03 October 2022 - Firm News
As one of the countries first and most heavily hit by the COVID-19 Pandemic (“Coronavirus”), Italy is facing a major economic downturn and the sports sector is no exception.
Major events, from football to tennis, skiing and basketball, have been disrupted. Essential revenue streams, from sponsorship, production and distribution of media rights, to ticketing and in-stadium corporate hospitality, have suddenly dried up.
According to Deloitte’s report on the evolution of Coronavirus and its effect on the Italian economy, the negative economic impact is estimated at EUR 80 billion, equal to approximately 4.6% of the country’s 2020 GDP. A much worse scenario has been predicted by the International Monetary Fund, as a recent study foresees that the Italian economy will contract by approximately 9% this year.
As anticipated, due to the outbreak of Coronavirus, all major sporting events have been cancelled, rescheduled or trapped in limbo.
For instance, the final races of the Audi FIS Alpine Ski World Cup, which were scheduled to take place in Cortina d’Ampezzo from March 16 to 22, 2020, were cancelled. Such an abrupt stop is even more unfortunate if we consider that the Ski World Cup finals would have served as the main test event for the 2021 FIS Alpine World Ski Championships to be held in Cortina.
Tennis bodies, the ATP and WTA, announced the suspension of both Tours until at least July 13, and ATP representatives warned that it is likely that each Tour would not be completed this year. As a result, this year’s ATP Masters 1000 BNL Internazionali d’Italia, which was scheduled to take place in Rome from May 10 to 17, will also not proceed as planned. Considering that last year’s Internazionali d’Italia generated more than EUR 13.2 million just in ticket sales, the relevant stakeholders will suffer enormous losses should the tournament be cancelled. For the time being, the Italian Tennis Federation (FIT) highlights that the Internazionali d’Italia could be played between September and October 2020. If this plan proves unfeasible, the tournament could be played in Cagliari (Sardinia) in November, or it might be converted into a fast track indoor event staged in Milan and Turin, without spectators, if necessary.
FIT President, Angelo Binaghi, has also recently guaranteed that Turin (already selected as the 2021 ATP Finals venue) may well serve as a back-up option to also host the 2020 ATP Finals, scheduled for November 15-22 at the London O2 Arena.
Based on a recent survey conducted by the KPMG Football Benchmark Team, the top five European Leagues stand to lose between EUR 3.45 and 4 billion. UEFA has postponed the 2020 UEFA European Football Championship (Euro 2020) until the summer of 2021. Therefore, despite having secured their place at Euro 2020 by winning all matches in their group, Italy will have to wait an additional 12 months. The city of Rome was to host the opening game of Euro 2020.
From the Italian football standpoint, Lega Serie A estimates a loss of EUR 720 million should the season not be concluded, most of which is due to missed revenues from non-delivery of live matches to broadcasters.
Taken as a whole, Italian football – which generates up to 98.000 jobs – has been calculated to be worth EUR 3.5 billion per year. These figures, based upon the revenues reported in the 2017-2018 season alone, would include Serie A, Serie B and Serie C.
Stadium ticketing is another source of revenue which is falling abruptly. The average number of stadium spectators prior to the Italian government suspending the football matches was 26,644. Should the current season be cancelled, Serie A could face losses amounting to about EUR 100 million in match day revenue alone.
To date, the most optimistic – but equally less probable suggestion – is to resume the football season a month after the restart of official team training, currently envisaged for May 4. This would, in any case, occur under certain safety measures and with players and staff under continuing medical supervision.
Within this context, Italian Serie A is set to resume first, followed by Italian Serie B. Serie C has already asked FIGC (the Italian Football Federation) to sanction the termination of the season, considering the prohibitive costs involved in ensuring participants’ safety, should training and matches resume. Serie B may follow suit.
According to Serie A estimates, should the league complete the season, the losses would stand at a more bearable amount of about EUR 170 million.
Italian bank IMI estimated how Juventus FC could be affected. According to their report, in the event that all football competitions at national and international level were to be cancelled, the negative impact on Juventus revenues alone for the 2019-2020 season could be around EUR 110 million, broken down as follows:
- Loss in stadium revenues amounting to around EUR 25 million;
- Loss of revenues from TV/media rights amounting to around EUR 45 million; and
- Lower sponsorship revenues amounting to around EUR 40 million.
In an attempt to reduce losses, Serie A teams have requested the Italian government to terminate the ban on gambling advertising. Such a ban, which entered into force in July 2019, is, in fact, depriving football stakeholders of large revenue streams. However, the possibility that the ban would be repealed is remote, given Five Star Movement’s stern opposition within the current coalition government.
After initial disagreement, all Serie A clubs but Juventus asked the players’ union (‘Associazione Italiana Calciatori’) to accept a reduction of one third of the season’s base compensation. Although firmly rejected by the players’ union, this request may be referred to the Italian government. Given the standstill, some of the clubs have entered into independent negotiations with their first team players. Juventus has led the pack by agreeing on a 4-month base compensation cut across the board, three-quarters of which will be deferred until the next season.
In France, many clubs are reducing the wages of their football players in accordance with a procedure known as ‘partial unemployment’ (‘chômage partiel’). Recently amended due to the COVID-19 crisis, this procedure provides that players will earn around 70% of their usual wage with the French state covering up to 4.5 times the national minimum guaranteed salary. In Italy, however, professional football is subject to specific statutory regulation; therefore, Italian football clubs may not benefit from general employment protection schemes as regards their players. However, the FIGC has requested that the government apply similar protection to Serie B and Serie C players, whose annual compensation is lower than EUR 50.000.
All in all, as one would expect, this is a pretty grim situation.
But then again, and, after all, as they say: ‘tomorrow is another day!’ – ‘domani è un altro giorno!’
First published by Sports Law and Taxation on 23 April 2020.