Economics of no fans at events

Tennis and golf tournaments could be in real financial trouble because of the coronavirus pandemic because they rely on spectators and local sponsors. Some events simply could disappear.

When he first contemplated the prospect of a U.S. Open without fans because of the coronavirus pandemic, the U.S. Tennis Association’s chief revenue officer figured there was no way it could work.

Lew Sherr eventually came around to embracing the idea of a closed-door Grand Slam tournament — if it’s held at all; a decision is expected as soon as next week — because it still could make money even if millions were forfeited with zero on-site receipts from tickets, hospitality, food and beverage or merchandise sales.

“Certainly better than not playing. It still makes sense financially and as a way to keep the sport vibrant and engage fans,” Sherr said. “As you get to lower-level tournaments, it becomes a much harder conversation.”

Golf, which resumed Thursday in Fort Worth, Texas, also could take a real hit because of the virus and the recession.

Week-in, week-out events in tennis, where the pro tours are suspended at least until late July, do not bring in TV rights fees like the U.S. Open, which averages $70 million per year in the host country alone. Some of the smallest tour stops even need to buy air time.

The biggest team leagues such as the NFL and NBA seem to be in good shape because they derive most of their money from TV contracts worth billions each season. NASCAR, which returned last month with a flurry of races at empty tracks but announced plans Tuesday to begin allowing small numbers of fans, relies mainly on broadcast rights fees worth hundreds of millions annually. Another sport built around events at independent tracks, horse racing, will begin its Triple Crown series sans spectators at the Belmont Stakes in New York on June 20 with what might approach $100 million in online gambling.

One possible fallout of reduced revenue around tennis could be reduced prize money, even at a major championship like the U.S. Open. Another: Some tournaments simply could disappear.

“Will a 15,000-seat stadium need to seat only 5,000 because of social distancing? Will that be tennis’s future? If so, will the sport survive?” said James Blake, a former top-five player and tournament director at the Miami Open, one of more than 40 tennis events scrapped since March because of the COVID-19 outbreak.