Impact of COVID 19 on the

Global Sports Industry: Union of

European Football Associations
and India Premier League

The impact of the coronavirus continues to ripple through the

world’s educational, financial, and health institutions – and it has
not spared the sports ecosystem as well. The culture of sports as
we know it has come to a halt.

This disruption has impacted stakeholders across the sporting

value chain. Other industries, such as media, hospitality, travel,
and so on, which are dependent on sports industry, have taken a
major hit as well, with cancellation or postponement of some
major global sporting events.

This case study takes a deep dive into the global sports industry
and ecosystem with special emphasis on two major sporting
events impacted by the virus.
The Case Challenge

Organizers for the UEFA and IPL have asked for your help. As a consulting partner, you will consider the current
situation, in which the global sports industry is incurring huge losses. Stakeholders across the board are being
financially hit because of disruption in the sports industry and cancellation of major events.

1. What strategy should the organizing committees adopt to navigate through this situation and ensure
survival and growth of their events and the sporting ecosystem as a whole?

2. COVID -19 has brought tremendous disruption to the traditional sports industry. What strategies can
organizing committees adopt to ensure interests of sports enthusiasts and viewers is maintained
throughout this period and beyond?

3. Design a sustainable business model with an objective to overcome the slowdown and achieve profit
margins for any of the sporting events of your preference. Please encompass the various dependent
industries viz. media, travel and tourism, medical sector, fitness, and the financial services sector.

BACKGROUND

The impact of the coronavirus continues to ripple through world’s educational, financial, and health
institutions and has not spared the sports ecosystem. The culture of sports as we know it has come to a halt.
The nonstop sports entertainment has pressed the pause button. Tournaments, games, and major events like
Olympics and IPL are either being cancelled or postponed, causing an industrywide disruption.

This disruption has impacted stakeholders across the sporting value chain, such as athletes, coaches,
instructors, administrators, competition officials (referees, delegates), and businesses. Especially hard hit have
been the micro and small businesses like fitness clubs, gyms, retailers, event organizers, marketing agencies,
and sport equipment producers and renters.

Not only the sports industry, but industries such as travel, hospitality, sports medicine, media and
technology, merchandising and clothing, and real estate – which usually get a significant boost from sports
tournaments around the world – have taken a major hit, with cancellation or postponement of some major
global sporting events.

In this case study, we ask you to take a deep dive into the global sports industry and ecosystem, with a
special focus on two major sporting occurrences around the globe that have been impacted majorly by the
coronavirus pandemic.

Global Sports Industry Snapshot

The sport industry is a lucrative market. People, businesses, events, and organizations are engaged with
creating, encouraging, advancing, or organizing multiple events, experiences, or business endeavors focused
on sports. The evolving and ever-growing sports industry has already outpaced the GDP growth of some
nations.

The worldwide sports industry is worth between $480 to $620 billion, with a growth rate of 5.91% in 2019.
As of now, the United States has the greatest market share, contributing around $31.83 billion. From live
sports to broadcasting, media and commercial rights, food stands and material goods, this industry is
evolving quickly and has a promising future.

Impact on world’s two of most prestigious sporting events

UEFA
Introduction
The Union of European Football Association (UEFA) is the regulatory body for beach soccer, futsal, and
association football in Europe, governed by FIFA. UEFA comprises 55 national committees. An array of
competitions is represented by UEFA, comprising club competitions like Champions League, Europa League,
Super Cup. It also includes national competitions like UEFA European Championship and Nations League. It
also manages the prize cash, guidelines, and media rights to those rivalries.

The anthem for UEFA Champions League (also called The European Cup) is “This is the main event. These are
the champions,” and it excites the hearts of many football fans across the globe. The UEFA Champions League
is one of the most esteemed football competitions in the sports world. The league is held annually by UEFA
and is ferociously contested by Europe’s most elite clubs. This unparalleled football league forms a significant
share of UEFA’s revenue.

Business Model
The business model of UEFA is based on three significant revenue-generating factors:

a. Media rights – the amount paid by media organizations to broadcast UEFA sporting events

b. Commercial income – sponsorship (brand logos on jerseys, advertisement hoardings around the stadium,
media broadcasting) and other activities related to marketing, catering, conferencing services, and social
media platforms (e.g., Twitter, Facebook, Instagram).

c. Match-day income – Revenue generated from sale of tickets (which also includes season passes)/

Over a period, the MCM (media, commercial, match day) model helped UEFA to increase the European football
market by moving to a format that included participation of more teams, thereby increasing the supporters’
interest as well as broadcasters, sponsors, and media partners. This model was initially implemented by UEFA
Champions League and was a huge success. It led to a significant increase in revenue, which increased by
almost 10 times from 1994 to 2014. This model was subsequently adopted by other UEFA competitions.

Revenue streams
UEFA has a tremendous surge in revenue the past few years. The turnover doubled in the 2015/16 season
alone as compared with the year before. In 2018/19 UEFA reported further increase of €1.07 billion in revenue.

UEFA is currently growing at a pace of 14%. considering 4-year’s average data. The most prestigious UEFA club
competitions have seen a substantial rise in revenue for past few years. The introduction of new club
competition cycle from 2018-21, the start of UEFA Nations League cycle in 2018/19, and Euro Qualifiers cycle
have a; boosted the revenue impressively.

UEFA's primary objective is to keep on expanding its revenue while simultaneously investing back into the
game. In 2018/19, the revenue grew by 38% and the distribution increased by 50%, which is a reflection of the
same. The total revenue income in 2018/19 was €3.86 billion. Please refer Exhibit 1 for comparison of revenue
generated annually for past 6 years.

Exhibit 1. Comparison of revenue generated in €m annual for the past 6 years. [NOTE: Please ask CDG to
remove the line referring to “Annexure” in each Exhibit.]

In 2018/19, the media rights share increased considerably. The revenue surged from 81% to 86%, primarily
due to increase in pay-tv contracts, which was around €1.05 billion of revenue in respect to 2017/18. The
commercial rights revenue also achieved a new high, nearing the €500 million mark. Revenue generated from
ticketing and hospitality were also up due to the addition of inaugural UEFA nation’s league competition in
2018/19. Please refer to Exhibit 2 for comparison of revenue streams in 2018/19 season.

Exhibit 2. Comparison of revenue streams in €m 2018/19.

The revenue generated for UEFA from club competitions is significantly higher than the earnings from national
teams and other competitions. The bifurcation for the same is present in Exhibit 3.
Exhibit 3. Comparison of revenue in terms of competition €m.

A major chunk of revenue generated in 2018/19 season was distributed to the participating clubs. Also, a
substantial amount of revenue generated was shared with the participating nations in UEFA national
competitions as compared with the previous year’s share. UEFA distributed €2.54 billion to the clubs
competing in 2018/19, a major increase from the previous year. The total distributed amount accounted for
€3.09 billion, which comprised 80% of UEFA’s total revenue in 2018/19. Please refer Exhibit 4.

Exhibit 4. Breakdown of revenue and expenses in 2018/19.

Breakdown by nature

Total revenue 3 857.2

Distribution to participating teams -3 093.1

Contributions to associations -46.8

Event expenses -239.8

Referees and match officers -39.6

Information and communications technology -49.8

Employee salaries and benefits -99.7

Depreciation and Amortization -9

Other expenses -60.8

Total expenses -3 638.6

Operating result before solidarity payments 218.6

Solidarity payments -275.2

Financial items and taxes 10.2

Net result for the period -46.4

UEFA Event Postponement to 2021
Because of COVID-19, all UEFA club and national competitions have been scrapped or postponed for 2019/20
season. As a result, match day ticket sales, broadcasting, and sponsorship rights involving these competitions
took a huge hit, thereby causing substantial loss of revenue. For instance, it is estimated that UEFA will have
to face a revenue loss of 300 million euros in case of postponement and a revenue loss of 400 million euros in
case of cancellation of much-awaited Euro 2020. The postponement or possible cancellation of other UEFA
competitions will cause a substantial loss of revenue as income from match day ticket sales, broadcasting, and
sponsorship rights will fade away. Decline in revenue streams, along with substantial wages of the players and
transfer fees, will risk the clubs to sell as they won’t be able to make payment obligations.

India Premier League (IPL)

Introduction
The Indian Premier League (IPL) is undoubtedly a game changer for the global sports events industry, The IPL
had an enormous viewer and fan base not just in India but also around the world. It is a professional T-20
format tournament Managed by the Board of Control for Cricket in India (BCCI). This annual event takes place
in March through May and has had 12 successful runs since its inception in 2008.

The IPL has risen to a unique status as the showpiece sporting event in India, with a worldwide viewership and
a fan following unrivaled by any other cricketing league. It consistently maintains the highest attendance in its
category of T-20 cricket and was ranked the 6th largest in average attendance among sporting tournaments.

In 2010, the IPL lodged its name in global history books as the first global sporting event to be broadcasted live
on YouTube. According to a brand valuation report by Duff & Phelps, the IPL’s brand value was ₹475 billion
(US$ 6.7 billion) in 2019

Revenue Model
The IPL revenue model is a true reflection of the product – It is not just cricket but a complete family
entertainment event based around cricket and targets audience of all ages, backgrounds, and socioeconomic
statuses. This unique positioning enables it to have multiple and diverse revenue streams, with the key ones
listed below.

Sponsorships: Roughly 60% of the IPL’s revenue comes from sponsorships. Out of this, half of the amount is
shared among the eight franchises. DLF was the official brand partner from 2008 through 2012. followed by
Pepsi in 2013. For 2016 and 2017, Vivo bagged the rights for 100 crores INR each year, along with a 5-year
contract of title sponsorship for 2199 crore rupees (US$ 330 million)

Exhibit 5. IPL Sponsors through 2008-2022.

Sponsor Period Sponsorship fee (per year)

DLF 2008–2012 ₹40 crore (US$5.6 million)
Pepsi co 2013–2015 ₹79.2 crore (US$11.1 million)
Vivo 2016–2017 ₹100 crore (US$14.0 million)
2018–2022 ₹439.8 crore (US$61.7 million)

Merchandise Sales: Times of India in 2014 reported the sports gear business market value was projected to be
approximately $30 million. The franchises utilize merchandise like t-shirts, caps, and watches. It also generates
revenue from fans and from brand tie-ups and player endorsements of partner brands and representations on
sporting gear and kits. The sales of licensed products in 2016 in India was $1.4 billion, of which only $18 million
was through sports merchandise. The game of utilizing IPL’s scope of merchandising has just begun.

Ticket Sales: Another vital and central part of the revenue of the franchises are the ticket sales, which
account for roughly 10% of team revenues. The tournament is extremely popular, and a large section of fans
attend these matches, which contributes to a major chunk of income. The home franchise gets all the
revenue from 80% of the tickets, while the 20% seats are reserved for special guests.

In-ground ads: The in-ground advertising banners also contribute to revenue streams, as these capture the
attention of the fans across, on and off the screen.

Broadcasting rights and media rights: The IPL's broadcast rights were initially owned by a partnership between
Sony Pictures Networks and World Sport Group, under a 10-year contract valued at $USD 1.03 billion. In 2016,
Sony's broadcasts accomplished over 1 billion impressions (television viewership was in the thousands), which
was followed by 1.25 billion the next year.

Exhibit 6. All India TV impressions for IPL.

In 2017, Star India acquired the global media rights to the IPL under a 5-year contract starting in 2018. This was
valued at ₹163.475 billion ($USD 2.55 billion) and was the most expensive broadcast rights arrangement in the
history of cricket. Facebook had made a $USD 600 million bid for domestic digital rights. International
streaming viewership on Hotstar recorded a whopping, 10 million + simultaneous viewers numerous times.
The 2019 final match shattered these records, topping at 18.6 million concurrent streaming viewers.

Player Trading: A transfer window is unlocked for a certain period of time before the auction every year. This
window facilitates the exchange and trading of players between teams. This again provides franchises with
revenue opportunities, as they can make money by bidding and selling the players in their teams.

Exhibit 7. IPL revenue model.

IPL Brand Value
The brand value of IPL has been rapidly growing between 2016 and 2019. The major contributor to this rapid
increase was the signing of new television deal with Star India Private Limited. This new deal led to broadcast
of IPL matches in 8 regional languages, instead of being transmitted only via a sports channel with English
commentary, as it was previously.

Exhibit 8. Graph depicting IPL business valuation.

IPL 2020 Suspension

IPL 2020 was planned to launch on 29th March 2020. But due to initial lockdown announced by GOI it was
postponed to April 15. As the lockdown was extended by governments, BCCI decided to suspend IPL 2020 till
further notice. It was not an easy decision for BCCI, as this leads to loses for all stakeholders such as BCCI, the
franchises. and broadcaster Star India Private Limited. There were contingency plans such as closed door
tournament or truncated events for tournament, but with extension of lockdown, all those were put on hold.

With no COVID-19 insurance in place, BCCI is set to lose over Rs 4000 crore if the IPL does not happen this
year

Money riding on IPL and Impact on key stakeholders

BCCI: BCCI earns a revenue of Rs 4,000 crore through broadcasting and digital rights, along with roughly 20 %
of franchisee revenues and sponsorships

Players: The cricketers themselves may have their contracts revoked if there is no IPL, as the franchises operate
with “no match, no money” rule. Domestic and foreign players together may lose Rs 700 crore in match fees

Franchises: The 8 franchises are expected to incur significant losses on multiple fronts; each franchisee makes
Rs 250-300 crore from home stadium ticket distribution. Another Rs. 450-500 crore are expected to be lost
because of central revenues, merchandising and advertising, team sponsorships, and licensing fees.

Host Broadcaster: In 2017, Star India (Now Disney-Star) had won the TV and digital rights of IPL for Rs
16,347.50 crores for a 5-year period from 2018 to 2022. It is still the biggest television deal in cricket history.
On an annual basis, Disney-Star India make Rs 3,000-3300 crore from advertising and broadcasting sponsors
as it beams the matches on TV and its OTT channel Disney+Hotstar. A cancellation of the IPL this year would
result in a direct loss of about Rs 3300 crore for them this year.