The Coronavirus Pandemic, NFL, and Force Majeure

By: Lily Fontenot

On May 7, 2020, the National Football League (NFL) released its schedule for the upcoming 2020-2021 season. The 2020 season is scheduled to kick off on Thursday, September 10 in Kansas City as the reigning Super Bowl Champions, the Kansas City Chiefs, host the Houston Texans. The schedule release provided sports fans with much-needed hope in light of the current shutdown of professional sports in the United States due to the global coronavirus pandemic.

In response to the pandemic, the NFL indicated that Super Bowl LV, which is set for February 7, 2021, in Tampa, Florida, could be postponed by a couple weeks without significantly changing or canceling the regular season matchups. For example, if the beginning of the season is delayed by a week or two, the NFL can move the delayed games to the end of the season and push back the Super Bowl accordingly. This ability to move Super Bowl LV allows flexibility for the NFL to adapt its season to the constantly evolving public health conditions and regulations.

However, how is this flexibility compatible with legally-binding contracts, including the contracts made between the NFL, venues, hotels, sponsors, etc.? If the pandemic forces a schedule change, a force majeure clause could come into play. A force majeure provision “excuses one or both parties’ performance obligations when circumstances arise which are beyond the parties’ control and make performance of the contract impractical or impossible.” Force majeure translates from French as “superior force,” which explains the types of events covered by force majeure clauses. These events, which are typically listed in the contractual language, include acts of God, such as hurricanes, tornados, fires, and floods. Additionally, wars, acts of terrorism, epidemics, governmental acts, changes in law or regulations, and strikes and labor disputes are usually included in these provisions.

Similar to the legal issues in the ongoing coronavirus pandemic, courts interpreted force majeure clauses during the Spanish influenza of 1918. In Citrus Soap v. Peet Bros Manufacturing, the city of San Diego forced a soap company to shut down its factory for a few days to combat the Spanish flu. Due to the shutdown, the company’s delivery of soap drums to Peet Bros was delayed, which Peet Bros refused to accept. The contract between the two parties included a contingency clause that required the company to give notice if there was an unforeseen delay in production. The court held that the soap company’s notice was a reasonable attempt, in good faith, to meet the contract requirements. Thus, the delayed performance did not violate the contract.

Moreover, courts tend to adopt narrow interpretations of force majeure provisions. In In re Cablevision Consumer Litigation, the court emphasized that force majeure clauses “will generally only excuse a party’s nonperformance if the event that caused the party’s nonperformance is specifically identified.” This reasoning introduces the paradox of force majeure clauses: how can an unforeseen event be specifically identified in a contract? Consequently, modern force majeure clauses should include longer, more specific lists of possible extreme events in order to better protect the contracting party.

However, the current Collective Bargaining Agreement between the NFL and the NFL Players Association (NFLPA) has limited language in its “Cancelled Games” provision that favors the players over the league. The provision, which only mentions “a terrorist or military action, natural disaster, or similar event,” requires good faith negotiations to adjust the total revenue and salary cap for the following year, not for the current year. So, the NFLPA could argue that the players are entitled to their full salaries for the 2020 season regardless of how many games are played. Therefore, the NFL must be cognizant of its limited force majeure provision if it needs to delay the upcoming season in order to protect the health of the players, staff, and fans.

If the NFL must delay the Super Bowl due to COVID-19, it will not be the first time that the Super Bowl was moved due to a national crisis. After the terrorist attacks on September 11, 2001, the NFL postponed Week 2 of its regular season and consequently rescheduled Super Bowl XXXVI, which was originally scheduled for January 27 in the New Orleans Superdome. However, moving the Super Bowl back one week was not a simple task. During the weekend of February 3, the proposed new date, the National Automobile Dealers Association (NADA) was scheduled to host its convention in the Superdome and surrounding areas. After weeks of negotiations between the NFL and NADA, the NFL agreed to pay the car dealers $7.5 million to switch dates in the Superdome and to match up to $500,000 of NADA contributions to the September 11 relief efforts. This deal allowed the NFL to retain its 12-team playoff format while keeping the Super Bowl in New Orleans. Similar to this one-week delay in 2001, the 2020 season could be adjusted to accommodate the ongoing efforts to combat the coronavirus.

Additionally, the NFL moved Super Bowl XXVII out of Arizona due to state political conditions. In November 1990, a voter referendum rejected making Martin Luther King Day an official state holiday. After this refusal, the NFL moved the 1993 Super Bowl from Arizona to Los Angeles. This voter referendum is an example of unforeseen or extreme state government action that is typically mentioned in force majeure clauses. During the current pandemic, legislation and lockdowns vary drastically from state-to-state and even city-to-city, which could impact the NFL’s 2020 season. However, because the NFL’s force majeure clause does not specifically mention government action, the NFL’s leverage is limited in this sense.

Furthermore, the NFL canceled all international games for the upcoming 2020 season in response to the coronavirus pandemic’s global presence. Originally, the league scheduled four games in London and one in Mexico City; however, the NFL decided to cancel all of these games for the “well-being of players, personnel and fans.” The league currently plans on returning to London and Mexico City for games in the 2021 season.

Thus, a change in the 2020 season due to the coronavirus pandemic would not be the first time that the NFL had to adapt its season. However, the NFL’s current “Cancelled Games” provision could limit the league’s ability to restructure the season. Due to the increased attention to previously over-looked force majeure clauses, the NFL should consider redrafting its provision to better protect itself from future events.

Force Majeure in the Age of COVID-19: An Introduction

As the global economy reels from the impact of COVID-19, the pandemic has particularly impacted the sport and entertainment industries. The past few months have brought a flurry of cancellations, postponements, and suspensions to live competitions and events. In the United States alone, the National Basketball Association, National Hockey League, and Major League Soccer have suspended their seasons, the start of Major League Baseball’s season has been postponed, and the Xtreme Football League has filed for bankruptcy. Broadway has suspended its shows until at least Labor Day weekend. Dozens of music festivals and tours have been either cancelled or postponed, including household names like Coachella, Bonnaroo, and Jazz Fest. In light of these unprecedented interruptions, one of the hottest topics amongst industry stakeholders is the law of force majeure.

A force majeure event refers to an Act of God, such as a natural disaster, that a contracting party cannot predict or account for. Force majeure clauses are frequently included in contracts within the sport and entertainment industries to provide parties protection from liability if unavoidable catastrophes prevent the parties from fulfilling their contractual obligations. Given the cancellations and postponements of live events due to COVID-19, a looming question for leagues, teams, venues, sponsors, ticketing companies, fans, and other stakeholders is whether force majeure clauses can provide leeway for companies to escape contractual performance when live events do not occur as planned.

Determining whether a force majeure clause is triggered turns on the specific language in a contract. But because not all contracts explicitly mention an epidemic or public health emergency in their force majeure clauses, COVID-19 is confronting the sport and entertainment industries with novel issues. For example, television and media contracts pose particularly difficult questions as to which parties are liable for unfulfilled contracts. And while many advertisers are attempting to use force majeure to regain money originally meant for advertisement during events that are now cancelled or postponed, this course of action is not always possible or even in the advertiser’s best interest because cancelling these contracts can impact the media rebates the advertisers receive. Cancelled concerts have also left music festivals and companies such as Ticketmaster with difficult choices regarding how to handle refunds, with some of their decisions already sparking public outrage. Despite the possible protections that force majeure clauses provide, these companies can expect continued litigation from frustrated fans if full, immediate refunds are not provided.

In the coming weeks, this blog will feature weekly posts from students participating in the University of Miami School of Law’s summer course, “The Law of Force Majeure: The Impact of the COVID-19 on Sports and Entertainment.” The blog posts will analyze the topics discussed above in detail and discuss the impact of COVID-19 on specific sectors of the sport and entertainment industries. The student authors will be informed by industry-leading experts who will guide class lectures on the impact of COVID-19 on everything from professional leagues to TV and film to the Olympic games. The students’ posts will explore both the drafting of past force majeure clauses and how they may change in response to the COVID-19 pandemic in the future. For now, some parties are finding their force majeure clauses to be a safe haven, while others are facing difficult choices and fewer options to excuse their failure to fulfill contractual obligations. While force majeure has oftentimes been considered standard “boilerplate” language that is quickly glossed over by lawyers during document review, COVID-19 undoubtedly stands to alter that method of operation.

We hope this blog will serve as an opportunity for Miami Law students to discuss timely topics and provide helpful analysis on a complex issue unfolding in real time. The blog posts will track both the planned course topics, as well as incorporate current events in the coming months as the sport and entertainment industries attempts to navigate these circumstances and return to a semblance of normalcy. In addition to the blog posts, the students will cooperatively author a forward-looking paper at the conclusion of the summer. The paper will synthesize material from the course, the current events that unfold throughout the summer, and each student’s unique perspective on the industry’s future, emphasizing how industry stakeholders ought to respond. While these times are uncertain and difficult, the unprecedented circumstances provide an opportunity and challenge to provide innovative solutions. It is our goal that the University of Miami School of Law’s Entertainment, Arts and Sports Law LL.M. students will be a leading voice in analyzing COVID-19’s impact on the sport and entertainment industries and how these industries can best move forward. We look forward to sharing the students’ insights and facilitating discourse on a fascinating subject.