Introduction
The COVID-19 pandemic has become one of the most significant events defining the 21st Century. The outbreak of this virus has affected every sector of the society. In setting the tone for the discussion, it is essential to understand the key concepts of the topic under discourse. Coronaviruses are a group of viruses that can cause disease in both animals and humans[1]. The outbreak of the virus which can spread from person to person through close communities occurred in the late 2019 in Wuhan, a city in Hubei province of China. When people with COVID-19 breathe out, speak loudly or cough, they expel tiny droplets that contain the virus. These droplets can enter the mouth or nose of someone without the virus, causing an infection to occur[2], hence the prescription on wearing face masks particularly outdoors and in public gatherings, inclusive of sports audience in public stadia where typically individual fans almost invariably sandwiched one against another and loudly express their support for an athlete or a sports team.
Owing to the rate at which the virus was spreading across the globe, the novel COVID-19 was declared a pandemic on the 11th day of March, 2020 by the World Health Organisation[3]. The declaration of COVID-19 as a pandemic does underscore the threat which the virus poses to human existence spotlighted by the growing number of confirmed cases and mortality.
COVID-19 AND SPORTS
The success of sports in the modern society is built on the spirit of fair play and fair contest. Sports over the years have attracted large audiences and followership which makes it one of the most lucrative ventures in human history. The fact that sports thrives on its ability to attract large spectators naturally means it will be greatly affected by the pandemic.
After the outbreak of COVID-19, sports administrators all over the world were confronted with the challenge of how to best manage the impact of pandemic on sports. There was the urgent need to ensure the safety of the athletes, fans and protect the investors in the sector as there were several confirmed cases of players, coaches, club owners and sport administrators being infected by the virus[4]. The alarming rate at which the virus was spreading amongst the fans, athletes, sports executives and coaches eventually led to the decision to shut down all sporting activities around the world. Upcoming sporting events were also not spared as they were either cancelled outrightly or postponed to a further date[5].
Force Majeure and Sports Contracts
Force majeure is practically speaking an unexpected and unforeseen happening or event, making nonsense of the real or anticipated situation envisaged by parties.[6] Force majeure is a principle of law rooted in the Civil Law jurisdictions. It is basically, an event that is unforeseeable, unavoidable and external that makes the execution and performance of contractual obligations impossible.[7]
Under Common law, the principle of Force majeure does not exist, it is a creation of contract.[8] Hence, before a party can rely on the principle of force majeure, there must be a clause in the contract specifically providing for same. In most instances, a force majeure clause is always specific and provides for the circumstances under which it could be raised. In absence of such a clause in a contract, the law will not aid a party whose failure to execute his/her obligations is as a result of an external event.[9]
The singular exception/qualification to the general rule stated in the preceding paragraph is the common law principle of frustration, which relieves parties whose obligation in a contract is said to have been frustrated by an event beyond their control.[10] The old language used under Common Law in such contracts frustrating circumstances is the concept known as act of God. Notwithstanding these semantics, Parties therefore will invoke force majeure and frustration either to renegotiate their contractual obligations or be relieved of their obligation which have become impossible to perform under the contract.
FIFA officially recognised COVID -19 as a force majeure in football and declared COVID-19 as force majeure pursuant to its powers under Article 27 of the Regulation on Status and Transfer of Players which vested the body with the power to determine which event qualifies as a force majeure under the Regulation.
The Economic Impact of the COVID 19 on sports contracts
Generally, contracts in sports are no different than contracts in everyday life. Professional athletes are like accountants, lawyers and skilled employees compensated for their services just as anyone else. A sports contract is a legally binding agreement and just like any other contract, it could be subject of a breach. A contract represents the meeting of the minds of the parties. Contracts in sports are subject to the same principles of contract formation as any other form of agreement. The elements of a contract like offer, acceptance, consideration and intention to be contractually bound by the agreement are also applicable to sports contract. However, terms in sports contract owing to the nature of services rendered in most cases are express and not implied.
Sports is one of the biggest sectors in the world, by this reason, several contractual obligations running through several chains of transactions are created. There are enormous contracts related to sports law and listing all of them could be overwhelming. While some of the contracts flows from the relationship between the clubs and players, some flows from the relationship between the clubs and the service providers, between clubs, the clubs and the fans, the clubs and the organisers of tournaments, the organisers and service providers amongst several others.
This paper for case study purposes will focus more on contracts that flows directly from the relationship between the clubs and athletes, like professional service contract, endorsement contract and appearance contract.
Interpretation of Sports Contracts in a COVID 19 Situation: A Case Study
The standard contract of an athlete is usually in a boilerplate form. Contracts usually offered to the athletes are all the same other than the salary and bonus which varies in line with the assessed worth of individual players. In discussing this paper, we shall be using the general clauses common to all sports contract which are likely to be affected by the COVID-19 pandemic and the analysis below will touch on team sports where an athlete signs a contract with a club, usually.
Firstly, for a football club, a player normally covenants to give his best efforts and loyalty to the club, and to conduct himself on and off the field with appropriate recognition of the fact that the success of professional football depends largely on public respect for and approval of those associated with the game. Players must, as a duty, report promptly for matches, trainings, all club meetings and practice sessions, and all pre-season, regular-season and post- season football games scheduled for or by the club.
Under the contract, a Player also represents to the club that he is and will maintain himself in excellent physical condition. Players at intervals undergo a complete physical examination by the club physician upon the club’s request, during which physical examination the Player agrees to make full, frank and complete disclosure of any physical or mental condition known to him which might impair his performance under this contract and to respond fully and in good faith when questioned by the Club physician about such condition.
On the part of the club, the primary obligation of the club is to pay the wages, agreed bonuses of the players and provide facilities and conducive environment for the players to perform their obligations.
The pertinent question is, has the performance of these salient terms been hindered or affected by the COVID-19 Pandemic? The answer to the poser depends on the term of the contract under review. It seems that while performance of some of the players obligation appears impossible, some of the terms can still be subject of breach notwithstanding the outbreak of COVID -19 pandemic. It seems reasonable that by the cancellation of the games, ban on large gathering and imposition of curfew by government, no team will expect a player to turn up for training at the team’s training ground. The doctrine of Force Majeure or Act of God/frustration as the case may be can be invoked by the player if the club is attempting to enforce this obligation on the part of the Player.
Notwithstanding the prevailing situation of the COVID-19, a player is still bound to keep to the terms of his contract to keep fit. The concept of reasonable man test will be deployed in dealing with this kind of situation. What is expected of the player at this period is to take reasonable steps within his limits to keep his body in proper shape. A player who for example turn up obese or with a physical condition capable of affecting his performance after the COVID-19 pandemic may be liable for breach of contract. This could be more fatal if it is caused by the conduct of the athlete and his failure to take reasonable care to keep his body in shape. Force majeure or doctrine of frustration cannot avail the player if same is invoked as a defence to his conduct.[11]
On the part of the club, save for payments like match bonuses that are earned allowances tied specifically to the happening of specific events, the club is bound to pay the wages of the players. This is premised on the fact that standard contract of athlete is for a fixed period. During this period, the player cannot play for another team during the existence of the contract. He would also be payed even if out on account of injury in the course of performance of his sports contract. Since a player cannot go and play ice hockey for a team in Antarctica because there is no COVID-19 there due to his contract with his club, or would be payed when injured, then the club cannot refuse to pay his wages because the league has been suspended. Simply put, the club has bought the time of the athlete during which they have the right to deploy his services in line with the contract.
Also, players, from a finance standpoint, may be regarded as assets to the club and the club continues to take economic advantage of the player notwithstanding the fact that no matches are being played. Presence of some players in a team affects the economic value and stock of the team. The clubs also generate and or boost revenues and royalties from sales of equipment, artifacts, jerseys, sports shoes, etc on account of those players hiring into the clubs’ roster of players. When Cristiano Ronaldo joined Juventus in the year 2018, the value of the stock of the club doubled[12]. It is safe to conclude therefore that the continuous status of Cristiano Ronaldo as a player of the team impacts on the value of the club in general, notwithstanding the suspension of Italian Serie A football league.[13] FIFA by the COVID 19 Regulation has however advised players and the clubs to consider agreeing to a pay cut or deferral of some of the obligations of the club to the players to avoid a situation where clubs would go bankrupt[14].
While the obligations of parties may continue as discussed above in the short term, it may not be economically viable and reasonable to continue with the contracts if the pandemic continues for a longer period. Either of the parties may exercise its right to terminate the contract or renegotiate their obligations under the contract to reflect the economic reality. If a club terminates a contract under this circumstance, it may use the principle of force majeure or frustration to renegotiate the amount to be paid as damages to the player for the termination of the contract. Also, FIFA introduced a COVID -19 Football Regulatory Issues[15] to deal with issues relating to the tenure of contract of players. By the Regulation, the expiration of the contract of players with clubs was altered to end at the conclusion of the last match of the season irrespective of the date of end date contained in the agreement which is usually the 31st day of June 2020 when the league was expected to have ended. Also in recognition of the far reaching economic effects of the pandemic, some players have voluntarily proposed a pay cut or channelled some of their salaries as humanitarian reliefs to others[16]
Endorsement Contracts
For an endorsement contract, unlike the professional services contract, it does not involve an employer-employee relationship. Rather, it is one of contractor- independent contractor. An endorsement contract is one that grants the sponsor the right to use the athlete’s name and image to advertise the sponsor’s products or services[17]. Just like the Service contract, it is always for a fixed period wherein the sponsor may continue to use the right of the Player to sell its goods for an agreed period.
We opine that the pandemic cannot be a ground to relieve the sponsor from its obligations to the player. This is because the consequent effect of the pandemic on the business of the sponsor which is loss of profit is such which is contemplated under the contract initially and cannot come under the doctrine of frustration. It is always a possibility that the sponsor may pose loss and not make profit at the end of the financial year.
This is more so as the impact of the use of the player’s image on the profit of the company before the outbreak of the Pandemic may be beyond what was contemplated under the contract.
However, where certain agreed and numbered promotional events with timelines, perhaps quarterly, are expected to be carried under the contract but rendered impracticable by the outbreak, perhaps a different case could be made. The challenge that might be posed would then be the case of severing such obligations from others highlighted above.
Conclusion
The outbreak of COVID-19 pandemic has laced the world with several challenges. The threat of the virus to the world is damning, and the effect has been devastating. While efforts are being made to combat the virus, the resultant effect of the outbreak would be felt for years. So many contractual obligations have been left unperformed while most of the contracts don’t contain force majeure clause. Sports being one of the sectors impacted by the outbreak will have several contractual disputes which will arise in future as a resultant effect of the COVID-19 pandemic. Since resolution of sports are mainly resolved via arbitration, it is expected that some epic legal battles will ensue and landmark sports arbitral awards would result from the current conundrum caused by the pandemic in the months and years to come. These legal battles will further help to shape how contracts are to be drafted and prepare us for future occurrence which may have similar devastating effects.
By Adeyinka Abdulsalam, with contributions and research assistance from Okorie Kalu and Samuel Soladoye
The content of this article is intended to provide a general guide to the subject matter. where relevant, Specialist advice should be sought about your specific circumstances.
For more information, please contact us at info@punuka.com, or the following persons: o.kalu@punuka.com
, a.abdulsalam@punuka.com,
s.soladoye@punuka.com
[1] https://www.merriam-webster.com/dictionary/coronavirus Accessed on 27th March 2020
[2] https://www.who.int/health-topics/coronavirus#tab=tab_1 at 12:06pm
[3] https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen
[4]Popular Arsenal Coach Mikel Arteta, Players like Paulo Dybala and Blaise Mutuidi, Rudy Gobert and Donovan Mitchell of NBA all tested positive to the virus.
[5] The Olympics was moved to 2020 and the boxing duel between Tyson Fury and Deontay Wilder was postponed indefinitely. The NBA was shut down after two players tested positive. Even expected box office and grossing movies such as James Bond No time to die and Marvel movies have been rescheduled.
[6] Globe Spinning Mills (Nig) Plc Vs Reliance Textile Industries Ltd (2017) LPELR-41433
[7] (Siteresources.worldbank.org, 2020) <http://siteresources.worldbank.org/INTINFANDLAW/Resources/Forcemajeurechecklist.pdf> accessed 24 March 2020.
[8] Emma Johnson and Dyfan Owen, ‘Force Majeure Under Common Law’ (Ashurst.com, 2020) <https://www.ashurst.com/en/news-and-insights/legal-updates/quickguide—force-majeure-under-common-law/> accessed 24 March 2020.
[9] Ibid
[10] Taylor v Caldwell(1863) 3 B & S 826.
[11] Kyle Walker of Manchester City Football Club was recently subjected to disciplinary proceeding by the club for breaching the social distancing Regulation imposed by the British Government
[12] https://www.businessinsider.com/juventus-fc-stock-has-doubled-in-the-cristiano-ronaldo-era-and-its-probably-only-the-beginning-2018-9?IR=T
[13] Some recent happening appears to defy our conclusion on the issue of wages. Juventus and Barcelona Players have agreed to pay cut after extensive discussion with the club. However, it appears the pay cut agreed to by the players is based on compassionate ground rather than contractual. The players have done that to help the club to keep their staffs and avoid a situation of massive retrenchment in the system
[14] Since contract is personal between players and the club, we are yet to see how the Regulation of FIFA will play out in the scheme of things as FIFA cannot rewrite the contract between the parties
[15] March 2020
[16] https://bleacherreport.com/articles/2883722-lionel-messi-barcelona-players-to-cut-pay-70-donate-to-workers-amid-covid-19
[17] https://sportslaw.uslegal.com/sports-agents-and-contracts/sports-contracts-basic-principles/
