Coronavirus and Its Effect on World Football
Last weekend, four Serie A fixtures were suspended. This weekend, five Serie A fixtures taking place in affected territories in the north of Italy will be played behind closed doors in response to a new decree passed by the Italian government. This will have a direct impact on the clubs’ revenue. Clubs will miss out on ticket and other match day revenue for games played behind closed doors.
Inter Milan are reportedly refunding fans who purchased tickets to their Europa League game, which is also being played behind closed doors. Juventus, however, are reportedly not refunding fans for tickets purchased for the Derby d’Italia against Inter in Turin on Sunday. Last season, the same fixture at the Allianz Stadium generated revenues of €3,100,000 for Juventus. Juventus may be able to rely on force majeure provisions in their ticketing terms and conditions if they decide not to refund fans for their tickets (if they included such provisions in their terms and conditions). Force majeure clauses allow the party seeking to rely on the clause to exclude its liability for not being able to perform the contract due to events beyond their control. If this type of clause is contained within the ticketing terms and conditions, subject to any limitations under Italian law, it would permit Juventus not to refund fans for tickets they have purchased, because the requirement to play the fixture behind closed doors is an event beyond their reasonable control – it is mandated by a decree passed by the government. Our sister Global IP & Tech blog discusses the interaction between the coronavirus and force majeure, and the effect it could have on your commercial contracts, in greater detail.
Sky Italia has announced that it will broadcast the clash between Juventus and Inter on free-to-air television. However, Sky Italia only owns the pay TV rights to Serie A football – it does not own the free-to-air TV rights. As a result, reports indicate that Sky Italia will be prevented from following through with this gesture.
The Chinese authorities have taken a more extreme approach than their Italian counterparts. Domestic football is indefinitely suspended in China. The new season was due to start on 22 February, but will be delayed until further notice. Not only has the coronavirus impacted the commencement of the new season, but it has also influenced the behaviour of clubs. Some clubs have taken the step of loaning out their star players who would otherwise be entitled to high wages without playing any football. Manchester United signed Odion Ighalo on loan from Shanghai Shenhua in January until the end of the Premier League season.
It’s also possible that the coronavirus has deterred foreign players from joining the Chinese Super League. The Chinese Super League transfer window closes on 28 February with clubs spending just €28,000,000, the lowest since 2011. There are other contributing factors, however, including the introduction of new rules by the Chinese FA to encourage the development of domestic players. A tax has been introduced, which requires clubs that spend more than €6,000,000 on a foreign player to pay a 100% tax on the signing fee. The FA has also imposed a new rule, preventing foreign players from earning more than €3,000,000 per year (after tax). Finally, clubs may be cautious about committing to further spending in circumstances where it is not clear when they will be able to generate match day revenue again.
Each country is tackling the outbreak of the coronavirus differently. It is likely to continue to affect the operation of professional football leagues across the world. Clubs should review existing contracts with suppliers and their terms and conditions with customers to consider whether force majeure provisions can apply, whilst preparing for the financial consequences of measures that may be taken to contain the outbreak of the virus.