COVID-19 Impact on Global Sports Stokes Fears Across Industries

As Coronavirus fears mount, local and state governments are beginning to implement stricter guidelines on large group gatherings and social distancing measures. In response, sporting events around the world are seeing suspensions, postponements, modifications and cancellations.

This week, the US witnessed its first major developments in sports: The NCAA canceled March Madness, Washington State and New York banned large social gatherings, and all major US sporting leagues including the NBA, NHL, MLS, and MLB suspended or postponed their seasons. With that precedent set, all leagues are considering their responses to the global pandemic.

While it’s too soon to uncover the impact on the $471 billion global sports industry, early signs point to volatility in sports betting, entertainment stocks, brand partnerships, consumer discretionary, and retail spending with Nike and MSG stocks both falling Thursday.

Who is talking about how COVID-19 is impacting their businesses? Learn which companies are communicating on Coronavirus’s impact on sports and how they expect the virus to affect financial results below. 

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Here are the highlights. [Note: We are updating this post and our compilation post daily to reflect the most recent commentary. Last updated 3/19]

 

Takeaways:

• Sports betting companies are speaking in uncertain terms on financial impacts due to bans on large social gatherings
• Venues are tracking the virus spread and potential for event cancellations, citing uncertain material impacts
• Companies are being asked about marketing, partnership, and brand revenues as it relates to the sporting industry

Olympique Lyonnais Groupe (PR – 3/19)

Faced with the current major and unprecedented worldwide health crisis caused by Covid-19 and in response to the sports authorities’ decision to suspend all competitions and the French president’s announcements on Monday 16 March 2020, OL Groupe hereby announces the decisions it has taken today, which will remain in effect indefinitely to help limit the propagation of the virus:

• All sporting activities of both the men’s and women’s professional teams, as well as the OL Academy teams, have been suspended for an indefinite period. Given that all matches and training sessions have been suspended, OL Groupe, like all other Ligue 1 clubs, has put all of its sports personnel on partial unemployment status until further notice.

• OL Groupe has also put part of its administrative employees on partial unemployment status. All other employees are teleworking. Those whose physical presence is required at Groupama Stadium may continue to work on-site, while strictly adhering to the measures in place to prevent the spread of the virus.

• The Club’s management believes strongly that the measures implemented by the health authorities must be strictly applied so as to combat the propagation of Covid-19 and have thus decided to suspend all activities open to the public at Groupama Stadium.

All these measures are intended to protect everyone’s health, to defend the most vulnerable among us, and to curb the epidemic.

OL Groupe is following developments very closely and will keep the market informed about any important changes in the situation with respect to its business activity.

 

Gfinity (PR – 3/16)

The challenging market conditions have now been exacerbated by the unprecedented impact of the COVID-19 virus which is forcing the postponement of all live sporting and esports events. Two major events that Gfinity designs and delivers for clients, and due to take place before July 2020, have now been postponed. The Company is closely monitoring developments regarding COVID-19 and its ongoing impact on the business and will continue to update the market as appropriate.

Consequently, the Board now expects that for the year to 30 June 2020 revenue will be lower and adjusted loss before tax will be higher than current market expectations.  In light of all this, the Company is pursuing other options for financing in the short term and continues its discussions with several potential strategic investors.

 

Flutter Entertainment (PR – 3/16)

Flutter Entertainment plc (the “Group”) provides the following update regarding the cancellation and/or postponement of multiple sports fixtures globally.

In recent days, many national governments and sports authorities around the world have made the decision to postpone/cancel high attendance sports events in an effort to delay the spread of the COVID-19 virus. This will obviously have a material impact on the revenue and earnings of the Group which, in 2019, generated approximately 78% of its revenues through bets placed on global sporting events.

Quantifying the precise earnings impact on the Group is difficult at this point as we do not have visibility on the duration of restrictions on sporting events. While most major global sports have been suspended/cancelled, there are some exceptions where events are now being scheduled to take place behind closed doors. These include some Australian sports as well as Irish and Australian horse racing – we have provided full details of the sports affected in the Appendix.

 

The Stars Group Inc (PR – 3/16)

“Outside of our strong performance so far this year, the recent outbreak of the coronavirus pandemic (COVID-19) has resulted in the cancellation or postponement of major sporting events globally. We are closely monitoring the continued impact of the coronavirus, and the health and safety of our employees and customers remains our top priority, as we implement our business continuity plans and continue to observe and comply with local mandates and guidelines across our global offices. Our employees are working remotely to ensure that our customers can continue to enjoy our products, and while we currently still offer a broad range of betting options for our customers, any sustained outbreak resulting in the further postponement or cancellation of major sporting events could have a material impact on our sports betting revenue in the near term,” continued Mr. Ashkenazi.

“Notwithstanding, while it remains difficult to predict the scope, timing and length of the current sports postponements and cancellations, our business is online only with a global geographic reach and a majority of revenues (62% in 2019) generated from poker and gaming. We therefore remain confident in our ability to continue driving revenue growth in the years ahead, despite the inevitable disruption in the sports industry during 2020,” concluded Mr. Ashkenazi.

 

GVC Holdings (PR – 3/16) 

GVC Holdings PLC (LSE: GVC), the global sports betting and gaming group, today provides an update regarding the impact of Covid-19 and subsequent cancellation of sporting events.

On 5th March 2020 the Group updated on current trading for the period 1 January 2020 to 23 February 2020 stating  “Trading in the year to date was strong with Group NGR +5% cc and Online NGR +16% cc, both of which have benefitted from strong sports margins in the first two months.”

As the spread of Covid-19 continues across the world, the well being, safety and security of our colleagues and customers is of paramount importance to us.  We are following government advice in each area of our operations and have enacted contingency plans to minimise disruption to the business.

The spread of the virus means that a number of live sporting events are being impacted.  In our financial year to 31 December 2019, approximately 45% of our Group NGR was generated from sporting events, with 43% of our online NGR generated from sports.

 

Nordic Entertainment Group (PR – 3/13)

Nordic Entertainment Group (NENT Group), the Nordic region’s leading streaming company, is temporarily reducing the prices of its Sports packages on its Viaplay streaming service in all markets following the postponement of various Nordic and international sports events due to the global spread of the Coronavirus.

The spread of the Coronavirus is having an adverse impact on the Group’s performance, which will put at risk NENT Group’s previously stated ambition to deliver profitable growth for the full year 2020.

 

WWE (PR – 3/13)

The potential impact of COVID-19, and corresponding changes in the way WWE operates, may adversely impact the Company’s business including, but not limited to, its live event ticket sales and the sale of merchandise at those events. It should be noted that the Company may be directed to cancel, postpone or relocate certain upcoming events and the number of these changes is unknown at this time. The Company is currently unable to quantify the potential financial impact of COVID-19, but the financial impact to the Company may be material. Accordingly, the Company is withdrawing its previously announced first quarter and full year 2020 guidance due to the increased uncertainty of the financial impact of COVID-19 to the Company.

 

RTL Group SA (Earnings Call – 3/13)

I will now take you through the group’s outlook statement for 2020, as outlined on Slide 22. The group expects 2020 to be another challenging year for commercial television advertising, especially in the year with major sport events that will mostly be broadcast in public channels.

The recent COVID-19 outbreak is also presenting many companies with unexpected challenges. The RTL Group will see the first cancellations of advertising bookings and impact on productions but the first quarter will be broadly stable and in line with our expectations.

We are taking all appropriate measures to protect our people and to protect our businesses. We will continue to invest in our businesses. We will not cut into the substance of our businesses, and we will stick to our streaming boost plans as just presented.

Importantly, in times of crisis, including COVID-29, television viewing is increasing as is streaming. The following outlook does not reflect the COVID-19 outbreak as it is currently too early to quantify its impact on RTL Group’s results.

 

DEAC NV Merger Corp (Prospectus – 3/12)

Our business will be particularly sensitive to reductions from time to time in discretionary consumer spending. Demand for entertainment and leisure activities, including gaming, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our users’ disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as daily fantasy sports, sports betting and iGaming. As a result, we cannot ensure that demand for our offerings will remain constant. Adverse developments affecting economies throughout the world, including a general tightening of availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending on leisure activities, such as daily fantasy sports and gaming.

For example, the recent outbreak of coronavirus, a virus causing potentially deadly respiratory tract infections originating in China, may negatively affect economic conditions regionally as well as globally and may cause a reduction in consumer spending. Efforts to contain the effect of the virus may include travel restrictions and restrictions on large public gatherings. Many businesses have eliminated non-essential travel and canceled large-scale events to reduce instances of employees and others being exposed to large public gatherings. These efforts have expanded significantly in recent weeks and are likely to expand. To date, sporting events in multiple other countries have been canceled or postponed and in at least one country, large public gatherings have been banned. The occurrence and threat of coronavirus could cause professional sports leagues in the United States to cancel or postpone sporting events or hold them without live spectators. In the event that a public health pandemic, such as the coronavirus, results in cancellation of sporting events or significant changes in how they are conducted, this could reduce customers’ use of, or spending on, our product offerings, which could adversely impact our business, financial condition and results of operations. Relatedly, if a large number of our employees and/or a subset of our key employees and executives are impacted by the coronavirus, DraftKings’ ability to continue to operate effectively may be negatively impacted. The ultimate severity of the coronavirus outbreak is uncertain at this time and therefore we cannot predict the impact it may have on our end markets and our operations; however, the effect on our results could be material and adverse. Any significant or prolonged decrease in consumer spending on entertainment or leisure activities could adversely affect the demand for our offerings, reducing our cash flows and revenues, and thereby harming our business, financial condition, results of operations and prospects.

Newgioco (8K – 3/12)

NEW YORK–(BUSINESS WIRE)–March 11, 2020–Newgioco Group, Inc. (“Newgioco” or the “Company”) (Nasdaq: NWGI), a global sports betting and interactive gaming technology company providing fully integrated, omni-channel sports betting software solutions, today provided an update on the impact of the COVID-19 virus on its operations.

As result of the global outbreak of the COVID-19 virus, on March 8, 2020 the Italian government imposed certain restrictions on public gatherings and travel until April 3, 2020. Accordingly, the Company has temporarily closed approximately 150 betting shop locations throughout Italy. Subsequently, on March 10, 2020 the Italian government imposed further restrictions on travel throughout Italy as well as transborder crossings that may negatively impact the Company’s operating results and hamper our efforts to meet filing deadlines. The closing of physical locations does not affect the Company’s online and mobile business operations; however, most professional sports events have been either postponed or cancelled which may have an effect on our overall sports betting handle and revenues. The impact, extent and duration of the government imposed restrictions on travel, public gatherings and sports events as well as the overall effect of the COVID-19 virus is presently unknown.

“We are closely monitoring the active circumstances and the impact of COVID-19 on our product demand and business. Our priority is protecting our employees, supporting our customers and providing timely information to our investors and stockholders,” stated Company Chairman and CEO, Michele Ciavarella.

 

Monarch Casino & Resort (8k – 3/11)

“With respect to COVID-19, Monarch’s first quarter results had not been impacted through early March though this has changed over the past several days. At this time, our priorities are the health and safety of both our guests and team members and we have taken prudent precautions throughout our facilities and work spaces. We continue to monitor the situation and are prepared to quickly make operational changes should they be required.

 

GPAQ Acquisition Holdings (Post-affective amendment – 3/10)

In December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China. While initially concentrated in China, the outbreak has now spread to other countries and infections have been reported globally, including in the United States. The outbreak has begun impacting travel and resulted in the cancellation of some large-scale events, including in the sports industry. The extent to which the coronavirus, like any other rapidly spreading contagious illness, may impact our operations will depend on the evolution of the outbreak, which is highly speculative at this time and cannot be predicted with any level of confidence. The duration of the outbreak, new information that emerges concerning the severity of the illness and the actions to be taken to contain the spread of the virus or its treatment remains unclear. We believe that the continued spread of the coronavirus could adversely impact our operations. Our Tom Benson Hall of Fame Stadium is used for sports and entertainment events. If the outbreak worsens, attendance at events that we schedule in the stadium could be impacted, which could have an adverse impact on our business and financial results. Further, the spread of a contagious illness or fear of such an event over a longer period of time could have a material adverse effect on attendance at the Hall of Fame Village.

 

Clarus Corp (Earnings Call – 3/9)

Question – Mark Eric Smith: First off, John, you’ve talked a little bit about the Olympics and potential opportunity there, especially as we look at climbing being involved this year. Has your view changed on that? If we saw a cancellation, would there be any real impact from you in the near term? Have you spent money on marketing or anything that would impact that?

Answer – John C. Walbrecht: No. I think twofold. The first piece is, obviously, given the coronavirus market trends and discussions, I think the Tokyo Olympics may be a question mark. And I think a lot of people will pay very close attention to, politically as well as responsible-wise, how to approach that. Our belief has always been the same that it’s not really about the Olympics specifically, [the few weeks] that will drive and have a positive impact on the Black Diamond brand. I think like anything, it’s the awareness of the sport in a greater spectrum to a much wider audience. It’s the family sitting around watching the Olympics that decides Little Johnny is going to be a climber rather than a baseball player, or they are going to go try a climbing gym because they’ve now seen this sport, and it seems pretty exciting. And that will rise this.

 

Interpublic Group (Deutsche Bank Media, Internet and Telecom Conference – 3/9)

Answer – Michael Isor Roth: Well, good news is for ’19, we had a good performance virtually for most of our agencies, including our global networks. And of course, our media businesses outperformed, both with respect to organic growth as well as margin. And that continues to be a very big contributor to our success because, frankly, in this world out, media and targeted data-driven marketing is a critical part of media, and we have the expertise to really address those issues. So we continue to expect our media businesses as well as our Kinesso business, if you will, to continue to outperform. And that’s built-in there. Plus we continue to build into our creative and our other special services like PR and experiential and sports marketing continued growth into 2020.

Question – Laurence Davison: Okay. And let’s discuss coronavirus then because your guidance was set before that. You said that China is under 2% of revenues for you, but since we’ve had results, you’ve seen this move to become more of a global issue. What impact are you seeing right now in marketing budgets? And how should we think about quantifying the impact for the next year for a global agency yourselves?

Answer – Michael Isor Roth: Yes. It’s clearly too soon to tell what the direct impact is. Obviously, we’re very much focused on the safety of our people, of our clients, our providers and our communities. So I mean that’s what we’re focusing on first. You’re correct, 2% is our exposure in China. The likely — and we have seen some impact in the event side of our business. So we do big conferences. And needless to say, some of these conferences have been canceled. That said, that — the size of that business is less than 2% as well.

 

Wanda Sports Group Company (6K – 3/6)

In terms of the impact on sports events, some countries have begun to impose emergency measures that ban large public gatherings.  For example, Switzerland has banned gatherings of more than 1,000 people until at least March 15, 2020, and France recently suspended indoor public gatherings of over 5,000 people.  A wide range of sports events around the world have been postponed or cancelled due to concerns over coronavirus contagion, including at the urging of clubs unwilling to play in stadiums without fans. Other events are going forward without fans in attendance, for example in Italy all sports are to be played without fans through April 3.  The football season in China has been delayed, and it currently is unclear whether summer events, such as the Tokyo 2020 Summer Olympic Games, may be postponed, cancelled or otherwise disrupted.  Postponement or cancellation of test or qualifying events, as well as disruptions to training schedules for athletes and event volunteers, could adversely affect the timing and quality of events scheduled to be held months in the future.

We expect that the foregoing developments could adversely affect our Mass Participation as well as our Spectator Sports and DPSS segments, and that adverse effect could be material.

With respect to our mass participation events, we have had to cancel or postpone events in China, Taiwan and the Philippines and expect, based on the current trajectory of the spread of the coronavirus, to have to cancel other events.  Our mass participation sports events that are not cancelled or postponed may experience reduced rates of athlete and fan attendance due to reduced interest (out of fear of being infected or quarantined, or in anticipation of cancelations or postponements) or ability to attend (due to travel bans, flight cancellations, quarantines or other travel interruptions).  To date, we have seen in the first quarter of 2020 registrations for our mass participations sports events in China and the surrounding region decline. If the spread of the coronavirus continues, we expect we will see registrations for our mass participation sports events drop further in the second quarter of 2020, which could have a material adverse effect on results of operations in our Mass Participation segment.

 

MSG Entertainment (Form 10 – 3/6)

As a result of coronavirus, we may be compelled or advised to cancel or postpone events at our venues. To date, sporting events in multiple other countries have been cancelled or postponed and in one country large public gatherings have been banned. The occurrence and threat of coronavirus could cause professional sports leagues in the United States to cancel or postpone games. Coronavirus could also deter artists from touring and/or substantially decrease the use of and demand for our venues. It is also possible that coronavirus could deter our employees and vendors from working at our venues. As a result of these factors, events at our venues could be cancelled or postponed, and we may be faced with a period of time in which we are unable to book events due to the uncertainty around the spread of coronavirus. Mandatory quarantines have been ordered in several countries and numerous self-quarantines, including in the United States, have been recommended. It is possible that coronavirus could cause professional sports teams in the Unites States to play games without an audience. The impact of cancelled events and reduced attendance, including at our dining and nightlife venues, would decrease our revenues, and in all cases we would not expect to be able to reduce our expenses, many of which are fixed over the near-term, to the same degree as our decline in revenues, which would adversely affect our results of operations and cash flow to a greater extent. To date, we have experienced minor impacts from the coronavirus.