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COVID-19 derails record year for Nook Sports; state restrictions make recovery challenging

When Jim Launer returned to the office following a weeklong retreat with three other Spooky Nook Sports executives in early March, he felt inspired and excited.

“The meeting was phenomenal,” said Launer, the company’s chief operations officer. “It was uplifting.”

At the retreat, the executives put together a 10-year strategic plan, laying out ways “to capitalize on the success we’ve been seeing,” including a record-setting start to 2020, he said.

But the good vibes were short-lived.

The next day, Nook Sports heard a rumor that its biggest event of the year, the Irish Rumble volleyball tournament coming up that weekend, might be canceled due to fears of COVID-19. The day after, the rumor proved true.

And in a few more days, Nook Sports was among thousands of businesses in Lancaster County and statewide closed by Gov. Tom Wolf to contain the pandemic.

“From that point on, it’s been just watching literally millions of dollars walk away a month with not much of an opportunity to have that business return,” Launer said.

The crisis has devastated the finances and workforce of Nook Sports, the largest indoor sports facility in North America and — in normal times — a major contributor to the local economy.

Last year, when the economy was growing, Nook Sports drew 1.4 million athletes, family members, fans, coaches, meeting goers and others through its doors.

Those visitors spent an estimated $128 million at Nook Sports and at off-site hotels, restaurants, gas stations, amusement parks and other places while they were here, according to research by Nook Sports and consultant Tourism Economics Inc., much like the way large crowds at Sight & Sound Theatres have a positive impact on other businesses that serve traditional tourism.

“There’s a handful of events a year where you can’t get a hotel room within 45 minutes of this property,” said Launer.

The throngs of visitors to Nook Sports and the tens of millions of dollars they spend established the complex as the cornerstone of the county’s young “sports tourism” industry,

But, as 2020 is demonstrating, the ripple effect can flow the opposite direction too. Tough times for Nook Sports pose setbacks for the dozens of area businesses that are patronized by those visitors.

“I’m not sure we’re going to have a big tournament again the rest of 2020,” Launer said, acknowledging that the wave of cancellations would have consequences for both Nook Sports and many other businesses.

“Nook Sports is a huge contributor to our room nights,” said Diane Poillon, president and CEO of Willow Valley Associates, which owns and operates the 85-room Hampton Inn & Suites at Donegal Square, two miles from the sports complex.

The hotel lost more than $100,000 in revenue from room reservations canceled by visitors who had planned to go to Nook Sports from April through last week, she said. Other area businesses felt the Nook Sports shutdown too.

Former warehouse

Nook Sports opened in 2013 in a former Armstrong World Industries warehouse that measures 700,000 square feet. Over the years, Nook Sports has steadily added more uses to the building, including a 135-room Warehouse Hotel and Forklift & Palate restaurant, with 148 seats plus an atrium with another 98.

Over time, Nook Sports added training, clinics, camps and competitions for more and more sports; it now offers about 18 of its own sports, while renting out space for others such as wrestling, archery and cheerleading. At the same time, it established itself as a party, meeting and event venue.

These strategies kept visitor counts rising. Company executives expected 2020 to be another record-setting year.

“We were busier than we’ve ever been. I think we would have probably done 1.5 (million) or 1.6 million visitors. Financially, we were blowing away our budget in the first 2, 2½ months," said Launer, declining to specify that projected annual revenue.

“We were far ahead of the pace of last year. We were far above the pace that we had set for ourselves this year. Then it came to a crashing stop,” he said.

The impact on the workforce was immediate.

Its payroll of 800 employees, including 120 to 140 full time, was slashed to about 12 or 15. However, to ease the financial and mental burden on its furloughed full-time workers, Nook Sports is picking up the employee share of their health insurance premiums through mid-July.

“I don’t know how to stress enough how much we care about our employees and want to bring them back,” said Launer.

Ironically, while the East Hempfield Township facility is barely functioning, the company continues to construct a far bigger, $140 million sports complex in Ohio.

The complex in Hamilton, proposed four years ago as a much smaller venture, will include a 235-room hotel as part of a 1.2 million-square-foot facility. A December 2021 opening is planned.

“We are moving forward. Steel is going up at some point this month …,” said Launer. “It’s very strange to watch a business be torn apart here in Pennsylvania while one is being built in Ohio.”

Positive steps

Here, Nook Sports took a small step forward last week. Another dozen or so employees returned, partly because it began its annual summer camps, taking advantage of the somewhat looser business restrictions that come with the county being upgraded on June 5 by Wolf from red to yellow.

The camps got off to a modest start, drawing only 123 campers, down from 296 the first week last year, said marketing manager Mackenzie Bender.

Nook Sports is using a forgivable loan from the federal Paycheck Protection Program to pay the returning workers.

Nook Sports next hopes to reopen its fitness center and climbing gym Tuesday, while limiting attendance to 25 at a time in each. Nook Sports expects to take more small steps when the county goes green, which it hopes will happen by the end of June.

Still, that will be nowhere near sufficient to restore Nook Sports to its old health, since green limits gatherings to 250 people and requires social distancing.

Those green restrictions likely mean Nook Sports would be limited to using less than 5% of its capacity, though the state issued revised standards Wednesday for youth sports that had Nook Sports taking another look at how much of its capacity can be tapped.

Wolf indicated late last month that counties which attain the green status probably will remain green until a safe and reliable vaccine against COVID-19 is widely available. It’s not known if or when a vaccine will be developed.

However, a spokeswoman for the state Department of Community & Economic Development, the “referee” that interprets the red/yellow/green rules, on Wednesday declined to say if a vaccine is needed before the restrictions are canceled.

The spokeswoman, Rachel Wrigley, said only that “the administration will continue to monitor public health indicators and adjust orders and restrictions as necessary to ensure the spread of disease remains at a minimum as reopening continues.”

Launer, echoing a predicament voiced by operators of large entertainment venues and restaurants here — from Sight & Sound Theatres to Shady Maple Smorgasbord — said green is no panacea.

To pay large bills, such as $560,000 a year in real estate taxes, and bring back sizable numbers of staff, Nook Sports needs crowds in the thousands, not hundreds, he explained.

For instance, consider the Irish Rumble volleyball tournament.

That would have brought 216 teams with 5,800 players, coaches and spectators into Nook Sports for two days, based on data provided by Marissa Goss, sales and customer relations manager for tournament organizer Zero Gravity Volleyball.

So what’s the recovery strategy for Nook Sports?

“We have two focuses every day. How do we bring back our employees? And how do we survive, stop the bleeding and generate revenue? We don’t have answers to either right now …,” Launer said.

“I don’t think it takes much to realize we’re in a precarious position. Anybody who understands our business understands that we function off of events — and large events at that. Not being able to have that is going to be challenging for our organization.”

At the same time, Launer was confident Nook Sports would find a solution somehow.

“We’ll make our adjustments and figure out how to make it work in some form or fashion. Nook Sports is not going to go away, but it’s going to require a lot of creativity. … We really don’t know, based on the information that we’re given by Pennsylvania’s leadership, how to move forward right now. And we can’t be the only people (in this situation).”

Launer was sharply critical of Wolf, a Democrat, and state Health Secretary Rachel Levine for making COVID-19 decisions without seeking input from the Republicans who control the state’s General Assembly and represent Nook Sports. Republicans have been urging Wolf and Levine to loosen restrictions faster.

“That is beyond frustrating to me …,” he said. “This isn’t the way you should have to operate a business.”