Strongest will be ready to seize even more power when crisis ends
Experts see lengthy legal battles as inevitable but believe there could be a surge in demand for sport
Sports law
The most immediate legal aspect of the coronavirus pandemic will be rescheduled fixtures, a very complex task. “Behind every sporting event is a web of contractual relationships which underpin the sports ecosystem,” explains Alex Harvey, a sports lawyer at Sheridans. “Many of those contractual relationships are being tested to the limit and it is inevitable that legal disputes will arise.”
One simple example is domestic football. The season is now likely to extend beyond June 30, the normal time when player contracts expire. An option is to extend contracts monthly but, as Harvey says: “Could we be left in a situation where those players become free agents on July 1, but can’t join a new club until the transfer window opens at the end of the delayed season?”
If the season were declared null and void, the questions would be more complex. Two problems would loom largest, Harvey believes: promotion, relegation and European qualification; and broadcasters, sponsors and season-ticket holders would have paid for matches that did not take place. These issues explain the determination of domestic football and the rugby union’s Premiership to avoid voiding their season.
Postponing the Olympics until next year brings a range of complications. There will be “significant legal and commercial consequences – both in relation to broadcasting, sponsorship and other commercial deals, and the host city agreement between the IOC and Japan”, says Jonny Madill, a sports lawyer at Sheridans. Financially challenged broadcasters and sponsors may try to renegotiate their deals, or even pull out altogether. The result could be “years of costly legal battles throughout the sporting world,” warns Mo Bhaskaran, a partner at Stewarts.
Darren Bailey, a consultant to Charles Russell Speechlys’ sports group and formerly the Football Association’s director of football governance and regulation, believes the crisis may lead to a shift in how sport is legally viewed, and strengthen the calls for a European Model of Sport, which would view it as a distinct legal entity. “Sport needs to use the thinking time it now has to plot the appropriate pathway.”
The business of sport
Worldwide, sports competitions generate around $90billion (£72billion) a year. For as long as sport is on hold, “at least 90 per cent of this industry revenue is lost”, estimates sports economist Victor Matheson. “Some sponsorship and merchandise money will stay, but everything else dries up.” The earlier live sport can resume, and the more matches can be rearranged, the more of this lost income can be made up.
One of the biggest changes in global sport this century is the winner-takesall effect. Globalisation has allowed the most popular sports teams and leagues to grow into new frontiers and gain a greater share of sports revenue, placing heightened pressures on smaller clubs and leagues.
The coronavirus pandemic could accelerate this trend further. “We are likely to see a crowding-out effect,” explains Simon Chadwick, the director of Eurasian Sport at Lyon Business School. “The bigger and stronger sports organisations will not only be better equipped to emerge from the current problems. They will also use this power as the basis both for recouping losses incurred during the lockdown and for establishing a strategically stronger market position moving forwards.”
The response to previous financial crises suggests all companies will now demand a clearer return on their advertising budgets. Smaller teams could be disproportionately affected by decreases in advertising budgets.
In the years ahead, some sports teams and even organisations may not be able to remain viable, Chadwick warns. He suggests that teams under financial threat will need to show greater flexibility and creativity to remain afloat. Yet the fundamental role and popularity of sport after the crisis does not appear in doubt. Indeed, the surge in attendances after the first and second world wars suggests interest in sport could even be heightened. Sports economist David Berri says: “I do not expect there to be any significant long-run cost to sport. In fact, there could be a boost to demand.”
How sport is run
A striking feature of the sporting cancellations is that many have been largely player-led, with players demanding decisive action for the good of their health. There is a greater sense that athletes need to band together to ensure that sports are run in their interests. “Maybe athletes will try to gain more power in the sport system,” says Jean-Loup Chappelet, a sports governance expert who has worked for the International Olympic Committee and World Anti-Doping Agency.
Chappelet envisages that there may be pressure to change the fundamental way sport is run to give athletes a greater say. With the economic situation threatening grass-roots and lower-level sport, elite sport will also face heightened pressures to reconnect with society more broadly to reaffirm its worth.