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.

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.