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COVID-19 - Summer of Sports and Music Events - Public gatherings illegal - Events to be cancelled or postponed - Legal considerations for promoters, performers, sponsors, broadcasters, spectators and corporate entertainment.15th April 2020 Sports Law
The notoriously fickle weather of the English summer means outdoor sporting and music events have always been prone to potential cancellation or postponement. Events have also been cancelled or postponed based on police advice as a consequence of public disorder/ terrorist attacks. Accordingly event organisers and promoters have for some time factored in such potential occurrences in insurance policies and contracts.
The Covid 19-crises has however added another dimension in that such events would be illegal at this time given the ban on gatherings of more than 2 people. The initial government response to the crises enabled events such as Cheltenham Festival and football matches to proceed. A decision which has been criticised in hindsight. Then it was announced that Emergency Services/Police support would not be available which meant several events had to be cancelled or postponed but some continued. As matters currently stand all public events are illegal which whilst bringing clarity as to whether an event can proceed at this time has brought uncertainty as to how long that situation will last.
Each event organiser has had to take a view as to whether to hope for the best, or to make an early call to cancel or postpone the event. This requires a review of several factors including insurance, contracts and legal principles.
The legal principles that apply to events being cancelled now are however different to those being applied to future events. An event organiser contracts with several different stakeholders including performers, venues, broadcasters, spectators and sponsors. If an event was due to take place during the lockdown it would be illegal for the organiser to perform those obligations. The organiser has to assess the effect of that supervening illegality on its contractual obligations.
Firstly does the contract cover what is to happen in those circumstances. The contract may have a ‘force majeure’ clause. Ironically, my colleagues Richard Parkinson and Claire Brown displayed remarkable foresight in producing a blog on Coronovirus and Force Majeure way back in early February before the crises had taken hold. I say ironic because as they point out a force majeure event is one that is normally defined in a contract as an event that cannot be reasonably foreseen.
Contrary to popular belief there is no legal doctrine under English law of ‘force majeure’. It only applies if the parties expressly include it by consent. It is normally applied in the context that a party who relies on it can demonstrate the event falls within the scope of the clause, was outside their control and that performance is not possible as a result even if reasonable steps are taken.
Force majeure is normally applied to situations where performance is possible but significantly altered. Where performance is possible but vastly different to what was contemplated the issue would be dealt with by a clause governing ‘material adverse change’. For example if a football match can go ahead behind closed doors that is vastly different to what was contemplated but nevertheless is still a football match so arguably has not been prevented by force majeure but rather falls to possibly be dealt with as a material adverse change due to the obvious significant loss in revenue associated with the match.
The organisers must consider whether the current situation means the event has to be cancelled or postponed. It is stating the obvious that public gatherings are not going to be banned indefinitely. There will be an end to the crises just no one knows when. At some point it will no longer be illegal to hold a particular event. Whilst an organiser can say now that it cannot perform its obligations on the grounds of illegality that explanation may not be available in the future. Accordingly an organiser who wants to postpone the event will argue the current situation suspends their obligation and so suspends the contract. This would be the case with say a music concert that has been rearranged to the end of the year. Alternatively the organiser may seek to simply cancel the event without liability.
What if however the artist/Performer does not want to be contractually obliged to take part in the rearranged date in the event the promoter rearranges the event. If the promoter seeks to argue the contract has been frustrated in the absence of a force majeure clause the legal position will depend on whether the delay materially alters the nature of the contract .
Similarly a promoter may seek to argue the Covid-19 situation frustrates the contract and so they can cancel it without liability.
A contract is also not likely to be frustrated if it would be possible under the contract to delay performance for the period the laws responding to COVID-19 are in place, and that delayed performance would not be substantially different from what the contract envisaged.
The effect of frustration is to discharge the parties from further performance obligations under the contract however it preserves accrued liabilities and obligations including ay payments that might be due.
What is also happening however is that some event organisers are cancelling events further in the future even though they may still be able to take place in theory if the government restrictions are lifted.
Some organisers such as the All England Club and the Royal and Ancient have made an early call to cancel Wimbledon and the Open Golf Championship respectively. It is no coincidence that both had the benefit of similar insurance policies which meant outright cancellation was probably the best commercial option. Not all event organisers will have such comprehensive policies that cover events such as the Covid 19 outbreak.
It would seem the organisers of Wimbledon and the Open Golf championships regarded postponement as not an option so the events had in effect been ‘frustrated’. Compare that with the US Open Golf Championship which has merely been postponed.
Wimbledon and the Open Golf were due to take place in July. It may well be that come July the actual staging of those events would be feasible under government restrictions however the organisers will also have factored in the period of organisational preparation for events of that size. Also by cancelling the event they will be able to furlough staff that would otherwise have been involved in preparation for the championships.
Stakeholders in these events will be looking at their losses caused by the cancellation of these events by reference to the contractual and legal principles set out in this note. The Authorities will have had to have assessed the effect of delay both financially and materially on the character of the events. Then analyse whether such postponement/cancellation was contemplated. Sponsors and broadcasters will be looking at their contracts although it is anticipated there will have been dialogue with the governing bodies to anticipate their response to cancellation prior to making the announcement in an effort to preserve goodwill between the parties.
The position for ticket holders is normally fairly straightforward. The tickets will have terms and conditions attached but the ticket holder has the benefit of consumer law and normally the ticket holder can obtain a refund of the face value of the ticket ( though not usually booking and handling fees or can use the ticket for a rearranged date if that can make it if there is one.
It has been noted however that several ticket sites have recently changed their booking conditions so that refunds are only granted where concerts have been cancelled as opposed to rearranged.
Clearly event organisers have a lot to think about when contemplating what to do regarding future events and whilst there has been much press speculation about, for example, the remainder of the Premier League and Champions League season it is hardly surprising that generally no firm decisions have been taken as yet with so much to consider and so many variables to contemplate.