An Insurance Policy for the End of the World

By: Rivers Ridout

As COVID-19 continues to threaten industries around the world, businesses are attempting to stay afloat by seeking coverage from their insurance providers. This blog focuses on the perspective of those businesses while outlining the avenues for relief that businesses can utilize during such trying times. It also discusses insights provided by lecturers in the University of Miami School of Law’s summer class about the impact of COVID-19 on the sports and entertainment industries.

It is no secret that COVID-19 has resulted in greater financial damage than physical damage to property. When it comes to property insurance policies, most require direct, physical damage to trigger coverage. In distinguishing whether or not coverage is appropriate, the presence of apparent physical damage can be quite obvious. In the era of COVID-19, however, many courts have struggled to decide what qualifies as “physical” or “apparent” damage. Insurance companies hope that courts adopt a narrow approach, while at-risk businesses prefer one a bit broader.

According to lecturer Alycen Moss, Co-Chair of the Property Insurance Group at Cozen O’Connor, several courts have ordered coverage where there was no apparent physical damage, but the business lost its “essential functionality” or was deemed “temporarily unfit for occupancy.” For example, in Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of Am., 2014 WL 6675934 (D.N.J. Nov. 25, 2014), where an accidental release of ammonia into a facility caused the facility to shut down for one week, the court ruled that although there was technically no physical damage to the property, the damage rendered the facility temporarily unfit for occupancy. Similarly, some businesses have received coverage when their “essential functionality” could no longer be performed. The court in Wakefern Food Corp. v. Liberty Mut. Fire Ins. Co., 968 A.2d 724 (N.J. Super. Ct. App. Div. 2009) considered whether a supermarket’s insurance policy included damage resulting from an interruption of electrical power. The court held that because the interruption was the result of physical damage to electrical equipment away from the property, the supermarket’s policy did in fact cover any losses suffered even if there was no apparent damage to the property itself.

While businesses hope for broad interpretations of what “physical damage” means, insurance companies attempt to make business interruption policies as specific and inclusive as possible. This is because courts rarely adopt a broad interpretation of the insurance policies. For example, in Westport Insurance Corp. v. VN Hotel Group, LLC, 761 F. Supp. 2d 1337 (M.D. Fla. 2010), the court held that damage from bacteria was coverable because the policy did not expressly list bacteria as a pollutant under the pollution exclusion section of the agreement. Insurance providers fear that if the specific reason for the insured’s damages is not expressly excluded from coverage under an insurance policy, the courts will order coverage. Due to this concern, providers have begun expressly including viruses and pathogens in the excluded-from-coverage sections of their policies in the wake of COVID-19. As businesses seek to obtain coverage for viruses and pandemics, insurance providers are working to ensure they are not paying millions for things they never intended to cover. Generally, any ambiguities within a policy are ruled in favor of the policy holder, not the drafter. Lecturer Richard C. Giller of Pillsbury Winthrop Shaw Pittman LLP explained that when a court cannot decipher precisely what an insurer intended in a policy, the policy will be construed in the light most favorable to the policy holder.

COVID-19 has resulted in businesses looking to their property insurers to recuperate lost income. In addition to property insurance, businesses have relied on event cancellation insurance to mitigate the financial toll of COVID-19. For example, the All England Lawn Tennis Association, which organizes the Wimbledon tennis tournament, is looking to recover an astounding $141 million after taking out pandemic insurance 17 years ago. By paying $2 million in pandemic insurance every year for the last 17 years, over $34 million in total, Wimbledon will likely receive almost half of its losses after being forced to cancel the tournament for the first time since WWII.

If COVID-19 struck a few years ago, the NCAA may have found themselves in a similar position to the All England Lawn Tennis Association with March Madness. After the TSARS outbreak of the early 2000s, the NCAA purchased event cancellation insurance that would cover roughly one-third of the tournament’s annual revenue. That, combined with $500 million accumulated in a risk management fund, gave the NCAA a false sense of security. After years of depleting that risk management fund to cover class-action lawsuits and with an insurance policy that only covers a portion of the revenue presumed to be lost from the cancelled tournament, the NCAA will lose millions at the hand of COVID-19.

It is obvious that most businesses effected by COVID-19 will attempt to purchase some form of a pandemic insurance moving forward. The real question is whether it will be available at a price that makes commercial sense. Purchasing an event cancellation policy like Wimbledon’s will likely be easier said than done after this year as insurance providers try to shield themselves by increasing prices for similar policies. Regardless of the price, it probably makes the most sense for businesses to pursue coverage, as COVID-19 may remain a financial threat for the foreseeable future.

COVID Coverage: Property Insurance Claims from the Company Perspective

By:  Kevin Stone

How will sports and entertainment organizations earn money during the COVID-19 pandemic? This question is not only ever-present as the pandemic continues to paralyze the sports and entertainment world, but it also remains unanswered as professional leagues and venues have yet to resume operations. One way ownership groups and organizations have looked to capture some of the lost revenue is through filing insurance claims. Either by way of property insurance or business interruption insurance (“BI”), owners and venue operators are combing through their policies to determine how, or if they can recover on a claim.

Wimbledon made headlines when it secured a $141 million payout from its insurance company after it suspended the famous tennis tournament due to the virus. Wimbledon’s policy included a premium on specific coverage for loss of revenue due to communicable diseases, viruses, and pandemics. Wimbledon was paying a steep price for coverage over the last 17 years, yet its payout was more than three times the expense spent on coverage. Unfortunately, many organizations do not have targeted coverage like Wimbledon’s. Wimbledon’s policy included specific event-cancellation coverage, which is unlike a blanket BI policy. Because the event is held within just two weeks and is just a single tournament on the professional tennis tour, it made sense for the organization to insure the specific event. It would not make sense for professional leagues like Major League Baseball, for example, to take out insurance for every single game within the regular season. It would be too expensive and illogical to insure each game in the 162-game-season for 30 teams, which spans from March to August. As a result, legal battles may ensue between the insureds and their insurance companies to determine what types of claims, if any, will be successful under property insurance or business interruption insurance.

Under regular property insurance, claims are legitimate if the insured party can prove that the property suffered “direct physical loss or damage.” Courts have addressed this issue, and the majority have narrowly defined “physical loss.” For example, the courts in Universal Image Prods. v. Chubb Corp. and Mama Jo’s, Inc. v. Sparta Ins. Co. defined physical loss to mean an actual physical alteration to the property, like damage typically caused by flooding or fire. Furthermore, courts that have taken this narrow view, such as the courts in Mastellone v. Lightning Rod Mut. Ins. Co., Great Northern Ins. Co. v. Benjamin Franklin Federal Sav. & Loan Ass’n., and Newman Myers Kreines Gross Harris P.C. v. Great N. Ins. Co., have ruled that economic loss resulting from some physical contamination is not recoverable when there is no physical alteration or damage to the property’s structure. Claimants are unlikely to recover in jurisdictions that adopt this majority view because COVID-19 does not structurally alter the physical appearance or functionality of the property. Even though claimants will likely argue that COVID-19 has a physical component (the CDC has acknowledged the virus can be spread on surfaces), courts following the majority rule will be reluctant to find coverage where structural damage to the property does not occur.

Even if a claimant finds itself in a minority jurisdiction, it may have an uphill battle. In order to recover on a claim in a jurisdiction that has held that physical loss or damage is not limited to actual physical alteration, the claimant must show that the property loses its essential functionality, as the courts required in both Wakefern Food Corp. v. Liberty Mut. Fire Ins. Co. and Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of America. A court’s analysis of an “essential” business function is a subjective interpretation that operates on a sliding scale. It may be difficult to prove that an organization’s property lost essential business function if the organization could still operate executive functions and maintain some capacity at the venue.

Some organizations also pay premiums on BI. Many BI coverage policies include language that grants coverage when there is a loss of significant revenue or some force prohibiting access or essential business functionality. For example, most BI policies provide specific coverage when property access is prohibited by civil authority or government order. This type of coverage may be the best option for an organization looking to recover. However, BI policy language requires that the civil authority prohibition of access must be a direct result of physical loss or damage to the property or surrounding premises. The physical loss or damage requirement circles back to the aforementioned argument herein, thus leaving insureds with a difficult battle when they file claims and bring lawsuits in majority jurisdictions.

Under a BI claim, in addition to proof of physical loss or damage to the property, the insured party must prove complete prohibition from the premises due to the civil authority order. The courts in Kean, Miller, Hawthorne, D’Armond McCowan & Jarman, L.L.P. v. Nat’l Fire Insurance. Co. and Bienville Partners, Inc. v. Assurance Co. of America held that when a civil authority prohibits access, claims are not recoverable if the property is accessible in limited numbers. Thus, in states and counties where prohibition by civil authority was not a complete bar from access and organizations were allowed to work in limited numbers under certain precautions, it may be harder to recover on a BI claim.

Ultimately, the first court cases will set a precedent for those looking to file claims because the COVID-19 issue is new and uncharted. Should policy holders succeed in convincing a court that significant financial losses due to the virus are covered by their policy (barring any specific exclusions), it could create a wave of claims that would seriously financially burden insurance companies. Insurance companies will argue that because the organizations had the ability to specifically foresee and insure against the type of BI resulting from COVID-19, they should not be liable when the organizations failed to bargain for coverage. When crafting the policies, parties could have priced the premium for specific coverage under COVID-like circumstances. In the event where parties fail to contemplate that sort of coverage, the company will argue that they cannot be liable for payouts when the contract language is clear and unambiguous as to what is insured under the policy. Should courts uphold the specific, plain language of the policy, and only grant a remedy for parties that bargained to cover these incidents directly, many organizations will be stuck trying and find new ways to supplement for lost revenue.

Force Majeure Provisions in Unions and Guilds

By: Alyssa Levy

Force Majeure clauses have some inherent irony- they call upon the contract drafter to include language to excuse nonperformance of parties when an uncontemplated event or circumstance occurs, rendering performance impossible or impracticable. However, often times in order to be enforceable, the contract must have specifically mentioned the unexpected circumstance or event that the parties now need relief from. Further, before the onset of COVID-19, many industries either chose not to include force majeure clauses in their contracts or did not find them particularly useful. Now, we know how essential these clauses are.

On Monday, June 8, 2020, the American Bar Association held an online webinar entitled “No Lights, No Camera, No Game: Force Majeure Events & the Impact on Future Entertainment and Sports Negotiations.” Hosted by Mark Tratos, founding shareholder of Greenberg Traurig, the webinar explored how unions and guilds across the sports and entertainment industries have made use of and plan to use force majeure clauses in their collective bargaining agreements (CBAs) and other union contracts.  The panel featured Heather Pearson, general counsel of the International Cinematographers Guild, Anthony Segall, general counsel of the Writers Guild of America West, Gregory Riches, Vice President and Legal Counsel for MGM Resorts and the Las Vegas Aces WNBA Team, and Roman Stoykewych, Associate General Counsel of the National Hockey League Players’ Association.

The industries represented at the webinar have been disproportionately impacted by the COVID-19 pandemic. While cinematography took a huge hit as demand for production essentially came to a halt, the writers guild has gotten by relatively unscathed as the increase in streaming services requires a steady influx of scripts. Las Vegas, a city reliant on entertainment, sports, and gambling, has been devastated, yet has seen glimmers of hope in the form of the UFC opening at private venues and the Golden Knights securing a new arena. Although the NHL was able to complete the majority of their regular season, it has not had any games, fans, nor revenue since March 12.

These unprecedented times have called upon unions and guilds in the sports and entertainment industries to reexamine their CBAs, both to see how they may already be protected from the catastrophic economic fallout and, retrospectively, examining what they should include in future drafting and bargaining. For example, the NHL’s CBA has no force majeure provision and dictates a salary cap system in which revenues are split 50/50 between owners and players. Thus, revenue loss from the halt in the season has resulted in direct loss of player compensation. The cinematographer and writers’ guilds both had no force majeure clause in their respective CBAs, although the latter had provisions in the event of a strike, and while a few members of both industries still had the ability to negotiate individual contracts, any force majeure clauses were given little thought during negotiations and certainly did not adequately cover the pandemic.

As for why these unions never addressed force majeure events, answers range from a lack of historical need to the fact that it is unlikely the clause would even provide protection from liability if an event is truly unforeseen. Across the board, the webinar speakers seemed to agree that it is difficult to have a black and white provision when the parties are engaged in relationship-based bargaining. There seemed to be a consensus amongst the webinar panelists that there is an institutional expectation for parties to work out their problems via bargaining rather than by invoking a standardized clause.  All the safeguards in the world can be written into a contract, but when issues actually arise, these industries leaders emphasized that the parties involved must work out the issues amongst themselves.

This approach makes sense, as employers and employees have a mutual interest in negotiation. If parties have the flexibility to work out their own arrangements as issues come up, they’ll likely arrive at a more tailored solution than one inserted into a contract as a safeguard.  Further, negotiation-based problem solving preserves relationships better and is often the best route when planning long-term. While it might be easy for parties to act in their individual financial interests, rational actors recognize the value in avoiding legal battles through compromise and solutions that avoid adversarial actions that rely solely on contractual clauses.

While each panelist agreed that force majeure clauses were not typically a major point of consideration before the pandemic, they each agreed that these clauses will be given much more consideration in contract drafting going forward. This was an interesting end to the conversation because prior to this ultimate conclusion, the conversation surrounding force majeure clauses was that they either a) were unlikely to cover the specific unpredicted circumstances, and thus, were not useful in practice, or b) were unlikely to be enforced in an effort to preserve valuable relationships via compromise. I suppose that these panelists see the value in having some contingency plan or semblance of predictability just in case a party is unwilling to compromise. Regardless, I think it’s a safe bet that the words “pandemic” or “infectious disease” are likely to appear in some capacity in all major contracts’ force majeure clauses going forward.

Now What? Navigating Expectations and Reopening Guidelines in the Midst of COVID-19.

By: Catherine Perez

After months of closed museums and galleries, industries are eager to reopen their doors to ticket paying visitors who are also itching to escape quarantine as stay at home restrictions are lifted nationwide. While plans to reopen may bring hope to many financially distressed institutions, they also provide a maze of government guidelines to navigate, as well as questions on how to safely operate in the midst of a global pandemic.


The Law of Force Majeure course at the University of Miami School of Law recently hosted Ashwin Krishnan, Jeff Gewirtz, and Irwin Raij to guest lecture on the effects of COVID-19 on the future of stadiums and venues. While each lecturer is a respected professional in the sports industry, many of the concerns raised are also applicable to museums and the art industry.


The guest lecturers expressed concerns regarding how venues will implement and ensure compliance with government guidelines. Each state has started to release general and industry-specific requirements to reopen businesses. While at a minimum these state guidelines are requiring patrons and employees of venues to maintain 6 feet of physical distance, a reduction in occupancy, and thorough cleaning of frequently touched surfaces, each state has its unique approach to reopening. Some states like Texas are reopening on a state-wide basis, while others like New York have a regional reopening approach. Additionally, some states like Louisiana released museum guidelines to allow these spaces to reopen in Phase 1, while New York has said museums will not reopen until Phase 4. Further complicating a unified industry strategy is the long list of specific requirements, in addition to general state guidelines, that museums will need to check off before reopening their doors. Some states, but not all, require affirmative confirmation that regulations are implemented and enforced. The diverse nature of the art industry, coupled with the range of state approaches to reopening, demonstrates that each museum and gallery will need to take a highly individualized look at its space while collaborating with nearby museums to efficiently create its reopening plan.


For example, while the Metropolitan Museum of Art in New York saw approximately 7.4 million visitors in 2018, the smaller Frick Collection, down the street from the Met, saw only approximately 250,000 visitors. Even for institutions like the Frick and the Met that will operate under the same regional reopening plan, their efforts are bound to differ due to the differences in venue size and the number of guests that visit their halls. However, due to country-wide and international quarantines, museums will certainly see a large decrease in patrons, which should help ease the enforcement of physical distancing. But this raises the additional question of how these non-profit museums are going to fund efforts to ensure compliance with reopening guidelines. However individualized and regional each plan will need to be, there should be room for collaboration and resource sharing between museums within the same regions to help reduce costs and ease the transition.


The American Alliance of Museums (“AAM”) released its own considerations for museum reopenings. The AAM recommends that museums need to consider how to “limit person-to-person contact, monitor the number of visitors, and restrict or prohibit access to certain areas of the museum.” This could include online ticket sales, digital guides to visitors, interactive exhibit restrictions, capacity restrictions, no or limited access to certain spaces, group visit restrictions or cancelations, guided tours, public programs, new signage and barriers to enforce social distancing, changing the flow through the museum, and more. These guidelines will inevitably change the visitor experience and likely lead to further cancellations of blockbuster shows and events that cannot be smoothly and efficiently accommodated under new operating norms.


Regardless, museums should make great efforts to closely follow state guidelines to ensure that the new visitor experience is both safe and compliant. Strict compliance to incorporate these changes and requirements may bring high operating costs, but they will help museums and institutions avoid issues such as potential liability suits with visitors or employees for something as simple as not properly supplying hand sanitizer. An additional protective measure that museums can take is to include assumption of risk language on their tickets, informing visitors that they assume the risk of catching COVID-19 as part of their museum visit. The guest lecturers also discussed that while some venues and spaces have taken a look at their operating contracts for force majeure clauses as a route to potentially cut costs or excuse performance, many are hesitant to use these clauses due to the uncertain nature of the pandemic. Even with a clear-cut force majeure clause, institutions may not want to enforce these clauses and ruin relationships with landords who lease building space, publishers, and contractors who ship and assemble exhibits.


In short, museums should collaborate and dedicate resources towards navigating the reopening guidelines released by their respective states. These efforts will likely change the museum experience as we know it, raise operating costs at a time when museums are already suffering financially, and protect museums from potential liability issues down the line.

The Pandemic’s Impact on Sports Networks & Revenue

By:  Lily Fontenot

While the ongoing COVID-19 pandemic is affecting athletes, coaches, leagues, and fans, the suspension of all major athletics is particularly impacting sports media. Specifically, the pandemic is highlighting the interdependence between the media and sports. All of the major sports leagues and events, including the NBA, Olympics, NCAA, MLB, NHL, and NFL, rely on mutually beneficial relationships with media companies to produce revenue and content. TV deals are the top revenue source for sports leagues, and the leagues’ games provide the networks with live, unique content that is highly profitable. Consequently, the current absence of live sports is severely impacting sports leagues and media companies.

For example, the NBA, which suspended its season in March, receives about $2.6 billion annually from its broadcast deals with ESPN and Turner. To make up for missed games, the league must offer the networks concessions, called “make-goods.” Negotiations involving make-goods could include refunds, extra programming, or extension of deals without a price increase. These negotiations also need to consider the rescheduled games and post-season that the NBA recently voted on. The NBA’s recently approved 22-team format, which restarts on July 31 in Orlando, Florida, will help mitigate some of the revenue losses from this season.

Furthermore, the postponement of the Tokyo 2020 Olympics will heavily impact NBC, which paid about $1.1 billion for the U.S. broadcast rights to the games. The network had already sold more than $1.25 billion in ads for the Tokyo Olympics. Also, NBC had originally planned on launching its new streaming service, ‘Peacock,’ during its Olympic broadcast. Now, the network and sponsors must renegotiate these ad deals to reflect postponing the games until 2021. To show the pandemic’s massive impact, this postponement marked the first time that the Olympic games have been cancelled for something other than the world wars during 1916, 1940 and 1944.

Additionally, the cancellation of March Madness has led to a dramatic decrease in the NCAA and member schools’ revenue. CBS and Turner mutually pay the NCAA $785 million a year to broadcast the men’s tournament, a striking $330,000 per minute of game action. Because this year’s tournament was cancelled, the networks will likely renegotiate their deals with the NCAA instead of receiving a cash refund. The networks will be hit hardest by the loss of ad revenue related to March Madness, which totaled around $1 billion two years ago. The NCAA and member schools will also be greatly impacted as 72 percent of the NCAA’s annual revenue comes from the CBS-Turner deal.

Regional sports networks (RSNs), such as Sinclair’s Diamond Sports Group, make up the primary broadcast vehicles for local MLB and NHL markets. Sinclair, which recently bought the regional sports networks for $10.6 billion, will have to wait to see any return on investment due to the loss of revenue. The MLB, which postponed its 2020 season, also has a lucrative deal with Fox Sports. The network paid $500 million for the 2020 rights to many MLB games, including the World Series. Although Fox will likely recover the fees from MLB games that are not played, the network will still lose a large amount of ad revenue.

Overall, the pandemic has caused an estimated $12 billion loss in sports revenue and thousands of jobs. And, if the NFL and college football schedules are cancelled or severely impacted this fall, these numbers will likely double. According to Patrick Rishe, director of the sports business program at Washington University in St. Louis, each NFL regular-season game is worth almost $24 million in revenue from TV rights alone. In addition, the 65 college football programs in the Power 5 bring in about $4 billion in revenue each season. Consequently, if the upcoming professional and college football seasons are cancelled, the economic impact would be devastating. Luckily, the NFL is planning to kick off its season on time with the first game scheduled for Thursday, September 10, 2020.

Due to the current shutdown of sports, the leagues and TV networks must renegotiate their current deals to keep both entities functioning during the pandemic. Hopefully, as leagues like the NBA and MLS restart their seasons, rescheduled games can make up for some lost revenue and can diminish economic losses related to sports media rights.

Adjust and Adapt: “Make-Good” Provisions and Organization Revenue Post COVID-19

By: Kevin Stone

As professional teams begin to return to the playing field, many new challenges face owners and front offices as they try to honor sponsorship and advertisement agreements while still creating a safe and healthy environment for fans and competition. Front office legal teams will look to maximize their revenue both by incorporating some in-person fan experience and crafting “make-good” agreements to provide substantial alternative benefits to those enumerated in contractual language with existing corporate partners. Specifically, the National Football League (“NFL”) has been planning ahead to adjust to the post-COVID world without having to worry about suspending competition mid-season like other leagues. As states begin to reopen their economies and stay at home orders have been lifted, players are training again and legal officers in NFL front offices have returned to work, feverishly brainstorming what the return to play will look like in the fall. The State of Florida has just commenced phase two of its post-COVID economic opening plan, and after an in-depth conversation with legal officers of NFL teams within the state, one can begin to picture what the 2020-21 NFL season might look like.

The situation surrounding return to play in a post-COVID world is extremely fluid and will depend on existing CDC and governmental social distancing guidelines. Nevertheless, teams have been looking into ways to adequately distance fans in their stadiums. By creating zones within the stadium and ensuring that fans remain within their party and seat zone, teams might be able to create a live experience for fans. In addition to guidelines within the stadium, teams are also looking into ways to limit cross party interaction outside of the stadium. Tailgating zones will also likely be severely limited if fans are permitted to attend the games. Those fans looking to tailgate will probably have to remain in confined areas in the parking lots and only associate with those people in their seating party. In addition, we can expect parking spaces to be adequately distanced pursuant to state guidelines. Fans will likely have to enter the stadium with masks, during specific entry times, and may be subjected to temperature tests and waiver forms. With fans in attendance, organizations might be able to rake in at least a portion of normal attendance revenue.

As previously mentioned, “make-good” agreements will likely be negotiated with corporate partners so that teams can operate in accordance with existing sponsorship and advertisement contracts. Under “make-good” language existing in many of these agreements, a team reserves the right to modify the obligation of the agreement to provide a substitute benefit of substantially equivalent promotional value as determined by that team. It may be difficult to see how substitute benefits will manifest, but they could materialize previously untapped potential in in-person advertising, as well as television/streaming advertising. For example, teams could place corporate sponsor logos on uniforms or paint them on the field (like in college football bowl games) or on stadium inner bowl walls. Teams could even utilize property on the outside of stadiums and the property surrounding them to advertise to people that simply pass by but never set foot inside to see a game. If fan seating zones are covered with seat covers, company logos can be displayed on the tarps that cover the seats much like how logos appear on Major League Baseball field tarps. Notably, the aforementioned alternatives would require modifications of the current league rules. Alternatively, teams could opt for make-goods that do not require league rule modifications such as extending the term of deals, increasing advertising, altering team’s social media to create more impressions, or offering tickets and hospitality assets in future years as things return to normal. Furthermore, with sporting events expected to set record television and other streaming service viewership when they return, there may be ways to incorporate more advertisements during games to honor some of these existing contracts. Make-goods incentivize parties to workout mutually agreed upon alternatives in the event that the originally contemplated benefits are no longer available. In turn, both parties benefit from this good faith bargaining by avoiding breach of contract claims and costly litigation.

Make-good provisions and agreements will likely not supplement the original terms of the agreement, but they can certainly help teams maintain long term corporate partners and salvage some revenue from the 2020 season. It will likely be a challenge for teams to supplement terms of a contract with substantially equal benefits given the “new normal” and return to play. It is unlikely that the aforementioned prescriptions would adequately and effectively operate as the expressed terms of the contracts. Nevertheless, make-good provisions will likely preserve the long-term relationships between parties by preventing arduous and costly litigation on the matter.

Navigating COVID-19 as a Professional Athlete

By: Bryce Wasserman

In March, the sports world was flipped upside down with the cancellation of March Madness and the postponement of the MLB, NBA, NHL and MLS seasons. While most of the headlines have focused on the return to play plans of the major sports leagues, coverage regarding the impact of COVID-19 on professional athletes and their daily lives has been lacking.

On June 3, the University of Miami School of Law’s summer class about the impact of COVID-19 on the sports and entertainment industries welcomed Kim Miale as a guest speaker. Kim Miale is the current General Counsel of Roc Nation Sports and represents an all-star list of clients such as Saquon Barkley and Juju Smith-Schuster. Ms. Miale provided a unique perspective on how her clients are dealing with the delays caused by COVID-19, and the various off-field issues that have surfaced due to the virus. Specifically, she focused on the lack of access to training facilities for athletes and the “make-good” clauses that are being drafted to fulfill duties in existing sponsorship agreements. In addition to the Ms. Miale’s insight, I hope to give an extra layer of perspective as a current professional athlete in Major League Lacrosse. I believe there are many similarities between my experience and those of other professional athletes.

Athletes stay at the top of their game by training in the off-season. This training is usually conducted at their team’s facilities. But because these facilities have been closed due to stay at home orders, teams and players have needed to get creative to conduct workouts. Some athletes worked out with their current teammates, such as Buffalo Bills quarterback Josh Allen who organized a workout with his new rookie receivers. Others have worked out with fellow athletes in their local cities, such as Florida residents Lamar Jackson and Antonio Brown. On the coaching side, many have been in contact with their players for film sessions through Zoom. It seems this type of creative training will continue based on the NFL’s recent announcement stating that coaches will be allowed at facilities while players may not be allowed back until training camp.

In addition to complications regarding training, many high-profile athletes have dealt with complications relating to their endorsement deals with large brands and companies. Many of these endorsement contracts require a certain number of appearances and/or commercial shoots that are now unable to be completed. Rather than terminating the contracts and ruining relationships between players and sponsors, most agents are negotiating “make-good” clauses that will allow athletes to fulfill the obligations they owe to sponsors. For example, I had an agreement through my team to take part in eight appearances sponsored by Citizens Bank in Boston. Instead of participating in these appearances, I can fulfill these obligations by conducting two Zoom sessions with local youth programs for each previously scheduled appearance. Sixteen Zoom sessions will then equate to my eight initially required appearances. Many athletes have been using the power of their large social media following to negotiate “make-good” clauses by substituting appearances with posts on Instagram. Kim Miale explained to our class how Roc Nation’s social media department uses certain metrics to calculate how much a post on a certain athlete’s profile is worth in marketing dollars to a company. They can then calculate how many posts would adequately fulfill the obligations initially agreed upon. I believe these developments could lead to social media posts being included more often in future endorsement contracts as companies continue to develop and implement ways to accurately valuate an athlete’s social media following.

Stay at home orders have also provided athletes new streams of revenue, as they have been able to expand their brands through newer social media channels such as Twitch and Tik Tok. Athletes are using their unexpected free time to share and monetize parts of their lives such as their personal hobbies, which they could not previously share as frequently due to their intense schedules. One example of this is playing video games. With Twitch, athletes have been able to stream the video game they are playing to a large audience whenever they please. Fans and athletes both enjoy the interactions on the stream because they are outside the normal course of life as a professional athlete. Many Twitch streamers have been able to monetize their large followings by having advertisements, and I could see many athletes doing the same in the near future to create another revenue stream for themselves.

COVID-19 has changed the way professional athletes conduct themselves, both in their athletic activities and non-athletic activities. Amidst these changes, agents like Kim Miale have been able to help athletes earn money in new ways, while still allowing them to focus on their craft during these times.

College Athletics, Compliance, and Contracts in the Age of COVID-19

By: Jordan Gary

The National Collegiate Athletic Association (NCAA) is facing major issues regarding how to proceed with scheduled sporting events in the wake of the global coronavirus pandemic. The pandemic has affected every level of college athletics from playoff tournaments, to future scheduling concerns, to drastic financial losses for universities, with these problems only worsening as the future of this pandemic is increasingly uncertain.

In March, the NCAA opted to cancel the 2020 men’s and women’s NCAA basketball tournaments, marking the first year the tournament has not been played since its creation in 1939. The NCAA has also cancelled all other winter and spring sport championships that were scheduled. With most campuses closed down since March, many spring sports seasons effectively ended. As a result, the NCAA recently voted to give spring sport athletes an extra year of eligibility, though it excluded winter sport athletes in its decision, noting that a majority of games for the winter season were already played.

A major concern for schools with an unaccounted for group of returning athletes is whether to offer and how to fund scholarships for those athletes. The NCAA left that to each school’s discretion and offered funding through the NCAA Student Assistance Fund to help schools pay for the additional scholarships. These and other financial concerns are exacerbated by severe budget impacts as schools plan their upcoming football season.

College football is a $4 billion annual market, with the average Power 5 school generating half its athletic department’s revenue from football, and some schools generating upwards of 75% of its revenues from the sport. Needless to say, the outright cancellation of the season could gut college athletics as we know it. Estimates put football revenue loss for each Power 5 school at roughly $62 million, with $18.6 million attributable to ticket sales losses, and an additional $4.7 million attributable to loss of game-day spending by fans. Consequently, the possibility of playing without fans in attendance this fall would put a major dent in revenue, especially in light of revenue already lost from the cancellation of NCAA basketball tournaments.

The NCAA recently released a plan to help schools bring athletes back to campus for practices during the pandemic, which demonstrates the hopefulness that officials have in moving forward with the fall sports season. However, it will be very important for schools and conferences to ensure that they remain in compliance with federal, state and local guidelines to reduce liability and protect player and staff health and safety. With constantly changing CDC guidelines and regulations that vary greatly from state to state and even city to city, schools will have to adapt quickly and account for changes in laws and government regulations in the force majeure clauses of any agreements or deals they make related to the fall season. These often overlooked clauses in contracts are becoming increasingly important in sports and entertainment deals as “acts of God,” the public health pandemic, and government action prevent parties from being able to fulfill the original terms of their contracts.

In fact, force majeure clauses will be essential for schools, conferences, and the NCAA in various areas of revenue in the upcoming season. The previously mentioned revenue loss estimates do not account for potential losses in media revenue, which could have devastating impacts on athletic departments. Schools and conferences will need to carefully examine their broadcast agreements to see if force majeure clauses will allow for renegotiation of the deal due to the coronavirus pandemic. If so, schools may be able to not only save revenue losses from media deals, but potentially make up for losses in other budget areas.

Some schools have already decided to cut sports programs including men’s soccer, men’s cross country and golf, and women’s tennis. The Power Five conferences sent a proposal to the NCAA asking for, among other things, a waiver of the requirement to sponsor at least 16 varsity teams for Football Bowl Subdivision (FBS) schools. This raises potential compliance issues with Title IX requirements that a certain percentage of a school’s scholarships go to women, as well as problems for teams that operate as Olympic team feeders but lose revenue for their athletic department. While extraordinary measures will have to be taken to ensure athletic departments stay afloat in the face of hardships, the long-term success of a department could suffer if these issues are not carefully considered before programs are cut.

One way schools have tried to offset the losses in football revenue they expect to face is through pay cuts for high-earning staff such as the head coach and athletic director, who have a greater ability to absorb reductions in salary than lower earning employees. Many coaches and athletic directors at FBS schools are taking between 5-10% pay cuts for the upcoming year. Some schools are instituting mandatory time off, unpaid days, furloughs, and bonus freezes in order to save on salary costs. While this may be effective, and voluntary pay cuts can be extremely helpful, it is important for schools to consider the mandatory nature of these policies and whether it opens them up to breach of contract liability for staff members. In these instances, force majeure clauses may also play a roll if a public health pandemic is a covered event, as it may open the door for mandatory changes to be made to the agreement while ensuring it remains enforceable by law.

Force majeure clauses will end up being vital tools in the hands of the schools and conferences that had the foresight to institute them, and they will serve as a lesson to any lawyer drafting a contract or agreement in the future. These clauses, coupled with regulatory compliance and budgetary cost saving measures, may allow athletic departments to dig themselves out of a very deep financial hole due to the coronavirus pandemic.

The Legal Impact of COVID-19 on College Sports

By: Alyssa Levy

While the entire college experience has been uprooted by COVID-19, the pandemic has barred students not only from the classroom but from the fields, arenas, and stands as well. On May 27, the University of Miami School of Law’s summer class on the impact of COVID-19 on the sports and entertainment industry had the privilege of attending a fascinating webinar led by Donna Shalala, U.S. Representative of Florida’s 27th district, Tom McMillen, President and CEO of LEAD1 Association, Richard Giller, Partner in Insurance and Recovery at Pillsbury Law, and Peter Carfagna, Chairman and CEO of Magis, LLC and Co-Director of the Sports Law Track of the Entertainment, Arts and Sports Law LL.M. program at the University of Miami School of Law.

The panelists spoke to over 900 participants about the legal and financial ramifications of COVID-19 on collegiate athletics. Topics included the impact of event cancellation and business interruption insurance policies on college sports, the future insurance issues that may arise with the re-start of college sports, the cultural impact of COVID-19 on college sports, including the trickle-down effect from declining participation in youth sports programs, the consequences resulting from cutting athletic teams and programs, including Title IX considerations, and protecting against liability arising from the return of college sports. Each panelist brought a unique perspective to the plethora of COVID-19 related implications on college sports, including both the effect COVID-19 has had on universities to date and how the universities may be affected in the future.

One of the topics that the discussion focused on was what the return of college sports may look like in the coming seasons. The discussion often produced more questions than answers. For example, how will schools and athletic departments set standards on how to test their student athletes, and what will happen if opposing schools have different standards? How will schools enforce social distancing both amongst athletes and amongst fans? How will schools tackle contact tracking and approaching a student or coach that does not feel comfortable returning to athletics?

Representative Shalala voiced a concern that the NCAA must avoid the confusion that would arise if a school with one set of testing and distancing standards plays a school with a more lenient set of standards. She argued there needs to be a uniform set of guidelines set by the NCAA. For example, she suggested a regular regime on COVID-19 testing for student athletes in conjunction with guidelines set out by the CDC. Based on the fact that the test is non-invasive and could be funded by the federal government, regular testing could be a way to ensure safe practice and playing and keep up with contact tracking.

Representative Shalala’s concerns seem to be extremely well grounded, as any future in collegiate athletics without a common structure to provide consistency and direction would undoubtedly result in even further delays to an already turbulent sports season. These measures are not only necessary to provide a smooth transition back to college sports, but they are also imperative to ensure the health and safety of the players that do choose to return. While I largely agree with Representative Shalala’s opinion, I worry that a plan that prioritizes access to testing for student athletes over the larger student body might invite backlash. However, as testing becomes cheaper and more accessible this will become less of a concern.

Mr. Giller explored how schools can insulate themselves from liability by including language on the backs of tickets specifying that fans take on an assumption of the risk when choosing to attend sporting events. This can immunize schools so long as they uphold a general duty of care. Such clauses could be akin to ticket back language already used by professional teams and schools that shift liability from teams to fans for the risks involved when attending a sporting event. These types of clauses would, for example, protect a baseball team from liability if a fan is hit with a foul ball.  Mr. Giller also suggested that athletic directors should meet with their administration, general counsel, and potentially outside counsel to review insurance policies. This recommendation underscores the importance of schools’ lawyers, risk managers, and insurers all working together to instill a commercial general liability policy or business interruption policy to safeguard against potential lawsuits and revenue losses. It also seems to be the best way to ensure to ensure that all an athletic department’s bases are covered (no pun intended) as it approaches the mitigation of liability from every possible angle.

The panelists discussed issues regarding not only the safety of players and fans, but the coaching and training staff as well. One interesting idea suggested was that older coaches that are within the at-risk age range or that are immune compromised could coach from the press box rather than on the field or court itself. This forward-thinking approach is reasonable, as we have already seen this type of “socially distanced” coaching method implemented by professional teams while club facilities have remained closed. The NFL and NFLPA have implemented a voluntary offseason program consisting of classroom instruction workouts and educational programming all via videoconferencing.

Because these are unprecedented times, there is no way to know with absolute certainty what the return of college sports will look like. But recent moves by the NCAA might help predict what to expect. On May 1, the NCAA released a document entitled “Core Principles of Resocialization of Collegiate Sports” enumerating nine core principles to guide restarting sports and a three phase guide to resocialization with suggestions on everything from temperature checks to sanitation protocols. NCAA President Mark Emmert has stated that it will be up to the individual schools, not the NCCA, regarding the process for resuming college sports. The NCAA has also established a COVD-19 advisory panel consisting of leading experts in the medical, public health, and epidemiology fields, as well as college athlete liaisons to advise NCAA schools on how to remain compliant with evolving CDC protocols.  The panel can merely give advice and recommendations, but it cannot mandate what schools ultimately do. Further, on May 7, the American College Health Association released guidelines suggesting the creation of a COVID-19 Action team and action plan, heightened training and education for athletic staff, testing procedures, assessment of transmission capabilities for each individual sport, and inspections of physical facilities.

While the COVID-19 advisory panel has developed a robust set of guidelines, they may run into challenges implementing these measures due to their lack of authority. Their suggestions, while grounded in expert opinions, still must be deferential to local, state, and national mandates, as well as schools’ leadership. Further, these guidelines will likely have to be continuously modified as the government and governing committees adjust their own health and safety recommendations. Additionally, the Power 5 conferences may be reluctant to heed to NCAA guidelines, especially in light of the clashes they are currently facing over the recent name, image, and likeness developments. Nevertheless, the fact that the advisory committee has suggested a rollout of three distinct phases of resocialization will help to accommodate a broader range of national standards and provide further flexibility. If nothing else, these measures will at least serve as a reference for best practices and a general standard for schools to follow.

The chief medical officer for the NCAA has acknowledged the challenge of implementing these guidelines, emphasizing that there cannot be a “one size fits all” approach for an organization with over 1,100 members.  It seems that each regulatory body giving their recommendations has emphasized one general theme: that all practices need to be compliant with the broader nationwide, state, and local regulations to ensure the safety of the student athletes. It will be interesting to see how all the stakeholders involved in college sports respond to these broader regulations in order to navigate the return to college sports, protect their own interests, and, most importantly, keep student athletes and fans safe.