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Coronavirus Cancels Pro Sports—What Does This Mean for Brands?

As the coronavirus continues to spread through communities across the country, American professional sports leagues decided this week to suspend their playing seasons, a move that could mean lost sales of fan apparel and accessories.

In one fell swoop, the National Basketball Association (NBA), Major League Baseball (MLB), National Hockey League (NHL), the Professional Golfers Association (PGA), Major League Soccer (MLS) and National Association for Stock Car Auto Racing (NASCAR) canceled games, matches, races and rounds for the spring season.

The National College Athletic Association (NCAA) has also axed its Division I men’s and women’s basketball tournaments for this year, as well as all remaining winter and spring NCAA championships.

The spate of cancellations kicked off on Wednesday when the NBA announced that a player on the Utah Jazz had tested positive for COVID-19.

The player, Jazz center Rudy Gobert, has since apologized to his teammates for behaving in a “careless” fashion in the locker room, not knowing at the time that he was infected or contagious. Since the announcement on Wednesday, guard Donovan Mitchell has also tested positive for the virus, presumably after being exposed to it by his teammate.

“The NBA is suspending game play following the conclusion of Wednesday’s schedule of games until further notice,” the league said in a statement on Wednesday. “The NBA will use this hiatus to determine next steps for moving forward in regard to the coronavirus pandemic.”

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NHL commissioner Gary Bettman said the league has been attempting to follow directives laid out by health experts and government authorities, and has resisted taking “premature or unnecessary measures” with regard to cancellations.

However, following the news that an NBA player had tested positive for coronavirus, and given that the groups often share facilities and locker rooms, Bettman said, “it now seems likely that some member of the NHL community would test positive at some point—it is no longer appropriate to try to continue to play games at this time.”

MLB has cancelled the remainder of its Spring Training games, the group announced on Thursday. The beginning of the 2020 regular season will also be delayed by at least two weeks from its originally scheduled March 26 start date.

Across the pond, the Premier League has suspended play until April 3 at the earliest, following revelations that Arsenal coach Mikel Arteta and Chelsea player Callum Hudson-Odoi had contracted the coronavirus.

In addition to providing a much-needed diversion from the world’s most pressing problems, sports drive sales. But in the wake of mass event cancellations, could retail bodies that depend on these franchises’ fandoms see reduced demand for their wares?

According to NPD vice president and senior industry adviser for sports, Matt Powell, the industry is unlikely to see a huge shift in sales due to the cancellation of sporting events.

“Sports events do not alter the trajectory” of sports gear sales, he told Sourcing Journal Thursday, adding that the absence of games and matches is unlikely to totally deter consumer spending on performance apparel and footwear.

“Sports marketing will take a minor hit with these event postponements,” Powell hedged in a blog post on Friday, adding, “The bragging rights of MVPs or league championships always bring additional exposure to a brand.”

Still, even that kind of positive publicity “does not manifest itself directly through consumer behavior,” he said. Highly watched wins become valuable long-term brand-building tools, but “the lack of brand exposure will not hurt much in the short-term,” he argued.

On the other hand, he said, sales of sports licensed products do track closely with events.

“An East Coast sports retailer filed for bankruptcy recently, citing the poor results of its local teams,” Powell wrote, while the Kansas City Chiefs, who won the Super Bowl this February after years of lying dormant, lent a “huge lift to local markets.”

“Nike is the uniform suppler for MLB, NFL, and NBA,” Powell added. “I expect sales of caps, jerseys, and championship gear will be affected by the postponements. But assuming those games are eventually played, much of those sales will be made up at a later date.”

Greg Portell, lead partner at strategy and management consulting firm Kearney, agreed that events are a key part of marketing strategy for sports apparel brands.

“In a cluttered world where brands chase impressions, live sporting events have signature value,” he told Sourcing Journal. “It will be near impossible for marketers to replace these programs.”

Portell pointed to March Madness as one of the top-tier events for the year. “Brands who pegged marketing programs will be scrambling to find other ways to engage consumers,” he said. “The challenge is even bigger when you consider the inventory that has been stockpiled.”

John Kernan, managing director of retail and consumer brands at investment banking company Cowen, warned that the situation could prove dire for not just sports apparel brands, but the industry at large.

“We are going to witness mass demand destruction across consumer verticals,” Kernan told Sourcing Journal. “For instance, Adidas sales are forecasted to decline 80 percent in China in during Q1.”

Now with social distancing spiking in other continents, we are likely to see incredible declines in sales and massive losses from retailers as stores close and costs remain fixed,” he added.