COVID-19 and the Sports Industry: Preparing for Kickoff

As some sports leagues begin to play again in these challenging times, it is important for organizations to consider each aspect of reopening and the effects on players, employees, stakeholders, and spectators. Key considerations include whether to pick up or restart the current season, health and safety measures, litigation risks, and more.

The coronavirus (COVID-19) pandemic has caused sports across the globe to come to an unexpected halt, resulting in massive financial losses and uncertainty over when and how sports will return. Now, as jurisdictions gradually relax workplace restrictions, sports organizations are facing the unique challenge of resuming live events—one of the central revenue generators for the industry—which involve hundreds of thousands of employees and fans in close contact with one another.

Resuming live sports on a global basis will have an extensive ripple effect on the rest of the industry, reinvigorating businesses in all areas of the sports world, including broadcasting and media, sports betting, sports advertising, merchandise and apparel, and travel and hospitality, among many others. All organizations across the sports industry therefore have a vested interest in supporting the resumption of live sports.

Though competing in front of packed stadiums may not be possible at the moment, several organizations have taken the lead in defining what live events may look like going forward. South Korea’s baseball league, for instance, started playing live games without fans on May 5. The Ultimate Fighting Championship (UFC) likewise resumed fights in an empty arena on May 9. The German Bundesliga became the first major European soccer league to resume live events on May 16. Though top Bundesliga games often consist of nearly 50,000 people in the stands, the league’s post-pandemic matches are being played behind closed doors. The National Basketball Association (NBA) recently announced that it may resume in July in a centralized location, and Major League Baseball (MLB) is aiming for a July opening day, pending negotiations with the players’ union over various health, financial, and labor issues.

These early reopenings could provide a blueprint for other sports to follow. Given the public nature of sporting events, it is extremely important to be thoughtful about each aspect of the reopening process and the impact on employees and stakeholders. Below are some key considerations for sports organizations determining what live events will look like in the “new normal.”

Should We Pick Up Where We Left Off or Call It Quits?

When COVID-19 began to rapidly spread earlier this year, sports were suspended immediately, and indefinitely, in many countries. As a result, many sports including baseball, basketball, soccer and rugby find themselves midseason with unresolved league positions. And when league positions can determine promotions, relegations, player compensation, and a share of significant TV broadcasting revenue, where a team ends up in the league can be hugely significant.

Take soccer in England and Wales. Promotion to the Premier League (the top domestic league) from the Championship League (one tier down) is thought to be worth around £170 million ($208 million) to the promoted team—mostly TV money. On the flip side, relegation can be financially ruinous.

Domestic leagues and teams in varying sports are therefore grappling with how to reopen and, in particular, whether to pick up where they left off or call it quits for the season (and, if so, how). Different approaches are being taken around the world, driven at times by government decisions. In the Netherlands, for example, the soccer season was declared null and void. In France, the top two tiers of soccer (Ligue 1 and Ligue 2) were declared complete on the basis of the league positions as of the date that competition was suspended. Other leagues, such as the Bundesliga in Germany, La Liga in Spain, and the Premier League in England and Wales are taking tentative steps to recommence their soccer seasons and complete all remaining matches. In the United States, the NBA and National Hockey League (NHL) have suggested that they may resume their seasons (or at least playoffs), potentially using a centralized location or a few “hub” cities as hosts for the remaining contests, while many college sports and events such as March Madness were simply cancelled. There are pros and cons for either approach.

Ending the Season

Ending the season early buys breathing space until the start of the next season, by which point COVID-19 may be under better control. It also provides time to deal with the fallout of quitting the current season while allowing the league to prepare for the next, free from the immediate demands of competitive games. The fallout, however, can be huge; to name a few:

• Potential litigation. It is inevitable that ending the season early will result in winners and losers. Some teams will be in positions in the league that they were expected to occupy and others may have been on an unusually good or bad run prior to lockdown and may find themselves ranked higher or lower than expected. French soccer club Amiens has already launched proceedings in France after the early closure of the French Ligue 1 season resulted in Amiens’ “unjust” relegation.
• Broadcasting revenue. For sports that are televised, if games are not played, sports organizations may be liable to pay significant rebates to broadcasters. Given the financial importance of broadcasting revenue to many sports organizations, this could be a major economic shock to some, particularly at a time when finances are already stretched.
• Player compensation. Many player contracts tie compensation to the achievement of certain metrics, e.g., number of goals scored, appearances made, clean sheets kept, quarterbacks sacked, innings pitched, and games won. Ending the season early may make it impossible for some players to hit their targets, and in leagues like the NBA where the salary cap is tied to the league’s revenue, failure to resume the season will result in further lost earnings. Teams may be willing to prorate incentive arrangements or make other adjustments, but they are unlikely to be obligated to do so, and the appropriate mechanism for prorating may not be obvious. Negotiations at individual and collective levels will likely be necessary.

Recommencing the Season

On the other hand, recommencing the season has its own challenges. Quite apart from the difficulties of preserving the health, safety, and well-being of all those involved (considered further below), most leagues will inevitably need to extend their existing seasons to have sufficient time to complete any remaining games. The act of extending the season can again have myriad implications, including the following:

• Sponsors and commercial partners. Many commercial agreements in the sports industry are tied to individual seasons. The agreements anticipate the exact length of the season, commencing on the opening day of the season and terminating on the closing day. They are often arranged back to back. Extending the season throws out these carefully scheduled arrangements and will likely require additional negotiations and compromises.
• Player employment contracts. As with commercial agreements, player employment contracts (including loan agreements) can also be tied to individual seasons. Player employment contracts in the Premier League, for example, always end (however many years the agreement may last) on 30 June—the final day of the soccer season. If the season is extended, new agreements will need to be reached to cover the extension. For unionized players, leagues may also need to engage in bargaining on a rushed timeline to finish out the season, which (as we have seen with the MLB) can be a complicated and time-consuming process.
• Transfer windows. Traditional transfer windows (during which teams may buy and sell players in some sports) may need to be adjusted to accommodate the delayed end to the season. The value of players is also likely to fall significantly.

Professional sports yet to commence their seasons this calendar year, such as English cricket, the National Football League (NFL) and Formula 1, are free (for the moment) of these particular difficulties. However, they too must grapple with how to get competitive sports games up and running in a safe, responsible, and COVID-19-secure manner.

Health, Safety, and Other Reopening Considerations

Perhaps the most significant step in reopening sports events during a pandemic is ensuring the health and safety of players, staff, contractors, fans, and others involved in supporting the event. Reopening plans will vary depending on the jurisdiction and sport (i.e., golf may be easier to reopen than basketball), and will undoubtedly develop over time, but generally, sports organizations should consider the following:

• Revising employee schedules for professional staff (e.g., staggered scheduling, telework for nonessential personnel).
• Physical space modifications at stadiums and arenas.
  • Limit restroom occupancy.
  • Eliminate or modify high-touch surfaces, such as replacing latch-based doorknobs with doors that can be easily pushed open or closed.
  • Determine where television crews and press will be permitted and ensure adequate distancing between people.
  • Display markings or signs reminding players and employees to maintain social distancing, avoid touching surfaces unnecessarily, wash their hands, and wear face coverings where social distancing is not possible.
• Though the nature of athletic competition will make some contact inevitable, sports organizations should also consider limiting physical contact between players where possible.
  • Separate player equipment and lockers and require players to alternate times in the locker room.
  • Prohibit players from sharing water bottles or food.
  • Ensure that players on the bench sit six feet apart.
  • Prohibit handshakes, high fives, and certain celebrations (e.g., the Bundesliga players recently celebrated using forearm touches).
  • Limit shared equipment and regularly sanitize any equipment (balls, cones, etc.) that must be shared.
• Limiting contact between fans. Many sports will initially reopen behind closed doors. However, to the extent a limited or gradual number of spectators are permitted, sports organizations will have to consider additional measures, including limiting spectator capacity, creating “zones” to appropriately distance fans, marking and enforcing distances of six feet between people waiting in line, using “virtual” queuing and electronic ticketing, and closing or modifying food service areas.
• Confinement of players/coaches/officials, including whether to require teams to play only in certain stadiums and live in designated hotels or areas during the season.
• Regular screening protocols for players/coaches/staff, employees, or other visitors. Of course, this will require broad access to fast and reliable testing. Key considerations may include the following:
  • Whether to conduct temperature screens or other symptom checks and training personnel on how to appropriately conduct screening and maintain medical/private information collected through screening.
  • When and how often to test players and traveling employees (i.e., before they get on a plane, X hours before a match, etc.).
  • Whether to conduct a trial run of testing procedures to ensure that the process works smoothly with vendors and that test results will be received promptly and will not delay events.
  • Potential compensability of screening time.
• Personal protective equipment (PPE), including whether to make masks and/or gloves mandatory, and if so, whether the employer will provide them or reimburse for them.
• Additional cleaning and disinfecting measures (including reviewing and renegotiating contracts with vendors that provide these services).
  • Regular cleaning and disinfecting of athletes’ equipment and locker rooms and public areas such as door handles, bike racks, handrails, tables and chairs, and trash receptacles.
  • Making cleaning supplies/hand sanitizer available to employees, players, and fans/visitors, if applicable.

It is imperative that sports organizations clearly document and communicate their health and safety guidelines and other policies that may change as a result of the pandemic. Employers may consider the following measures:

• Developing a safety communication plan that explains health and safety protocols; provides training to employees, including how to report violations and complaints; and establishes a point person or committee responsible for employee safety and communication.
• Establishing a procedure to address workplace exposure (e.g., separate and send home employees who appear to have symptoms consistent with COVID-19, clean and disinfect the workplace), as well as procedures for contact tracing/notification of known exposure consistent with federal or local law (see more information below).
• Asking employees to sign an acknowledgment that they have received all health and safety policies and that they agree to comply.
• Messaging to patrons via websites, social media, and signage at events, as part of the ticket purchasing process, on mobile apps, in marketing, etc. regarding health and safety requirements and expectations at sporting events.
• Reviewing vendor agreements and having discussions with hotels, food providers, cleaning companies, and others to ensure that they are also implementing appropriate healthy and safety protocols.
• Reviewing state and local orders and communicating with local authorities to ensure compliance with relevant rules and guidance, including related to health and safety.
• Reviewing policies/CBA provisions, especially in light of recent federal, state, and local legislation. Some factors to consider include leave/sick time/PTO/vacation; remote work and essential travel; how to bring employees back from furlough, including notification, phased rehiring, reenrollment in benefits, and potential new hires; business continuity and procedure; and wage and hour issues including related to player salaries, continuous workday, reporting time and show-up pay, and split shifts.
• Reviewing insurance plans and broadcasting/sponsorship agreements to determine whether changes need to be made in light of the pandemic and the structure of events going forward.
• Enforcement and accommodation protocols related to these new procedures, including processes for identifying and addressing high-risk employees and those who are unable or unwilling to return to work.

What to Do If Someone Tests Positive

Despite everyone’s best efforts to get professional sport up and running again, COVID-19 is difficult to control. We know that it can be symptomless for some (either for the first few days post-infection or throughout the duration of the infection) and it is highly transmissible, spread through physical contact and close proximity. It is almost inevitable that on recommencing professional sport, some organizations will be struck by COVID-19.

Consider, for example, UFC. One day before UFC 249, one of the fighters tested positive for COVID-19 and had to be pulled from the fight card. Similarly, shortly after the Bundesliga announced its reopening, Dynamo Dresden, a team in Germany’s second tier of soccer, announced that a number of its players had tested positive for COVID-19 and the entire team would be self-isolating for 14 days. Since then, a number of newspapers have reported Bundesliga players and teams breaching medical protocols carefully prepared for the Bundesliga restart, and a senior politician in Germany even threatened to pull the plug on the resumption of German soccer. This is the reality of the weeks and months ahead. It will be incredibly challenging to ensure that each and every team and athlete remain fit and healthy, free of infection.

But what if an individual or team is struck down by COVID-19? In addition to following local authority guidance (e.g., regarding self-isolation and seeking medical attention, where necessary), employers should proactively prepare for this situation by having clear protocols in place as discussed above. This may include contact tracing and analyzing the level of threat presented to others by assessing the degree of exposure in each case.

There is also clearly the risk that if an athlete tests positive for COVID-19, any competitions in which they were competing at the time may be significantly disrupted. Whether those competitions can continue (in an adjusted form or at all) will depend on the nature of the competition (team or solo) and the extent of disruption.

Workplace Culture

How sports organizations respond to the pandemic, the measures they put in place, and how they communicate these measures to players, fans, and staff will have a significant impact on workplace culture going forward. This is particularly true for sports organizations where events-based employees are more likely to come into close contact with others during events than, for instance, office-based employees or those who can continue teleworking. Getting through this period with minimal disruption will require the cooperation and resolve of all stakeholders— players, staff, officials, partners, and vendors.

Organizations that inform and consult, listen and adapt, and motivate and train will find it easier to secure the buy-in of their players and staff. Processes and working arrangements will likely need to change; embracing that challenge by making positive adaptations—not just temporarily but potentially permanently—to improve the working lives of staff will pay dividends in terms of focus, morale, and productivity.

PR and Litigation Risk

The sports organizations that reopen first will find themselves under close public scrutiny. As the CEO of Deutsche Fuβball Liga reportedly commented, the reopened Bundesliga is currently “on parole” and reputation is a risk because “no one was in this position before.” Governments, authorities, the media, other sports, and the public will be watching to see how the inherent COVID-19 risks are managed. Is player and staff safety maintained, including the safety of their families? Are risk protocols followed at home, in training, and on event days? Is sporting integrity maintained? Is any strain being put on local (publicly funded) health resources?

The complexities of managing COVID-19 in the workplace create increased risks, and there will likely be an increase in litigation in the short term. In addition to the litigation risk related to ending seasons early, sports organizations will likely be faced with negligence and whistleblowing claims, contractual claims (e.g., related to cancellation of events and risk management arrangements), health and safety claims, and harassment complaints (e.g., failure to respect personal space or comply with safety guidelines).

Sports organizations should also expect spikes in employee grievances and incidences of employee misconduct as employees adapt to their new working arrangements.

Meeting the Challenge

There are numerous obstacles awaiting sports organizations as they return from the unexpected COVID-19 offseason. Overcoming these obstacles will require proactive thinking and creative solutions that keep players, employees, and stakeholders healthy and safe. But, in a world craving some sense of normalcy and hope, sports may provide a much needed boost to the economy and give us something to root for.

Coronavirus COVID-19 Task Force

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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
Thomas A.J. Twitchett

Orange County/Washington, DC
Jeffrey S. Moorad

Boston
John J. Concannon III

New York
David A. McManus

Washington, DC
Sharon Perley Masling