- Legal firms seeing unprecedented demand for advice
- Rights-owners ‘anxiously checking’ force majeure definitions
- Legal experts counsel collaborative approach in crisis
UK law firms acting for clients in the sports industry say they are dealing with an unprecedented demand for advice after the Covid-19 outbreak caused the widespread cancellation of sporting events.
One UK law practice said it has been running daily surgeries with sports stakeholders to understand their exposure to the crisis and to help them decide on an appropriate response.
But the global scope of the problem and the often-conflicting guidance offered by different local and national governments has only increased the complexity of the situation for sports organisations.
While leagues and federations are conscious of the financial implications of the outbreak, one expert said duty of care obligations to fans and athletes, together with the importance of adopting a respectful tone in what is a public health emergency, have tended to take precedence in decisions to postpone or cancel events.
“The political and health considerations are often taking priority over any strict legal or liability considerations or even contractual considerations,” explains Nic Couchman, head of the sports practice at Charles Russell Speechlys. “Event owners and sports businesses have both moral and legal duties of care and other legal obligations to staff, contractors, athletes and fans, which have to be at the top of their agenda.” He adds that the vastly differing problems faced by stakeholders, and the evolving nature of the crisis, also make it dangerous to offer any broad-brush advice.
The one pattern to have emerged so far, it is that right-holders have favoured postponing events rather than cancelling them outright, where the calendar allows. At this stage, the consensus is that it is preferable for them to delay the performance of their rights obligations while the crisis evolves rather than confront the repercussions of non-delivery straight away.
Media, advertising and entertainment lawyer Nick Breen, senior associate with London-based legal practice Reed Smith, says stakeholders will be “anxiously checking” the force majeure provisions in contracts that govern liability in the event of failure to fulfil rights obligations.
“The basic concept is that a party to a contract will not be liable for a delay in performance or non-performance of its obligations where such delay or failure is caused by a force majeure event,” he says.
He suggests that the most sophisticated sports promoters and sponsors will carefully detail what constitutes a force majeure and add contractual provisions for pandemics. But these clauses are often overlooked or omitted completely by other rights-holders. In countries with common law legal systems – such as the UK, the US, Germany and Australia – Breen says the law will be likely to look for specific reference to epidemics or diseases in force majeure provisions to relieve organisers of any liability for failure to deliver an event.
“Any party that wants to try and rely on a force majeure provision is either going to have to hope that their provision already covers a quite appropriate or analogous position, such as epidemics,” he says. “Or they are going to have to hope that their force majeure provision provides for the consequence of that epidemic, for example actions or instructions given by government agencies to stop sporting bodies from holding events.”
Breen suggests the reason a handful of rights-holders have resisted postponing or cancelling sporting events until the last-minute is because they were waiting for governments to explicitly prohibit such activities, thereby indemnifying them against non-delivery.
“The party wishing to rely on it [a force majeure] clause will also need to show that they cannot perform their obligations because of the circumstances that are beyond their control. They also need to demonstrate that no reasonable steps could have been taken to avoid the force majeure event,” he says.
However, all the legal experts spoken to by SportBusiness recommended against an adversarial response to the crisis given its human dimension. The changing picture and the possibility governments will create emergency laws to deal with the problem, or compensate industries affected by it, also ought to dissuade anyone from going on the legal offensive straight away.
Responsible
“In one sense they [rights-holders] ought to be applauded for taking responsible actions, irrespective of what their contractual arrangements might or might not lead them to be doing,” says Couchman. However, he predicted industry cash flow problems will inevitably create friction further down the line.
“It will be interesting to see whether the stakeholders in sports do dig deep and cooperate in a pragmatic way to achieve solutions,” he says. “Sport is built on long term mutual relationships, so trying to protect yourself at all costs has the potential to create an inverse effect in the long run as people work out who’s behaved in the right way and who hasn’t. The sports world is very small and hugely interdependent”.
Uefa and Fifa have already been commended for putting their turf war to one side in working together to rejig the international match calendar now that the Euros have been postponed until next year. Uefa president Aleksander Čeferin thanked Fifa president Gianni Infantino personally in a statement and has commended Conmebol for agreeing to move the Copa América.
In contrast, tennis stakeholders have accused the French tennis federation (FFT) of acting unilaterally and appearing to protect its own interests in postponing the French Open to September.
Breen suspects that it will be easier to ‘recast’ sponsorship rights to compensate brands but that broadcast agreements would prove trickier to adapt.
There is already evidence of sponsorship agencies trying to provide alternative inventory and assets to help brands gain a return on their sports investments in the absence of live content.
Joel Seymour-Hyde, head of Octagon UK, tells SportBusiness: “The biggest question we are asking at the moment as a business is: how can we solve our client’s problems and create different opportunities? The simple one is: if we have assets that we were creating for a live or experiential purpose, can they be repurposed for a digital ecosystem?”
There is a suggestion that broadcasters will not want to damage long-term relationships with rights-holders and jeopardise future negotiations by taking an adversarial approach, but by the same token, some parties might take advantage of the crisis to exit unfavourable deals early.
