Coronavirus: The Premier League v the Broadcasters – a clash of titans?
As we all come to terms with the new working environments and lifestyles imposed on us by the Coronavirus pandemic, one question that continues to be asked is “will the 2019-20 Premier League season be completed?”
Following the Premier League’s announcement last Friday that the season would only be completed if it is “safe and appropriate to do so” and that any return would only be with the “full support of the Government and when medical guidance allows,” the answer to this question still remains unclear.
Some argue that, given the circumstances, completing the season shouldn’t be a priority, and that the time, money and resources that would be necessary to complete the season would be better utilised elsewhere.
On the other hand, a return of Premier League football to our screens – even if the remaining games were to be played behind closed doors – would no doubt be a major boost to both the country’s morale and to the economy.
The Premier League – and its clubs – have a separate interest in completing the season, and that is to avoid the financial liabilities to broadcasters that might be incurred if the season is not completed. Existing broadcasting rights deals see the Premier League receive around £5bn from domestic broadcasters Sky Sports and BT Sport, and around £4.35bn from international broadcasters. The Premier League then distributes the monies to clubs based on factors including each club’s number of TV appearances, their final positions, and fixed participation fees.
The Premier League has already been paid the entirety of its broadcast money for the 2019/20 season – it receives its fees in two annual instalments, August and February – but it has been reported that broadcasters would seek to be paid back a total of £762 million should the remaining games not be played, as they would consider the Premier League and the clubs to have breached their contracts with them.
A force majeure clause, in England and Wales, is a clause that exists in commercial contracts whereby a party is freed from certain (or all) obligations under a contract if certain extraordinary events that are beyond the control of the parties occur.
Force majeure is not a concept under English law and therefore its applicability (to contracts governed by English law) is determined strictly by the terms of the contract. English courts construe force majeure clauses narrowly - i.e. if an event is not listed in the clause, it is unlikely to be considered as a force majeure event.
The Premier League and the clubs will likely be reviewing their contracts with broadcasters to see whether the force majeure clauses cover pandemics, to what extent they are covered, and whether they are subject to any mitigation clauses.
For example, if a force majeure clause does cover pandemics (which in itself is not a given and will depend on the drafting), but is also subject to a mitigation clause, the broadcasters may argue that measures to mitigate the effects of the pandemic – such as playing matches behind closed doors – could be taken, and that therefore the force majeure event hasn’t made fulfilling the obligation impossible.
On the flip side, French broadcaster Canal+ has informed the French professional football leagues that, invoking its force majeure rights, it will not be paying its next instalment of broadcasting monies, totalling 110 million euros.
In contrast to the position under English law where the applicability of force majeure is determined by the terms of each individual contract, in French law it is a defined concept. Article 1218 of the French Civil Code provides a specific criteria that defines a force majeure event. The occurrence of such an event justifies suspension or termination of a contract, even if the contract does not specifically include a force majeure provision.
Other jurisdictions will have different principles relating to force majeure, and so in addition to checking the material terms of their contracts, the Premier League, clubs, and broadcasters will also need to consider the governing law of each contract.
The Wider Effects
If the season is not able to be completed, then whether the Premier League and its clubs reach a settlement agreement with broadcasters or whether the dispute proceeds to litigation remains to be seen.
There is no doubt however that broadcasters will feel aggrieved that they had paid significant sums and not been able to broadcast any football. On the other hand, the Premier League’s statement last week confirmed that its priority was the health and wellbeing of the nation.
It is also clear that, in the interim, both sides of the dispute will have important commercial decisions to make.
Premier League clubs Tottenham Hotspur and Newcastle United have confirmed that they will be placing non-playing staff into furlough and seeking government assistance under the Coronavirus Job Retention Scheme in order to pay those staff. The decision taken by these clubs to request taxpayer funds to pay non-playing staff, whilst players may be earning up to £200,000 a week, has attracted criticism from both fans and MP’s.
Meanwhile, Sky Sports and BT Sports are suffering from both:
- loss of subscribers due to the lack of sports (and in particular, football) that they are able to show at the moment; and
- loss of advertising revenue due to the most lucrative advertising windows – those before, during and after Premier League games – currently not existing.
The loss of revenue that will arise from this may mean that their bids for future Premier League broadcasting rights will be reduced – which would ultimately mean less money for clubs to spend on high-profile players.
It goes without saying that these are unprecedented and strange times. However, we are continuing business as usual, and both our Commercial and Commercial Disputes teams are on hand to assist with any issues that clients in the Sports, Retail and Technology sectors may be facing.
News & Insights
COVID-19: Considerations for companies
An essential toolkit setting out key issues that companies and directors should consider during this uncertain time.
Digging deep into Rugby Union’s salary cap: Lord Myner’s Review and the future
2020 has been a tumultuous year for professional sport and in particular for Rugby Union.
Furlough fraud and other errors in coronavirus support claims: last chance saloon
Hugh looks at the recent clamping down of abuse of the furlough scheme by HMRC and the impact of the Finance Act 2020.