The force majeure event must be the cause of the non-performance (or the “delayed” or “disabled” execution, if covered). It would therefore not be possible to argue that compliance with obligations that arose before COVID-19 is excused. Again, this will be a key issue in the future if the events are legally justified, but there may be other reasons why organizers or others cancel. As COVID-19 continues to impact the world of sport and sports institutions strive to create contingency plans, we encourage sponsors, leagues, universities and teams to seek advice as soon as possible to assess and understand all contractual rights and options. Informed discussions should be conducted immediately by sponsors and various sports organizations to protect their interests under various sponsorship and other agreements with sports leagues, teams, universities and venues. The world of sport has been shaken by the current crisis, with Formula 1, national and European football competitions and the 2020 Olympic Games in Tokyo (among others) suspended or postponed indefinitely. Below we look at the impact on sponsorship agreements related to these events and the teams or players participating in them – in particular, can sponsors opt out or renegotiate their terms? In our experience, the starting point will be any explicit provision that deals with how replacement or renegotiation rights are agreed upon and, if not, how refunds operate and are evaluated. In the agreements we see, there are usually standard provisions that can even assign reimbursement values to individual rights. However, these provisions will not always be in place and, even if they are, they may not explicitly provide for how to deal with complete and extended cancellations. In those circumstances, the starting point would be the force majeure clause. If this is the case, the performance of the contract may be excused until the obstacle to performance has been removed.

There are a number of ways an event could be affected by COVID-19, including cancellation, postponement, and modification. Some or all of the events covered by an agreement may be affected. In most cases, it is not enough to rely on a standard force majeure or termination clause, and specific wording is required to cover each applicable scenario. Most people assume that force majeure means anything beyond the control of a party. In fact, the term “force majeure” has no specific legal meaning in English law. Rather, it is a general term for a type of clause (and the entire law used to interpret it) that defines what should happen when certain events occur that affect the performance of the contract. Force majeure clauses can be formulated in several ways, and the effects of the clause depend exactly on the wording used. For this reason, a review of each individual clause is essential. The COVID-19 pandemic has already had a significant impact on sponsorship contracts.

Many events – including the Tokyo Olympics and the Glastonbury Festival – have already been cancelled, and many more are at risk of being cancelled, postponed or changed. How does this affect current and future sponsorship contracts? Most sports sponsorship contracts are written in such a way that it is the team or site that commits to perform. For example, the team or venue is required to place a sponsor`s logo in certain places or say the sponsor`s name a number of times. Therefore, invoking force majeure in sponsorship agreements would generally benefit teams and venues, as they would be exempt from their obligation to display a sponsor`s logo or mention a sponsor`s name at events. In this sense, the pandemic has put sponsors in a more difficult position, as they have spent money to promote events that might never take place. Conversely, it was not clear that teams and sites could invoke force majeure, as many contracts did not specifically provide for pandemics. Sporting events are cancelled, postponed and postponed almost every day. Sponsorship agreements are often referred to by both parties as “partnerships” that build valuable, long-term business relationships.

It is not uncommon for both sides to try to preserve these relationships in difficult times. Admittedly, mutually agreed commercial solutions are generally preferred to litigation or arbitration. The exemption from force majeure is not available if the consequences of force majeure events could have been avoided or mitigated. This means that before a party can invoke the force majeure clause, it must first consider whether it can reasonably do anything to mitigate the problem in question and, if so, must do so. 2. Maintenance and capital expenditures. Most sponsorship rights involve some level of initial installation and subsequent maintenance on the respective site, especially if they are signage or naming rights. Therefore, site owners and developers should review their sponsorship agreements to (i) determine which maintenance and investment obligations apply, (ii) what licensing requirements may come into effect before these obligations can be met, (iii) which party is responsible for implementing and paying these obligations (may not be the same party), (iv) whether there are funding limits for the bonds. to the party paying such fees and expenses, and (v) if there are grounds to apologize for performance, such as.B.

force majeure (see below). In the context of COVID-19, the parties` original intention may be thwarted (at least temporarily), but they may also find it advantageous for both parties to change their maintenance and investment obligations to a level equivalent to reducing the operation of the respective venue. On 7 May 2020, the UK government published recommendations on responsible contractual behaviour when the COVID-19 emergency is affected. It is only a guide and therefore does not override the rights of the parties under a contract or common law. However, the scope of the areas in which the parties are expected to behave “responsibly and fairly in the national interest” in the performance and execution of their contracts includes issues such as the assertion of violations and the opening of proceedings, and is a relevant consideration in addition to the possible applicability of force majeure and our best advice for the design of sponsorship contracts in the future. The impact of COVID-19 on the sports industry is already widespread and far-reaching. Professional leagues abruptly suspended their schedules, colleges and universities ended their spring season without crowning new champions, and sports venues in all categories were effectively left in hibernation during the crisis. Following an unprecedented and seemingly endless series of event cancellations, event owners and sponsors must now dust off their sponsorship deals and review some basic regulations. Site owners will be primarily motivated to reduce their financial exposure to sponsors, while sponsors will strive to ensure that they balance their business interests under the original agreement. While many of these points are often seen as hypothetical concerns for lawyers, they are becoming increasingly relevant (and real).

Below are some of the key sponsorship arrangements that should be evaluated as site owners respond to their sponsors in the midst of the COVID-19 pandemic. The parties may also consider negotiating an amendment to the agreement to preserve the business relationship, share risk and achieve certainty. This is all the more true since the only certainty at the moment is uncertainty: the parties may have to be flexible where there has been only rigidity so far. Variations could include extending the duration to future/replacement events, different payment obligations and replacing sponsorship rights. There may be a temptation to agree on a simple, informal variant via email, but given that compliance with sponsorship rights and related provisions (such as early termination, pre-emption rights, and exclusive renegotiation windows) is timely critical and sometimes depends on other provisions, it would be safer to make formal changes. During the COVID-19 pandemic, the cancellation of events will be required by law in some cases; in other cases, there may be pressure from organizers, governing bodies, participants or others to cancel, postpone or modify the event. .