By: David Geller, CPCU, SCLA
As many Americans are confined to their homes during the COVID-19 outbreak, avid sports fans around the country are wondering if they will be watching sports on television in 2020.
For the most part, the majority of sports discussion has been focused on professional sports leagues (NFL, MLB, NBA, NHL, etc.) and if they will either continue seasons that were interrupted or begin new seasons in earnest in the months ahead.
However, these leagues consist of the 1% of the 1% of the 1% (and so forth) of all athletes. Ultimately, the trickle down effect from how sports, and in the case of this particular post, football, will be affected may ultimately produce far more significant impacts on the youth, high school, and less publicized college programs that don’t reside in the Power Five conferences.
Youth and High School Football: Will Helmets be Ready?
Each May, as USA Today reports, various helmet manufacturers repair, recondition, and recertify approximately 2 million football helmets that are sent back to small youth programs and high schools across the country (since some college football programs and NFL teams begin training in the spring, their helmets are typically prepared beforehand). The article describes the process as follows:
Internal parts are inspected and removed for cleaning. Helmet shells are inspected for defects and tested for cracks. If ruled defective, they are subsequently discarded. Those that are approved are buffed, sand-blasted, washed, painted, reassembled and put through a multi-step testing system before being recertified and packaged for shipment back to customers.
The social distancing measures implemented during the COVID-19 outbreak have reportedly inhibited this process, and USA Today notes that numerous high school, middle school, and youth football players may not have helmets ready when teams typically start practicing and playing games late in the summer into the fall (of course, even with the proper equipment, it’s far from a certainty that games will start on time to begin with).
The USA Today article did note that production is beginning to pick back up; although, since fewer workers are permitted in facilities at a given time, companies are reportedly contemplating adding extra shifts to make up for lost time.
Relatedly, prior to the outbreak, there were various reports pointing to helmet innovations being targeted as a way to mitigate the prevalence of head injuries that football participants sustain. Given the financial implications that COVID-19 has wrought, will there be enough capital and resources available to make these strides? At the end of 2019, Geekwire reported on one helmet startup that received considerable investments from prominent athletes, provided a product to the NFL, and still ran out of money. In all likelihood, COVID-19 has made a seemingly uphill battle considerably more difficult for the helmet industry.
College Athletics: A Moment of Reckoning for Football Programs?
Major college football programs typically have minimal issues generating cash flow. For example, per USA Today, the University of Texas football program received about $145 million in revenue in the 2018 fiscal year.
However, these elite programs appear to be the outlier in the collegiate world. After all, of the 126 teams (as of 2019) in the ;FCS, 98% of these programs lose money on an annual basis, reports USA Today. The median deficit, aside from three teams, is reportedly $2.4 million.
With an April 2020 survey of municipal bond analysts finding that higher education is at the third highest risk of any municipal sector for credit deterioration as a result of this economic downtown, schools may be more inclined to cut money-losing endeavors out of their balance sheets.
As a Hofstra University alumnus, I was a first-hand witness when they cut their football program about a decade ago, shortly after the Great Recession. The decision, per Newsday, saved the university $4.5 million annually and reportedly was reallocated, in part, to open their School of Medicine about two years later.
Additionally, several years later, a report from ESPN mentioned that different American universities have been struggling to justify the increasing insurance costs and liabilities involved with head injuries, and some are choosing to cut their football programs as a result. The article also notes that organized football leagues all the way down to the youth level are facing the same quandaries.
With a potentially significant shortfall of revenue and capital on the horizon for colleges, whether it be through the loss of: 1) international students that are restricted in their ability to attend this Fall, 2) the loss of revenue that may come from students not being able to live on campus for the rest of 2020, or 3) a dearth of state funding available due to the crisis, football programs for many schools may ultimately become a luxury that can’t be afforded.
College Football: Risks that may be on the Horizon for 2020
In the long run, less college football participation would naturally lend itself to less potential exposure to head injuries for athletes. But, if there are college football games in 2020, how could the presence of COVID-19 affect the current risk landscape?
The relationship between the National Collegiate Athletic Association (NCAA) and the student-athletes that participate is a reportedly complicated one (read this article from The Aspen Institute for more background), which could add an extra layer of difficulty when considering the months ahead. For example, if football players contract COVID-19 while practicing or playing, could they sue their respective colleges?
Just like many other industries, there appears to be more questions than answers regarding these unprecedented hypotheticals that may lie ahead. But if COVID-19 is ultimately contained enough for college football to proceed in the Fall, this is a situation that may warrant monitoring.