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.