United Kingdom / Coronavirus Insights
Sports, Leisure and Recreation During the COVID-19 Pandemic

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by Harry Dee, Industry Analyst
Dec 14 2020

Recreation and leisure activities have long been an important part of the British economy and way of life. However, the way that people have spent their leisure time has shifted drastically in 2020 due to the COVID-19 (coronavirus) pandemic. Since 20 March, when the government announced the closure of all theatres, cinemas, gyms and leisure centres, restrictions have limited consumers’ ability to participate in recreational activities. They have also reduced the capacity of venues and facilities for companies in the sector. Operators have since attempted to create new revenue streams through remote services, though their ability to do so has varied between industries.

Entertainment

The UK’s entertainment industries are amongst the largest in the world. Supported by rising incomes, revenue generated by entertainment events and box office receipts had increased prior to 2020. However, the coronavirus pandemic has disastrous for the sector. The UK Cinema Association estimates that cinemas lost £5.7 million per day while they were closed. Even after reopening, social distancing measures limited auditoriums to approximately 60% of their capacity. IBISWorld expects that 15.4% of establishments in the Cinemas industry will permanently close their doors in 2020-21 due to reduced demand. Problems for cinemas have been further compounded by the postponement of almost all major blockbuster releases, including No Time to Die, Top Gun: Maverick, and Dune, contributing to a collapse of UK box office figures.

The pandemic could potentially cause long-term change in the sector, as some film studios have opted to release new movies through online streaming services in lieu of a cinema release. Warner Bros has announced that all of its 2021 films will be simultaneously released in cinemas and through online streaming services. Although these measures are currently temporary, if they prove to be financially successful it could mark the end of cinemas’ monopoly on new film releases. This is a major threat to the future performance of the Cinemas industry, which has prompted major operators to attempt to prevent simultaneous releases. In April, AMC Theatres, the owner of UK cinema chain Odeon, temporarily banned all Universal films in its establishments after the studio planned to simultaneously release all future films following the successful digital release of Trolls: World Tour, which grossed more in three weeks than the original Trolls did in five months in cinemas. AMC and Universal eventually reached an agreement that allowed studios to digitally release films 17 days after theatrical releases, down from the previous 90-day agreement.

Theatres were kept closed for longer than cinemas, not being allowed to reopen until August in England and September in Scotland. Venues had not long reopened before being forced to close again over the winter lockdown in England, which ran from 5 November to 2 December, and remain closed in Tier 3 regional areas. However, even in regions where theatres are permitted to open, their capacity is heavily restricted. Due to the significant production costs associated with theatre productions, most major venues have remained closed. Cameron Mackintosh, the producer that ran the UK versions of Les Misérables, Hamilton, and Phantom of the Opera among others, announced in June that due to the uncertainty surrounding the future of social distancing measures all productions would be delayed until early 2021, with his theatre companies subsequently making over 850 people redundant.

Sports clubs

After the initial outbreak of the coronavirus, sporting events across the world were postponed, including the Premier League and Olympics, or cancelled altogether, such as Wimbledon. Since then, most major leagues in the United Kingdom have resumed, albeit with no supporters in attendance until restrictions were eased in December.

The loss of spectators has had a significant effect on sport clubs. Smaller clubs that have fewer alternative revenue streams are expected to have been hit the hardest. According to Deloitte, in 2018-19, Premier League clubs received around 13% of their annual revenue from matchday sales on average, while for football league clubs this rises to 21%. This has put many lower-league clubs in significant financial peril. Meanwhile, Premier League clubs seem undeterred by the loss of revenue, with transfer spending in the 2020 summer transfer window at £1.3 billion, only £100 million lower than the 2019 total and with a higher net spend when factoring in outgoing transfers. In September, a group of sporting bodies, including the Football Association, Rugby Football Union, and England and Wales Cricket Board, requested a £1.5 billion bailout from the government in order to save the sport sector. So far, however, the government has only granted £300 million. The English Football League has also looked to the Premier League to assist with its financial burdens, with months-long negotiations resulting in a £250 million bailout package being agreed in early December.

Other industries

The Libraries, Museums and Cultural Activities industry has also been hit by the coronavirus pandemic. Following the coronavirus outbreak, libraries moved to improve remote services and adapt facilities to social distancing guidelines, including reducing staff levels and making greater use of self-service kiosks. Libraries have also worked with book publishers to provide more e-books and a number of publishers allowed libraries to temporarily publish books online so that people could continue to access them while in lockdown. Meanwhile, museums have struggled to adapt to the effects of the pandemic. Foreign tourism, which accounts for approximately 70% of UK museum visits, is expected to have fallen by 76% in 2020, according to VisitBritain. Museums that rely on ticket sales have been more heavily affected by the pandemic, many of which have been forced to make redundancies and run on a small skeleton staff. However, even larger museums that receive funding from the Department for Digital, Culture, Media & Sport have had to make cuts, including the V&A, which was forced to make 10% of its staff redundant as part of cost-cutting measures.

Conclusion

The coronavirus pandemic has presented many challenges to recreation and leisure industries, and their success over 2020 has been determined by their ability to adapt to a more remote world. Some sectors, such as gyms and libraries, have been able to adapt their shared spaces to maintain social distancing while also upgrading their remote services.

The so-called ‘K shaped’ recovery looks likely in the recreation sector, with some industries aiming to return to normal operations as soon as possible, including sport clubs, which have already begun to welcome fans back to stadiums. However, the pandemic has accelerated the long-term trend towards a more digital world, which threatens to leave some industries behind. Cinema operators rely on film studios believing them to be the more lucrative way of releasing movies, and there was little evidence before the pandemic to the contrary. However, a number of studios have successfully released blockbuster movies digitally while cinemas were closed and are planning to continue this past the end of the pandemic., threatening the future viability of cinemas.

Instead, new recreational activities may come to the forefront following the pandemic. Video games and esports have both boomed during the pandemic, and could potentially become premier leisure activities in the future. Meanwhile, online classes, from exercises to cooking, have benefited from rapidly increasing demand and could become the new normal.

 

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