Beware the yellow vests: cancellation of sporting events and rights holder - broadcaster disputes

With the ‘yellow vest’ protests sweeping France, causing significant civil unrest and diversion of police resource, in December 2018, the Ligue de Football Professionnel (LFP) took the decision to cancel and reschedule twelve Ligue 1 matches and a cup semi-final. This decision is now the subject of a legal claim by the LFP’s media rights partner, Canal Plus, alleging lost revenue caused by the cancellations.

The dispute

Canal Plus allege that the LFP rescheduled the postponed matches on unfavourable dates, with 8 out of 13 postponements being moved to weekdays rather than the weekend primetime slots of the original games. As a result, Canal Plus claim to have experienced a 37% drop in excepted audience for Ligue 1 games and a higher than usual number of subscriptions not renewed. Canal Plus have also accused the LFP of taking decisions to rearrange matches unilaterally and failing to involve it in the search for a solution. The LFP refutes all of the media company’s allegations.

Although full details of the case are not public, the claim likely faces a number of hurdles, including establishing that the LFP’s actions were a breach of contract and proving actual loss of revenue.

Cancellation risk

Sporting events are not unique in being susceptible to cancellation, but security concerns, police requirements and issues with venues can all lead to cancellation (as well as rain in England during a Cricket World Cup). Recent examples include the shutdown of British horseracing following an equine flu outbreak in February 2019 and the cancellation of Manchester United’s home match against Bournemouth in May 2018 due to a bomb scare.

However, legal disputes following cancellation are rare as rights holders and broadcasters typically enter into long term arrangements and wish to maintain good working relationships following a cancellation and further the contracts expressly deal with cancellations.

Contractual provisions and force majeure 

Given the inherent risk of cancellation, it is typical in media rights contracts for sporting events to contain detailed provisions relating to cancellation. These provisions often include;

•  obligations on the rights holder to reschedule the cancelled events;
•  a mechanism for reduction in rights fees if the event cannot be rescheduled (or is rescheduled for a less-favourable time);
•  force majeure provisions which provide a release for the rights holder from liability (possibly including no reduction in rights fees) if the event is cancelled due to a force majeure event; and
•  whilst it may not be a contractual obligation, one or both parties will often seek insurance policies against certain risks of cancellation.

Even with detailed clauses, there is often room for dispute, for example, regarding the classification of particular circumstances as a force majeure event. It may be that Canal Plus will dispute as assertion from the LFP that the yellow vest protects constituted a force majeure event.

Summary

Contractual provisions are fundamental to allocating risk between the rights holder and broadcaster for cancellation and liability will often turn on the reasons for cancellation. As cancellation will be a lose-lose scenario, often with high stakes, careful planning is required to mitigate the impact, including a clear plan for working with broadcast partners to reschedule events.

As the Canal Plus case demonstrates, where relationships between rights holders and broadcasters break down, the potential for legal claims cannot be discounted.