• ILAPB

THE IMPACT OF COVID-19 ON FOOTBALL

Updated: Jul 29

[Authored by Abhishek Sriram, a 4th year BBA LL.B (Hons.) student at CHRIST (Deemed to be University), Bangalore.]

Introduction


Following the outbreak of COVID-19 and its declaration as a pandemic by the WHO, it has affected the economy adversely. Restrictions being placed on transportation, mandatory social-distancing, wearing face masks etc., hampers the business as usual. This is an unprecedented situation that the world finds itself in, we must adapt quickly to get out ahead. With it affecting the economy, a lot of deals and meetings are being halted. This raises the question of the validity of the contracts due to non-performance of contracts – although unavoidable. This post discusses the impact of COVID-19 on football and the contracts in the world of football.

A lot of leagues have been halted abruptly due to the COVID-19 without declaring any winners, relegations or promotions. If these results had been declared, the teams would either get a huge bonus from the league they have won or have been promoted to. These monetary compensations for the teams’ achievements would play a huge role in the compensation for the players and the staff. With it being halted, a lot of the players and staff may not be compensated or are taking huge pay cuts. Main sources of revenues for the clubs are from the advertisements, fans who attend the matches and the leagues they play in. Due to this situation, they would have to dive in deeply into their savings. The leagues having reached a standstill, a lot of contracts of the players have come into question. Those contracts that are expiring season end have reached an unknown territory.


“Force Majeure” Clause in Contracts


A recent trend in a lot of contracts is the Force Majeure clause. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled. It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.’[1] Thus, COVID-19 being an event that could not have been anticipated and cannot be controlled as well, a lot of questions have risen on the validity, termination or extension of the contracts. In 1902, there followed a series of “coronation cases”: various contracts had been made to hire accommodation for viewing processions during the coronation of King Edward VII. But the coronation was postponed, and the processions called off, because the King had appendicitis. Mr. Henry refused to pay Mr. Krell the balance for renting his rooms on Pall Mall to watch the procession that didn’t take place, and the Court of Appeal, relying on the doctrine of frustration, found he was discharged from his obligation to do so.[2]

As per Indian law, there is no specific definition of force majeure events but there is a hint of it provided for in Section 32 of the Indian Contracts Act, 1872 which states, “Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened”.[3] The option of the force majeure clause has been triggered by the I-League clubs, East Bengal and Chennai City that allows them to refrain the players’ salaries from April 30th, 2020 until their services can be availed.[4]


Impact of COVID-19 on Player Contracts


Internationally, according to FIFA’s COVID 19 Football Regulatory Issues Version 1.0 that was released on 7th April, 2020, expiring player contracts usually end when the season ends, with a termination date that coincides with the end of the season.[5] With the current suspension of play in most countries, it is now obvious that the current season will not end when people thought it would. Therefore, it is proposed that contracts be extended until such time that the season does actually end. This should be in line with the original intention of the parties when the contract was signed and should also preserve sporting integrity and stability. Now, we do have to look into the applicability of these regulations, as per the Regulations on the Status and Transfer of Players, Article 29 provides for the enforcement of these regulations which reads “These regulations were approved by the FIFA Council on 27 October 2017 and come into force on 1 January 2018.”[6] Whereas, Article 27 provides for matters not provided for, therefore, any force majeure situations, which states “Any matters not provided for in these regulations and cases of force majeure shall be decided by the FIFA Executive Committee, whose decisions are final.”[7] FIFA, with the regulations mentioned above has thrown a lifeline to players like David Silva, Zlatan Ibrahimovic, Edinson Cavani etc. whose futures are unknown due their contracts ending by the end of this season, which seems to be unknown, but FIFA has stated that these contracts shall expire as and when the season actually ends. Although, the Ligue 1, the French League, has concluded their season as is and has declared the results according to the table, declaring Paris Saint-Germain the winners and compensating them for winning the title. Whereas, for other leagues with undecided futures, the contracts shall be deemed as expired as and when the season comes to an actual end.

Now, what we need to understand regarding the aforementioned is its applicability and whether it is legally enforceable. Attorney Despina Mavromati, who founded SportLegis Lausanne, told the AP, “Under Swiss law, as in most jurisdictions, it is impossible for a club, a players' association or a league to unilaterally extend an individual contract of employment that expires on a specific date. All contracting parties must reach an agreement and amend the contract accordingly. Further, if there is a new contract starting immediately after the expiration of the old contract, then all three parties (former club, new club and the player) must agree on the extension of the old contract and the modification of the starting date of the new contract. And, even if a case goes to FIFA and then to CAS, it will be extremely difficult, if not impossible, for a club to enforce a unilateral extension of a player's contract."[8] What can be understood from the abovepoint is that it holds no legal value but may be used as a bargaining chip in contractual negotiations.


Drastic Fall in the Market Value of Players


With some of the leagues given a green light to play their matches behind closed doors, that is, without fans, a lot of their income ceases to flow in. This in turn, affects the market values of the players. Over the past few years, a lot of players being transferred to clubs for values circling the €100 million mark, such as Kylian Mbappé, Neymar, Coutinho, Paul Pogba etc., this may cease to exist for the foreseeable future due to the lack of funds available for the transfer season. There may be a rise in the demand for loaning players for the season, to reduce the financial burden on the clubs. According to CIES Football Observatory, a research group within the Switzerland-based International Centre for Sports Studies, the total transfer value of players from the top-five leagues before the outbreak was €32.7 billion. If the shutdown continues and player contracts are not extended, that value will fall by 28 percent to €23.4 billion due to factors like age, contract duration, and recent form.[9]


Conclusion


COVID-19 has impacted the people’s health severely as well as the economy and football is no exception. Clubs may struggle to meet their obligations to pay their staff, players, coaches etc., many of the contracts would have to be negotiated again to fit the situation we all find ourselves stuck in, values of the players may drop, purchasing power of the clubs may reduce heavily due to unfulfillment of advertising agreements, sponsorship agreements, halting of the matches, playing of matches on a future date which are required to be behind closed doors etc.


[1] What is force majeure? The legal term everyone should know during Covid-19 crisis, THE ECONOMIC TIMES (May 14, 2020, 11:14 A.M), https://economictimes.indiatimes.com/small-biz/legal/what-is-force-majeure-the-legal-term-everyone-should-know-during-covid-19-crisis/articleshow/75152196.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[2] Krell v. Henry [1903] 2 K.B. 740

[3] The Indian Contract Act, 1872, § 32.

[4] Ashwin Muralidharan, What is Force Majeure? The legal term is trending in the news amid the Coronavirus pandemic! (May 4, 2020, 9:10 P.M), https://www.goal.com/en-in/news/what-is-force-majeure-legal-term-coronavirus-indian-football/7rwvo77uz0it1czrtpjeyrntr.

[5] COVID-19 Football Regulatory Issues, FIFA (Apr. 7, 2020), http://xhimg.sports.cn/Image/soft/200509/64-200509115S3348.pdf.

[6] Regulations on the Status and Transfer of Players, FIFA (2018), https://resources.fifa.com/image/upload/regulations-on-the-status-and-transfer-of-players-2018-2925437.pdf?cloudid=c83ynehmkp62h5vgwg9g.

[7] Id., art. 27.

[8] COVID-19 impact: FIFA braced for challenges over player contract extensions, THE NEW INDIAN EXPRESS (Apr. 16, 2020, 10:14 A.M), https://www.newindianexpress.com/sport/football/2020/apr/16/covid-19-impact-fifa-braced-for-challenges-over-player-contract-extensions-2130825.html.

[9] Debkalpa Bannerjee, How Covid-19 is rewriting the multi-million euro industry of transfers and contracts, THE INDIAN EXPRESS (April 25, 2020, 9:39 P.M), https://indianexpress.com/article/sports/football/transfer-window-player-contracts-covid-19-changes-6377503/.

75 views

INDIA LAW AND POLICY BLOG

  • LinkedIn
  • Instagram

© 2020 INDIA LAW AND POLICY BLOG. All Rights Reserved.