After Utah Jazz Center Rudy Gobert tested positive for the novel coronavirus known as COVID-19, the National Basketball Association (NBA) suspended its 2019-20 season indefinitely. The move has major implications for the league’s broadcast partners, who stand to lose a serious amount of advertising revenue without games to air.
Having no NBA games also undercuts moneymaking NBA-adjacent programming like “Inside the NBA” and “SportsCenter,” as New York University Professor Lee Igel noted to CNN. In sum, the disruption will significantly impact the bottom line for broadcasters.
Entities like ESPN and TNT may be considering whether there is any legal recourse to recoup some of the millions they stand to lose. For the last couple of weeks, Sports Illustrated’s Michael McCann has been writing about the implications of the NBA’s response to the coronavirus outbreak. On March 7, discussing corporate sponsorships, McCann first raised the specter of force majeure clauses in league agreements playing a role in the resolution of legal claims. Force majeure clauses “allow one side in a contract to suspend or end its obligations on account of an extraordinary and uncontrollable circumstance.” These clauses are usually interpreted to cover natural disasters and other “Acts of God,” under which a global pandemic would almost certainly fall.
In addition to sponsorship deals, McCann speculated that the NBA’s broadcast “contracts might [also] contain a force majeure clause.” If so, “a network could insist it shouldn’t have to pay when the games aren’t being played due to a pandemic.” McCann also noted that even in the absence of such a clause, the “contracts likely contemplate the consequences of suspended games.”
At common law, courts have sometimes excused nonperformance of contracts under the doctrine of impossibility. See, e.g., Opera Co. of Boston, Inc. v. Wolf Trap Foundation for the Performing Arts, 817 F.2d 1094 (4th Cir. 1987). Did the rise of the COVID-19 pandemic make playing the games “literally impossible?” Given the massive drawdown in public gatherings and the fact that multiple NBA players have already tested positive for the virus, the answer might well be “yes.”
Of course, doctrine aside, one must consider that the payments in question would be made to the league in the context of longer-term agreements. And to be sure, “broadcasters don’t want to jeopardize long-term relationships over what will likely be a short-term drop in revenue.” As such, it is unlikely the parties will actually end up in court; particularly against the backdrop of an ongoing national emergency, any litigation on this issue would probably engender a negative sentiment against all involved.
The point is likely moot. Ultimately, it would be a shock if the two parties did not instead quietly negotiate a way forward. The symbiotic relationship enjoyed by the networks and the league has only gotten stronger in recent years, as evidenced by the $24 billion deal that the NBA struck with ESPN in 2014. And while a short downturn in revenue will be a difficult pill to swallow, both sides know there are plenty of billions to be made together going forward.
Eli Nachmany is a Sports Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first-year student at Harvard Law School (Class of 2022).