Europe’s Soccer Clubs May Face $1B Bill if Coronavirus Forces Season Cancellation

By and | March 16, 2020

If the coronavirus forces Europe’s soccer leagues to cancel the rest of the season, TV networks may be able to demand more than $1 billion in compensation.

The move to suspend international games and competitions in England, Spain and Italy has got media lawyers poring over broadcast rights contracts that are a big source of income for clubs such as Manchester United, Barcelona and Juventus.

Comcast Corp.’s Sky, DAZN and other media companies collectively pay more than 6 billion euros ($6.7 billion) a year to show Europe’s most prestigious football teams in action.

Scrapping the rest of the calender could expose the leagues and clubs to a liability that’s well above 1 billion euros ($1.12 billion), said Richard Broughton of media consultancy Ampere Analysis.

However, to deprive them of that income when they’re grappling with the virus could be a PR blunder for broadcasters that have always claimed a long-term commitment to the game.

“It’s like a house of cards. If one organization seeks legal redress, then others may also feel compelled to do so,” said Simon Chadwick, a director at the Centre for the Eurasian Sport Industry. “It then becomes a zero-sum game — and possibly one in which those involved draw scorn from both fans and the public alike.”

English games were suspended at an emergency meeting on Friday after Arsenal Football Club head coach Mikel Arteta and Chelsea Football Club player Callum Hudson-Odoi tested positive for the virus.

Spain’s La Liga has called off matches for two weeks after Real Madrid said it was placing players under quarantine. Luis Rubiales, head of the Spanish football association, said it may not be possible to complete the competition.

Italy’s elite Serie A has stopped until at least April 3, although league authorities still aim to complete the season. Sky shares rights to Serie A with sports broadcaster DAZN.

What Next?

With no games to watch, Sky and BT subscribers in the U.K. may be wondering why they are paying as much as 40 pounds ($50) a month.

One sports-rights holder has already approached one of the big five European domestic leagues to discuss potential compensation, said a person familiar with the matter.

A media company could expect to claw back about 25% of its annual contract if one quarter of the current season is eventually cancelled, said another person familiar with the industry’s legal arrangements, who asked not to be identified as the discussions are private. It would depend partly on the nature of each contract and whether the company’s insurance policies would kick in.

The decision is fraught with risk. While the broadcasters don’t want to be seen kicking the leagues when they’re down, the urge to claw back lost revenue will grow if their subscribers start canceling subscriptions.

Sky and BT Group Plc collectively spend 1.5 billion pounds a year on English Premier League rights in the U.K. alone, which works out at nearly 170 million pounds per month of the football season, said Broughton at Ampere.

Sky could potentially claim 200 million pounds back from the Premier League if all further games are now off. It also has important contracts in Germany and Italy. BT is paying 390 million pounds per year for exclusive rights to the Champions League and Europa League in the U.K.

If there are fewer matches, “consumer willingness to pay for expensive sports packages would dip and BT and Sky might feel obliged to offer subscription holidays or discounts to subscribers,” said Broughton.

–With assistance from Rodrigo Orihuela.

Photograph: David Silva of Manchester City shoots as Issa Diop of West Ham United attempts to block during the Premier League match between Manchester City and West Ham United at Etihad Stadium on Feb. 19, 2020 in Manchester, UK. Photo credit: Clive Brunskill/Getty Images.

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