BLOOMINGTON – Officials across college sports decided the cancellation of postseason tournaments was necessary based on concerns and unknowns surrounding the coronavirus global pandemic.
But, for Indianapolis area businesses, it was tough day when looking at the impact on the bottom line.
David Pierce, the IUPUI Sports Innovation Institute director, estimates the economic impact of canceling both the Big Ten tournament and NCAA Midwest Regional in Indianapolis at close to $40 million.
“Fairly significant,” Pierce said. “Not as large as the Final Four obviously would be for next year, but still major events in the sports landscape for visitor spending.”
Marty Bacon, manager of the Slippery Noodle Inn, a bar and restaurant adjacent to Lucas Oil Stadium, said the loss of both events will equal close to $500,000 at his establishment.
“That’s probably very conservative,” Bacon said. “Probably a quarter million a week. You can definitely say that about the Big Ten. The regional you are not sure what teams you get, and that plays into effect also, but, yeah, I would probably safely say a quarter million through one week and a quarter million for the second week.”
Bacon said it will be tough to tell certain part-time employees he will need to cut back their hours because of the unexpected cancellations.
“I’ve got people with kids. I’ve got people, you know, taking care of their parents and stuff like that, and that’s the real impact of it,” Bacon said. “But, I mean, what can you do? These are the cards that we’ve been dealt with this situation, and I mean you’ve got — it almost sounds selfish when I talk about losing out this money. People are dying from this.”
Bacon said the other concern involving area business owners is the fear of the unknown.
“You don’t have a definite timeframe on this,” Bacon said. “We have no clue how long this is going to actually affect us. With a blizzard, you know you have OK, maybe one, two, three days, but this is different.”
Pierce said the first level of economic impact is the out-of-town spending, visitors to bars, restaurants, hotels, cultural and tourism attractions. A second layer of impact, with the indefinite NBA suspension which impacts the Indiana Pacers, is those in sports management that work in an industry driven by ticket sales.
“I don’t know how long you can really sustain no revenue generation and have a business model,” Pierce said.
Another impact is hourly employees who work inside arenas like Bankers Life Fieldhouse for security, concessions and ushers.
“Your frontline event staff, people are going to feel that first, but I think if it goes too far, you’re looking even into your staff positions as well,” Pierce said.
Another potential impact is the statewide gambling industry. Sports gambling was legalized in Indiana in September 2019. Pierce said IUPUI did a study that 10 percent of the population within the state engaged in sports wagering. That number was expected to increase for the NCAA Tournament, a major sports betting event.
“Since they’ve legalized it, that’s really been the first time that March Madness has come around, and it’s kind of been that soft entry point for people to give it a shot the first time,” Pierce said.
With a high number of sporting events being canceled and postponed, another issue is events being left to bet on.
“There just aren’t any games,” Pierce said. “Unless you are betting on the dates that leagues will start.”
For the NCAA, based in Indianapolis, the decision to cancel all postseason events will result in a significant financial blow. It will be up to CBS/Turner and the NCAA to hash out how much of the $878 million given annually to broadcast the NCAA Tournament will be recouped due to insurance policies, and how much insurance is willing to pay out.
“That’s 82 percent of their revenue,” Pierce said. “That’s having all your eggs in one basket. That’s not a diversified revenue portfolio. I mean, it’s a really big deal to not be having that tournament.”