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Crew now face direct financial impact of coronavirus pandemic

The recent moves by the front office reflect new the team’s new reality.

MLS: New York City FC at Columbus Crew SC Greg Bartram-USA TODAY Sports

The on-field impact of the coronavirus pandemic was immediate for Columbus Crew SC. Despite going ahead with the game, the Crew changed the team’s travel plans for the March 7 game against the Seattle Sounders, just the second of Major League Soccer’s 2020 season, due to the virus. The game against Real Salt Lake a week later was the first in a string of initially postponed matches.

The off-field impact is only now starting to visibly hit the team.

A week and a half ago, the team disclosed that it terminated 11 employees, news that initially broke in a Columbus Business First story. The positions were in the sales department according to the article. A source with knowledge of the moves said that they were part of the inside sales group, the lowest tier of the team’s sales group, many of them new or relatively inexperienced. The staffers were charged with calling or emailing prospective customers and turning them into revenue-generating clients.

As part of the longterm plan, the positions were expected to move to the Legends organization, a company hired to help open the team’s new downtown stadium, by the end of the year. The pandemic and cessation of play accelerated the move by the team. With no games to sell now and the positions being short term, in the Crew’s eyes, the team made the moves sooner rather than later.

In the future, the team’s partner, Legends, will conduct the team’s sales outreach formerly conducted inside the team.

The team also implemented salary reductions for senior staff ranging from a 10 to 20 percent decrease starting in May and lasting through September. According to a source, this affects less than half of the front office members and are progressive, with deeper reductions on senior staff. No source was able to estimate the savings to the team from the moves, but it does signal that the team expects a loss of revenue as games continue to be postponed with the strong possibility at least some will be canceled or played without paying fans.

The wage cuts do not affect the playing staff, whose contracts are part of the league’s collective bargaining agreement. MLS is in conversations with the Players Association about possible wage reductions as the pandemic halts MLS play for at least three months and likely longer.

On Monday, the team addressed the growing list of postponed games in a letter to ticket holders. With the MLS season on hold until at least June 8, 13 Crew games are currently postponed, including seven home games. The team offered refund options for games that are officially canceled, played without fans or are postponed for more than eight weeks, a move that is becoming increasingly common in sports leagues across the country.

By the current conditions, there are three home games that have been postponed for eight weeks by the time MLS can possibly resume on the league’s current potential return date of June 8. These include the March 14 game against Real Salt Lake, the April 4 match against Toronto FC, and the April 11 contest against Orlando City SC.

It’s extremely likely that more games will be deemed “Affected Matches,” as a June 8 restart is unlikely with many of the league’s cities under states of emergency due to the pandemic. The State of Ohio only started resumption of certain lower-risk services during the first week of May. The restart of higher-risk activities, such as mass gatherings like sporting events is still to be determined according to the state.

The team is offering incentives to put any refund to future matches by offering a 10 percent bonus rebate towards future tickets, food and merchandise, or as a donation to Nationwide Children’s Hospital’s On Our Sleeves program. Season ticket-holding fans can rollover the cost of the ticket and get a 10 percent bonus in one of the three options as an incentive.

Any other refund option requires a call from the Crew’s membership services team.

Game day revenue is vital within MLS. A recent interview with FC Cincinnati’s Chief Operating Officer Dennis Carroll stated that ticketing, parking, concessions and game day merchandising accounts for 90 percent of the club’s revenue. Cincinnati’s strong game day experience likely drives that strong number, but the percentage isn’t much less for the Crew. MLS teams range between 70 to 90 percent of revenue from home matches.

The league’s broadcast contract, signed in 2014 with ESPN, Fox Sports and Univision, brings in $90 million a year. MLS’s overseas contracts only change the number nominally. It is a small sum compared to other American TV rights deals with the National Football League bringing in $6 billion dollars, the National Basketball Association cashing in over $2.5 billion and Major League Baseball also topping at over $1.5 billion.

This number is also dwarfed by other soccer leagues. The English Premier League tops $2 billion worldwide while the French, German, Spanish, and Italian top leagues all make over $1 billion in television rights deals and would be better positioned to play without paying fans.

Seattle Sounders majority owner Adrian Hanauer put the possible cost in stark terms to MLS, predicting “astronomical” losses, adding the possibility of “hundreds of millions, billions” and “really big numbers” in a podcast interview with Sounder at Heart.

The Crew’s recent moves are unlikely to be the last. The professional sports world faces significant challenges due to the ongoing coronavirus pandemic. Even after given the go-ahead to kick off sports again by health officials and government authorities, fans probably won’t be allowed to return for a while. Long term, there remains a big unknown of how many fans will return until the threat of dangerous contagion is effectively eliminated.

Like sports teams and leagues around the world, the Crew and Major League Soccer have a number of tough questions and decisions to make in the coming weeks and maybe months.