Paying for sport or organised physical activity/recreation (e.g. gym memberships) is a known barrier for many Australians, that has been exacerbated as the impact of COVID-19 has affected disposable income and reduced spending on non-essential items.

The Australian Institute of Family Studies stated Australians are mostly reducing their spending rather than increasing debt. There appears to be a high level of caution with spending, even among those whose income has not changed.

The most common financial action taken was to cut down on non-essential expenses. This was followed by reducing spending on essential items such as groceries, and using money saved for other purposes to pay for everyday expenses.

Financial concerns included coping with job losses and reduced income from employment, businesses, or investments; concerns about job security, career prospects and retirement plans; and the financial wellbeing of family members (adult children and family members living elsewhere) and the local community.

Due to the economic impact of COVID-19, many Australians have experienced changes to their employment, including job losses, stand downs and reductions in working hours. As a result, many families have had changes in their income.

Research from the Centre for Social Impact indicates financial hardship could be even greater for disadvantaged communities, particularly those where a higher proportion are Aboriginal or Torres Strait Islander peoples. The research revealed half of respondents in these communities did not have any money put away, and just under 40% said they would be able to get $2,000 in a week if there was an emergency. This tells us there is likely to be high levels of stress for a lot of Aboriginal and Torres Strait Islander people, and other disadvantaged communities, in the face of an economic downturn.

With costs being an issue for many Australians, this will likely impact how much importance is placed on paying for traditional organised sports participation. Combined with the increasingly popular community trend towards free and lower cost outdoor and recreational physical activities, organised sport participation is at risk of becoming a more discretional priority with many Australians.

Sporting organisations primarily depend on membership income as a key source of revenue to fund ongoing operations and support their workforce. With sport cancelled across Australia, this lack of revenue is impacting sporting organisations at all levels and has placed the survival of some community sporting clubs in jeopardy.

In September 2021, the Australian Sports Foundation reported nearly 83% of community sport clubs surveyed reported lost revenue across sponsorships, fundraising and membership income. With minimal financial reserves, over 12% of clubs (approx. 9,000) expressed concern for ongoing financial risk.

Exacerbating this concern is the ongoing operational costs that are reported to have either stayed the same (88%) during the pandemic or increased (47% reported). The most common increased cost lines included new hygiene measures and extra equipment due to COVID-19 protocols, member refunds (due to shortened or abandoned seasons) and overheads, such as insurance.

A survey by the Sport and Recreation Alliance in the UK also reported a decline in grassroots sport during the pandemic, suggesting around 60% of members were lost. Although clubs reported they expected to recover about three quarters of pre-pandemic memberships, that will require a vast amount of effort and substantial funding.

With reduced revenue, probably for a long 'recovery period', many community sport clubs will struggle, especially if additional costs are required to create COVID safe environments. The impact on the paid workforce across sport could lead to an even greater dependence on volunteers to fill key roles, requiring sports to think differently, and emphasise creating positive participation and volunteering experiences to maintain and grow playing and non-playing participants.

The impact of the pandemic has also been felt at the national level with several NSOs reporting a decline in annual revenue. Analysis undertaken by Sport Australia of National Sporting Organisations (NSOs), with a December 31 financial reporting year-end, revealed a total revenue reduction of 32% across 17 NSOs from 2019 to 2020. Government stimulus payments totalling $9.5m, protected 14 NSOs from reporting a deficit but the remaining three NSOs reported an aggregate deficit of $30.1m, despite the Government stimulus. With Government stimulus payments no longer available, the full extent of the pandemic is still materialising for NSOs with June 2021 reporting anticipated to be reported in November 2021.

With 2020 financial reporting as a guide and Government stimulus payments removed, it is likely several NSOs will be in a weakened financial position. NSOs are looking to lead their respective sports through recovery but the reduced level of finance and/or resources could impact the ability to do so. When considering an aspiration to rebuild pre-pandemic membership levels or considering new approaches to organised sport consistent with contemporary demand, the challenges for some NSOs could be great.

Economic analysis by KPMG (May 2020) estimated that the Australian sports industry generates approximately $32.2 billion in sales (based on 2016/17 data), resulting in a contribution to gross domestic product (GDP) of approximately $14.4 billion and supporting approximately 128,000 full-time equivalent jobs. This equates to approximately 0.8% of GDP and 1.5% of total Australian employment.

Sports operations, including the administration, governance, delivery and support of sport and recreation participation activities across the country is the largest segment of the industry. This segment accounts for 44% of industry sales, 38% of industry value add, and 47% of industry employment.

Reductions in the financial wellbeing of the sporting industry impacts the national economy and efforts to rebuild the industry should be considered as part of a holistic, national economic recovery strategy.