The sudden onset of COVID-19 moved the goalposts for businesses in all industries, but the sports industry was one of the hardest hit. With high-profile insolvencies in recent news, our business recovery and insolvency experts consider the impact of the pandemic on both elite and community sport in the UK.

Recent news presents a bleak forecast for Premiership rugby. Last week, Worcester Warriors entered administration, following a suspension from all competitions by the Rugby Football Union. There is also a suggestion that fellow Premiership side Wasps are headed down the same path, as financial issues grow.

In the aftermath of the COVID-19 pandemic, financial struggles have become a common theme across the sporting industry as a whole, not just professional rugby. But what factors are to blame?

Loss of spectators

National lockdowns, bans on large social gatherings and social distancing rules proved to be a triple threat for spectator sports in 2020. Initially, sporting events were cancelled en masse, from international tournaments and major leagues to local match fixtures. As the pandemic progressed, many sports were allowed to recommence but behind closed doors without spectators. Sports clubs suffered a significant financial blow from the loss of spectators.

While big-name clubs backed by millionaire moguls had the means to endure these short term losses, smaller clubs were left fighting for survival without the income from ticket sales and matchday revenue. Many were left with no choice but to borrow money to cover their mounting costs.

Even when restrictions were lifted, apprehension towards group gatherings lingered and prolonged the return of many supporters to stadiums and venues.

A different rule book for elite sports

Tension between elite sport and community or ‘grassroots’ sport existed long before the pandemic, with the latter often viewing the former as partially responsible for their lack of government funding. The term ‘grassroots’ encompasses non-league clubs, including community teams and Sunday league squads.

On 31st October 2020, the government announced that professional sports leagues would be allowed to continue during the second lockdown. As non-elite clubs remained shut, this decision reinforced the perception of preferential treatment and was met with heavy criticism.

A month earlier, a Guardian report found that 48% of grassroots football clubs had lost over half their income since the start of the pandemic. One in ten clubs also expressed concerns that they would be forced out of business before the end of the season.

Illness and isolation requirements

COVID-19 outbreaks at sports clubs were inevitable, especially at the peak of the pandemic. With the virus running rampant through teams, many fixtures had to be postponed or cancelled at short notice.

As part of a nationwide plan to ‘stop the spread’, the government introduced strict contact and isolation rules for positive lateral flow tests, which caused further disruption to the sporting industry. A single positive result, even in an asymptomatic player, could lead to entire sports teams being required to isolate and further match postponements or cancellations.

Government funding

The Sport Survival Package was one of several government initiatives introduced during the pandemic to provide urgent financial support to major spectator sports. The initial winter phase of the package was implemented at the end of 2020 and provided £300 million worth of aid for clubs to cover essential costs. The government announced another £300 million of additional funding in March 2021.

In total, the package provided support to more 1,600 organisations during the pandemic. Unfortunately, for many clubs, the funding only offered a short-term solution to financial troubles.

Long-term viability

Increased levels of insolvency in the sport industry were an unavoidable consequence of the COVID-19 pandemic. However, a lack of reliable revenue streams and unstable business models across the industry undoubtedly exacerbated financial struggles.

The global pandemic demonstrated that many sporting organisations lack long-term financial viability and highlighted the importance of sport venues diversifying their revenue streams beyond matchday income to ensure business continuity when faced with unprecedented disruption.

If you work within the sporting industry and would like further advice, get in touch with us today. Our business recovery and insolvency experts have extensive experience in advising and supporting businesses in the sports sector.