Potential impact of COVID-19: the economic implication on Premier Soccer League

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By Mahlomola Martin Lefupana

On Thursday 19 March 2020, Premier Soccer League (PSL) chairman Dr. Irvin Khoza stood in front media in Kempton Park to confirm as predictable the suspension of the football matches until further notice. The confirmation of the suspension of the league cup matches in the PSL and Glad Africa Championship is going to be severe to the entire value chain of football economy. The league further took a decision to discontinue the 2019/20 MultiChoice Diski Challenge season with immediate effect.

While a week earlier, the PSL intended to continue playing behind close door, the development of the COVID-19 and its spread in the country left them with no choice but to suspend until further notice. The virus is expected to peak in South Africa in April, raising questions and doubt over any possible resumption of the league in April or even early May.

The restriction imposed as a result of COVID-19 such as movement of people, prohibition of gathering of more than 100 people, restriction of good and services are impacting on football economy. The spread of the disease has put the PSL in limbo, disrupted the scheduling and loss of income which is estimated to be in the millions of Rands. While the economic impact of COVID-19 on the PSL economy has not been quantified at this point, we can estimate that match day revenue, media broadcast, marketing opportunities are lost.

As it is now there is little data or limited data available to make full assessment of the impact of COVID-19 on the PSL, particularly of match day revenue and broadcasting. In this instants, these are just my personal observation. Football industry contributes to Gross Domestic Products through direct and indirect creation of employment in entertainment, tourism, leisure etc. The COVID-19, thus impose short term, medium and long term impact, which could have severe consequence on the game.   

The restriction imposed by government has had immediate impact, with games suspended, disruption of broadcast schedules, disruption of marketing programmes, loss of income for service provides such vendors, musicians, security, media and related industries. The restriction is not only felt by football, but also other related industries. While the suspension in the short term might be manageable, the longer the virus spread and continued strong measures, it could plunge the economy of football into paralysis. If in the worst case scenario, the league is not able to finish beyond its extended date of 30th June, the consequences will be dire. Some player’s contracts comes to an end on the 30 June, broadcaster failing to meet their obligations to customers and sponsors not getting value for money, this could plunge the league into cash flow problems.  

The PSL’s economic value over the last ten years was anchored by the broadcast rights with Supersport, the failure to finish the season might have financial and legal implication, with adjustment or non-payment of broadcast money not out of question. Sponsors of competition such as ABSA and Nedbank could also push to adjust their payments, if the competitions are not finished. With most clubs in the PSL surviving through monthly grants and gate taking, the COVID-19 disruption will be severe.  

June will be a very important time for the PSL, because it’s the close of business in local football. Anything that goes beyond this period will have serious consequences of football economy. The risk of ending beyond June is unknown at this stage, although not sure if it will happen, a possibility cannot be overlooked. The PSL is fully aware of the risk and will prefer if the league resume at least in late April or early May.

The suspension of the league is likely to impact small clubs with low budget to spend the most and their operations might be impacted heavily, a situation where players are not paid might also arise. The challenge at this point is for the PSL to ensure the hardest hit remains afloat through provision of disaster / emergency grants, enhancing the capacity to cope and supporting of clubs impacted by COVID-19. 



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