Much has been written about the devastating impact which the coronavirus is set to have on the sports and wider entertainment industry – as a result of the unprecedented disruption caused by the global pandemic.
There is no doubt as to the potentially significant long-term social, economic and commercial impact on stakeholders right across the industry: whether rights holders (governing bodies, federations, clubs and event organisers), broadcasters, brands, sponsors, commercial partners, suppliers, venues or service providers. Those affected will have a vested interest in the hosting of live events at physical venues, but also the marketing, advertising and promotion of these events online.
It is important, however, not to overlook the individuals at the very epicentre of the industry, and what the worldwide health crisis is likely to mean for them in both the short and longer term.
This article looks at some of the practical, commercial and legal issues that talent and their representatives should be alive to in light of the ongoing uncertainty: whether players, athletes, influencers, gamers or online talent.
The current position
The spread of the virus has led to a host of unprecedented postponements and cancellations across the world of domestic and international sport. Elite football in the UK and Ireland has been suspended for a minimum period of a number of weeks, and the postponement of Euro 2020 is all but certain.
Athletes should carefully review the terms of their existing player contracts or participation agreements and seek clarity from their employers as to possible scenarios.
A growing number of other international competitions across traditional sport have been affected, including the London Marathon, the Six Nations, Premiership Rugby, UEFA’s Champions league and Europa League, England’s Test cricket series in Sri Lanka, as well as major global events in tennis, golf, Formula 1, Formula E and cycling. The responses at the top layers of elite international sport have in most cases trickled down to the lower levels of domestic and grassroots competition too. There have been numerous examples of squad wide quarantines and self-isolations off the back of individual players and staff testing positive in various sports.
The esports industry has been similarly affected. Many tournament organisers have cancelled, postponed or adjusted events. Most notably the League of Legends European Championship (LEC) has suspended its spring season indefinitely and major international events have been cancelled across CS:GO, Overwatch, Dota 2, Call of Duty and FIFA to name but a few.
Key issues for Talent
- Player contracts and on-field deals
The uncertainty around whether the 2019/20 domestic season will be able to be completed creates a myriad of issues for athletes in the context of their contracts with their club or employer. For example, if the current domestic football or rugby season continues on into the summer and beyond, there will be question marks surrounding players whose contracts come to an end on 30 June 2020. Whilst there is an onus on clubs to take proactive steps to engage with players and agents who fall into that category, and indeed consider their strategy for registering new players for the remainder of this potentially extended season, players themselves, and their agents, should be proactively planning for the various possibilities.
There is no doubt that clubs across numerous sports will face significant financial pressures due to the loss of match day revenue during any period of postponement. Whilst players will continue to be entitled to their wages, clearly performance-related bonuses will be affected. One legitimate question which has already been raised is whether football’s financial fair play rules should be relaxed, or event temporarily suspended.
In the football context, there will inevitably be players and agents assessing their options for potential moves to new clubs during the summer 2020 transfer window. The position remains that the window will close in the UK on 1 September 2020. Whether this is likely to change or not given the possibility of an ‘extended’ season, is obviously far from clear, and any changes will need to be communicated in advance by the relevant league body.
It would be sensible for Talent or their representatives to review any existing commercial deals to identify any ‘red flags’ and assess whether there is a need to take proactive steps to mitigating any risk.
Athletes should carefully review the terms of their existing player contracts or participation agreements and seek clarity from their employers as to possible scenarios. The same should be said for individual athletes in sports such as tennis or golf, who as independent contractors face the prospect of losing out on significant revenue due to not being able to play for prize money.
- Existing commercial deals
It would be sensible for Talent or their representatives to review any existing commercial deals to identify any ‘red flags’ and assess whether there is a need to take proactive steps to mitigating any risk. This could involve initiating conversations with brand partners to ensure minimal disruption to brand campaigns or endorsement deals.
From a legal perspective, in many cases contracts will include “force majeure” clauses, which state that the parties are effectively released from performing their obligations if a specified event outside of the control of a party takes place. The way in which this clause is drafted and specifically how a “force majeure” event is defined, is key. I.e. whether a “pandemic” is expressly stated as being a “force majeure” event will be significant in informing what the Talent’s and brand’s respective rights and obligations are.
The sensible approach for a Talent to take is to proactively try to find solutions by working collaboratively with brand partners. For example, if a Talent is being engaged by a brand to deliver services as part of a digital campaign related to a specific event (such as, for example, Euro 2020 or the London Marathon), it would seem sensible to vary the contract to allow for the rescheduling or amendment of the services. Likewise, if being quarantined or having to self-isolate, or being restricted from travelling, prevents a Talent from delivering the services as part of the campaign or partnership, exploring creative ways of finding solutions makes sense.
- Should new commercial opportunities be ignored?
There is inevitably a risk that the current uncertainty will lead to a natural decline in brand-related activity – whether endorsements, sponsorships or online campaigns. This is especially the case for activations related specifically to events or competitions directly affected by the responses to the virus. That said, there is nothing stopping Talent from pursuing new commercial opportunities. When doing so, however, it will be crucial to ensure that the drafting around “force majeure” in the contract with the brand is sufficiently robust. Ideally, there should be a degree of flexibility in the contract around what happens should the campaign or partnership be affected by coronavirus.
A “force majeure” clause will often state that after a period of time, the party affected by the event will be entitled to terminate the contract. Talent and their representatives should consider sensible wording around the parties committing to working together to agree a rescheduling of the services at the next available date, should the disruption continue. This is particularly relevant where a campaign or partnership relates to a specific event.
If a Talent wishes to partner with a brand as part of a global campaign involving overseas travel (for example, to attend video shoots or promotional events), thought will need to be given to what happens should a travel ban prevent the Talent from delivering the services, or indeed if a Talent feels uncomfortable traveling because of the risks to his or her health. These scenarios should ideally be factored into any contract negotiation and documented in the agreement itself.
It is worth noting that clubs, governing bodies and national team associations have duties of care towards their athletes and part of that duty relates to an individual’s health and wellbeing.
On one hand, there is a risk that brands’ budgets for these types of campaigns will be significantly reduced going forwards. On the other hand, there is an argument that the next few months will present a unique opportunity for Talent and brands to fill the void left by the lack of live sport by pushing out quality and engaging content online.
Finally, Talent should pay close attention to how payment terms are structured to ensure they are fairly remunerated for work carried out even if campaigns do not complete.
- The power of an online post
The profile of athletes and online talent, and the level of interaction and engagement through their social media channels, means that what they say and post online takes on heightened importance in times like these.
For the most part, this should be seen as a positive for Talent. Already we have seen numerous examples of athletes posting positive and in some cases inspiring messages of support, by emphasising that looking out for the health and wellbeing of others is more important than the results of a league or competition. The exchange on Twitter between Manchester City FC and Southampton FC is another example of a creative way of engaging with fans online. However, Talent should be alive to the risks associated with social media too. A post can go viral within seconds and will be monitored closely by clubs, governing bodies and commercial partners. As tempting as it might be to be critical or negative of others (whether sporting bodies, government ministers or world leaders) for their responses to the pandemic, Talent should ultimately think before they post and recognise the potential damage of saying something that could be construed as being insensitive or offensive.
- The importance of following advice and guidance
Talent should ultimately listen to and stay abreast of official guidance from key stakeholders. This is first and foremost, the UK or Irish government (as applicable) and the World Health Organisation, as well as the relevant national federation or governing body in the sporting context. It is worth noting that clubs, governing bodies and national team associations have duties of care towards their athletes and part of that duty relates to an individual’s health and wellbeing.
Concluding thoughts
There remain many ifs and buts, and plenty of unanswered questions, such is the unprecedented nature of how the Covid-19 crisis has impacted the world of sport and entertainment. Much of this uncertainty relates to how clauses in contracts are to be interpreted, who will share the commercial risk, and what this means for a Talent’s ability to earn a living and commercialise his or her image.
Whilst legal disputes are in some cases inevitable, it is hoped that from a Talent perspective, there will be ways of finding sensible and reasonable solutions when dealing with employers, regulators and brand partners – by taking a transparent and collaborative approach. Nevertheless, Talent and their representatives should be alive to the challenges posed by the ongoing disruption and the impact on their current and future contractual and commercial relationships.
Jonny Madill is a Partner in the Sports and Esports Group at sports, media and entertainment law firm Sheridans. He advises athletes, influencers, clubs, governing bodies, federations, event organisers, sponsors, brands, agencies and esports organisations. You can follow him on Twitter at @jonnymadill07 and @sheridanssport and contact him at jonny.madill@sheridans.co.uk.
