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COVID-19: What’s Next for the English Premier League?

April 09, 2020

The threat of coronavirus (COVID-19) has caused a sudden, unprecedented disruption to many areas of our lives. The decision to suspend the English Premier League (PL) is far from the most important or immediate concern, but it does factor as one of the many social, cultural, and financial fallouts of the crisis. We explore some of the legal issues arising out of the current suspension of the 2019/20 season and the legal challenges the PL and its key stakeholders will be considering in relation to the prospect of a total cancellation.

Legal Implications of Cancelling the PL

The PL is currently suspended indefinitely following the recent announcement that the season would not resume in May 2020 as proposed in its original 20 March announcement. Reports indicate that the season may resume in June 2020 although this is increasingly in doubt.

It is clear that the PL is seeking to avoid cancellation of the remainder of the season. One reason for their reluctance is that the decision to cancel would require the unpicking of a myriad of contractual relationships, including the clubs’ league memberships, the employer-employee relationships, suppliers, sponsors, and broadcasting rights agreements. Cancellation would require these contracts to be terminated through the contractually agreed mechanisms or applicable common law principles:

  • Force majeure: contracting parties often include force majeure clauses by which they agree to a release from their obligations on the occurrence of certain events. In this case, the force majeure clause would need to apply to the occurrence of a “disease” or “pandemic.”
  • Frustration: Where there is no applicable force majeure clause, parties can seek to rely on the doctrine of frustration by which the parties are released from their contractual obligations. It applies where an intervening event has occurred which, through no fault of the parties, so significantly changes the nature of the contract that it would be unjust to hold them to the outstanding contractual rights or obligations. In essence, it will apply where the event has rendered the performance of the contract impossible. This is a high threshold and the doctrine does not apply where an event is contemplated by a force majeure clause.
  • Termination: where the parties cannot rely on a force majeure clause and are unable or unwilling to pursue a case for frustration through the courts, parties could seek to minimize overall losses by terminating contracts, whether pursuant to the contractual terms or at common law.

Looking at the PL itself, there is no easy route to cancellation. Each of the PL clubs are shareholders of the PL and their membership constitutes an agreement to comply with the Premier League Rules 2019/20 (PL Rules). While the PL Rules set out detailed terms on the functioning of the league, describing the obligations owed by the clubs to the PL and to each other, they do not contemplate force majeure events. There is nothing in the rules addressing the approach to be taken in the context of an event like the COVID-19 outbreak. In fact, the PL Rules are drafted on the premise that each season will reach its conclusion and that the cycle resumes again. This contrasts with similar regulations such as the Champions League Regulations 2019/20, which provide for “unforeseen circumstances” (Article 83) and give full authority to a UEFA Emergency Panel to make a decision.

The absence of a force majeure clause leaves the door open for clubs to challenge the PL on any decision to cancel the remainder of the season. Liverpool FC was only two wins away from winning the PL title and they would certainly object to the season being voided in its entirety, as some have proposed. Similarly, those clubs in the relegation zone  would no doubt strongly oppose relegation after an incomplete season or would presumably at least argue that it could only be done on the condition that they receive greatly enhanced solidarity payments from the PL.

The question of broadcasting agreements will also be a primary concern for the PL. The PL estimates that 70% of the UK population has watched the 2019/20 PL season on television and its broadcasting rights are a multibillion-pound revenue stream. The PL will need to consider as a first priority the scope of any force majeure clauses in its broadcasting rights agreements. If they cannot rely on force majeure, they will have to argue that its broadcasting rights agreements have been frustrated and that it should be relieved of its contractual obligation to perform the full season of matches.

There are also a number of employment issues that could arise from a cancellation, in an industry where workforces are hired on a season-to-season basis. Players themselves could potentially be deprived of bonus payments that are based on their individual performances and comprise a large proportion of their remuneration. The PL has already asked players to accept a 30% wage reduction in view of the ongoing suspension and reduced cash flow.

Suspension Is Not Without Issue

Even if cancellation is avoided, a number of other legal issues will arise. Many of the clubs’ suppliers – such as facilities management services, security firms, IT services, or waste removal companies – will be on season-long contracts. Each of these contracts will have to be reviewed and potentially renegotiated.

There is also the question of those players whose contracts expire at the end of June 2020. It is understood that FIFA has established a working group to consider temporary amendments to player contracts. It is a very unusual situation for clubs to be openly reviewing player contracts at any time other than during the January transfer window or the summer break.

There is unfortunately also the prospect of insolvency issues arising among clubs that are less financially stable, although this predominantly applies to the lower league clubs. Although not in the PL, Yeovil Town was one of the first to report that its players and staff are set to take a pay cut to tide the club over in the absence of stadium receipts and its other usual income stream during the season suspension. There are also questions over whether the financial fairplay rules will have to be relaxed for the PL clubs in circumstances where their usual revenue streams are so heavily disrupted.

Other more concerning potential legal cases will also arise. Fans, players, and other support staff might argue that clubs breached their duty of care to them by continuing to hold matches after the outbreak of COVID-19 in the United Kingdom. The final PL match before the suspension was played just 24 hours prior to the official government advice to cease large-scale gatherings.

Concluding Remarks

At this stage, it is not certain whether the PL will be able to conclude the 2019/20 season at all. The decision is out of anyone’s control and other major sporting events, including the 2020 Wimbledon Championships that were scheduled to take place in late June, have already been cancelled. If the season is cancelled, a number of legal issues will arise, not least the question of who should be promoted or relegated in circumstances where the clubs and leagues have not contractually agreed how to address a situation like the COVID-19 outbreak.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

London
Louise Skinner
Melanie Ryan

Orange County
Jeffrey S. Moorad

Boston
John Concannon