In the midst of the Coronavirus pandemic, professional and amateur sports face a massive challenge. How does an industry focused on bringing people together survive when health and safety require people to stay apart? This is the first in a series of articles from Fox Rothschild attorneys discussing the legal and operational challenges facing the sports industry and its response to COVID-19.
In this first part, we discuss why leagues are so eager to get back to work, including financial consequences if seasons are terminated. We examine the steps leagues and teams are taking to minimize risk, including an in-depth look at “Project Restart,” the German Bundesliga’s plan to return to play this weekend. If successful, the German roadmap could serve as a guide for North American leagues as they finalize their own plans to resume play. Finally, we address the success of last weekend’s UFC 249 in Jacksonville, along with plans for horse racing this weekend at Churchill Downs in Louisville and NASCAR at Darlington in South Carolina.
What’s at stake if leagues cannot complete in the current seasons?
To understand why leagues are making their best efforts to return to play as soon as possible, it is important to understand what is at stake.
On March 9, 2020, Leicester City walked off as 4-0 winners over relegation-threatened Aston Villa in a soccer match in England’s top league. Just four days later, the English Premier League – the financial juggernaut of world soccer – was suspended due to the rising tide of Coronavirus infections across the country. The match would turn out to be the league’s last for at least two months.
This week, the Premier League announced it is considering a June return to play. Far from business as usual, the season is likely to be completed in empty stadiums in what are being called “ghost matches.” Players, coaches and essential personnel will likely be segregated with their families through the end of July, training in small groups and tested regularly, all in effort to complete the last nine plus match days of the current season. But why all the trouble to play the final 92 matches behind closed doors?
Similar to the analysis for many of the major American professional leagues, the Premier League’s decision to resume play may come down to money. KPMG estimates that Europe’s “big five” soccer leagues – the top divisions in England, Spain, Germany, France and Italy – stand to lose around $4 billion in broadcasting, sponsorship and matchday revenue if current seasons are not completed. However, most of that loss could be mitigated if the leagues could complete – and broadcast – the season’s remaining matches behind closed doors.
For example, the Premier League’s current domestic and international broadcast rights deals bring in roughly $4 billion per season, much of which is distributed to the league’s 20 teams. (NBC Sports, which broadcasts and streams Premier League matches in the United States, pays a reported $166 million per season for English-language rights in the U.S. market). ESPN recently reported that if the English Premier League were to declare the 2019-20 season null and void, the cost to clubs could approach $1.25 billion. This amount is believed to include nearly $1 billion which – absent other agreements – might need to be refunded to broadcast partners to account for the roughly one-quarter of the season yet to be played. Even foregoing ticketing and other match-day revenue, this massive liability to broadcast partners provides a major financial incentive for teams to make every effort to complete the season.
The English Premier League is not alone. Figures are similar in La Liga, the top soccer league in Spain, another country hit hard by the COVID-19 outbreak. According to estimates, canceling the rest of the season completely would cost the league just over $1 billion, while completing the season behind closed doors would cost a more manageable $380 million. ESPN reports that Spanish clubs have already received 90% of their television rights payments, leaving clubs to have to repay some of that money – and foregoing their final rights payment – if the league cannot complete the current season.
American leagues face similarly difficult decisions. While speaking on CNN this week, Rob Manfred, Commissioner of Major League Baseball, estimated that a cancelation of the 2020 baseball season would cost MLB’s owners nearly $4 billion. Around half of this amount, however, could be mitigated by playing behind closed doors. MLB’s current national broadcast deals with Fox, TBS and ESPN bring in a little more than $1.5 billion per season (set to increase to around $2.2 billion per season when new broadcast contracts begin in 2022) and teams also enter into agreements with regional sports networks to broadcast games locally, providing additional revenue per team. Commissioner Manfred echoed sentiments that live sports could also provide a much needed emotional boost, giving sports fans something to distract them from the Coronavirus pandemic.
The other major sports leagues in North America have similar incentives to play behind closed doors. The National Football League’s domestic broadcast deals with CBS, Fox, NBC and ESPN bring in around $4.5 billion per year, though the league has the luxury of time before the 2020 season is scheduled to begin. The National Basketball Association’s national broadcast deals with ESPN and TNT bring in around $2.6 billion per year. The National Hockey League’s deals in the United States ($200 million per year) and Canada ($500 million per year) are also relatively substantial. Each of these leagues will have broadcast-related incentives to try to complete their seasons, even if fans are not able to attend games.
The case for Major League Soccer is somewhat more complicated. With national broadcast revenues reported to be around $90 million per season, and with much smaller regional sports deals, ticket sales and other match-day revenue streams make up a much larger piece of the league’s revenue pie. Minor league sports face even greater challenges – lacking major broadcast contracts – leaving ticket sales, concessions, parking and in-stadium sponsorships as the largest components of team revenue. In other words, the smaller the broadcast revenue, the less attractive it may be for a league to consider playing without a live audience.
What is “Project Restart” and why are all eyes on Germany?
On Saturday, May 16, 2020, play is scheduled to resume in the Bundesliga, Germany’s top professional soccer league. “Project Restart” would give the Bundesliga the distinction of being the Western Hemisphere’s first major sports league to resume play following a COVID-19 suspension. The eyes of the sports world will be on the Bundesliga this weekend, as leagues across the globe – including the major North American leagues – watch to see if the Germans’ meticulous plans are successful.
Germany – perceived to have managed COVID-19 efficiently and effectively due to high levels of testing, contact tracing and available acute care facilities – was spared the worst of the Coronavirus pandemic compared to other European countries such as Italy, Spain and France. But while Germany’s human death rate from COVID-19 was one of the world’s lowest, the pandemic threatened the existence of several of Germany’s professional soccer clubs. ESPN reported that German clubs could lose about $800 million if the season were completely abandoned, including $350 million in lost broadcast revenue for the league’s final nine match days. According to Transfermarkt, 12 of the 36 teams in Germany’s top two leagues had already pledged their share of the final broadcast rights payment to creditors; and 13 clubs – four in the Bundesliga and nine in the 2nd Bundesliga – could be insolvent by the end of June. The heads of two of Germany’s largest clubs recently speculated that 56,000 jobs could also be lost.
As a result of this financial threat, the league began planning for a potential return, seeking guidance from national and state government. German teams were allowed to resume individual “small group” training as early as April 6, 2020. However, players returned to a world that had changed drastically from the one that existed when the Bundesliga’s last match had been played – Borussia Mönchengladbach’s 2-1 win against bitter rivals Cologne – on March 11, 2020.
Instead of training together in groups of 20 to 30 players at a time, training resumed in separate groups of four to five players at a time. Players were required to stay at least two meters (six feet) apart from their teammates at all times. One-on-one duels, tackling, practicing set pieces such as corner kicks, and game scrimmages were banned because of social distancing rules, replaced by fitness training, passing and shooting drills, and technical “on the ball” skills. Instead of using only their main locker rooms, teams also separated players and staff into locker rooms normally used by the away team, referees and youth teams. Players were encouraged to shower at home and team restaurants were closed, with food provided “to go,” if at all.
After weeks of regular COVID-19 testing, on May 6, 2020, the league’s proposal to return to play was approved by German Chancellor Angela Merkel and the leaders of Germany’s 16 states. Teams resumed full-contact training last week. Matches will resume on Saturday, May 16, behind closed doors. Fans have been advised that they cannot congregate outside stadiums during these “ghost matches” or the clubs risk severe sanctions, up to and including forfeiting matches.
"We are very pleased about the prospect of being able to play Bundesliga matches again in the near future, even if it will unfortunately be without spectators and without the support of our fans," said Max Eberl, Sporting Director for Borussia Mönchengladbach (or “Gladbach” for short). "The coaches and the team have worked under unusual conditions in the past weeks, and everyone is happy that team training has now been allowed again. We take all hygiene and contact regulations very seriously and we have the impression that all our players deal with the situation responsibly and with discipline."
In accordance with the league’s return to play rules, all of the players and everyone associated with the team will continue to be screened for COVID-19 infection at regular, short intervals over the coming weeks, in order to keep the risk of contagion as low as possible. On Monday, May 11, players and key staff moved into isolation in hotels near training facilities, where they will remain until matches resume, continuing to have their health closely monitored. “The team have a floor to themselves in the H4 Hotel attached to the stadium,” said Eberl. “We can follow all of the safety measures in the DFL’s concept there without any problems. Every player has a room of their own and mealtimes will be in small groups. There’s no necessity for a bus journey [because Gladbach’s training fields are adjacent to the hotel], which can carry a certain amount of risk, as we have the best conditions possible here to prepare while maintaining the necessary distance.”
When Gladbach hosts their next match at home against Bayer Leverkusen, only around 200 key personnel will be allowed inside the stadium. This will consist of the players, coaches, doctors, trainers and referees, along with a limited number of league officials, photographers, media and broadcast personnel. Another 100 or so people can be on the perimeter of the stadium to assist with security and broadcasting duties. Other than the active players and referees, everyone will be required to wear masks and to maintain their distance from each other. Coaches will be allowed to remove their masks only when yelling instructions to their players. Every player will have their own disposable water bottle. Pregame formalities, such as handshake lines and team photos have been abandoned, and players will be prohibited from celebrating goals too close to each other or from crowding around the referees to argue calls.
Other changes will be less obvious. Teams were encouraged to increase the size of their training squads, in case positive COVID-19 tests require one or more players to quarantine. Many teams, including Gladbach, have added some of their top youth talents to the squad. The show, as they say, must go on. And thanks to a rule change by soccer’s governing body, the league will allow teams to use five substitutes during each match, instead of the normal three. Given that the league will try to finish the season before the end of June – when some player contracts could expire – the additional substitutions could help ease the workload on players, an added benefit to their health and safety.
The Bundesliga and its teams are doing everything they can to safely return to play, but clubs recognize that risk cannot be completely eliminated. There has been an effort to make sure that players are well informed of the risks. “The team have always been well informed about the necessary measures,” said Eberl. “They have paid really close attention to their hygiene and maintaining the necessary distance over recent weeks and will continue to do so. If a player feels unsafe for themselves or their family, they’re more than welcome to stay at home. No one here is being forced to do anything; everyone is happy to train and play.” At Gladbach, the players seem eager to get back to business.
The league banned clubs from piping-in crowd noise during the ghost games. Worried about the lack of stadium atmosphere without their legendary fans, Gladbach supporters came up with a creative solution. Fans were permitted to purchase cardboard cutouts of themselves to be installed in Borussia Park for €19 (around $20), with proceeds going to benefit local charities and workers affected by COVID-19 layoffs. Even fans of other Bundesliga teams were permitted to order cutouts to be placed in the stadium’s away section. Over 30,000 cardboard cutouts have been ordered and are being installed in the stadium. “Not only does it give us some motivation, but it’s also helping a good cause,” said Marco Rose, Gladbach’s head coach. “It gives Borussia Park a little bit of life. Obviously, it does not replace our real fans, but it’s still nice to see them.”
To avoid the look of an empty stadium, German fans donated to COVID-related charities to have a cardboard cutout of their images installed in Borussia Park for the return of soccer.
Even if the league is able to complete the season behind closed doors, the Coronavirus pandemic will have a major financial impact on Gladbach and other German clubs. According to Wolfgang Heilmann, Gladbach’s Head of International Projects, the club had to delay a number of overseas projects, including a possible post-season tour, partnerships with American youth clubs and soccer schools offered to promote youth soccer in the United States. “Sadly enough, we had to cancel all of our activities planned for this summer,” said Heilmann, “but we are very positive to come back even stronger next year.” Gladbach’s projects in several U.S. markets, including Chicago, Atlanta, San Diego, Las Vegas and Albuquerque, will have to be rescheduled. In the meantime, the club released a series of free “at home” skills training videos on Twitter – in both German and English – in an effort stay connected and provide youth players with something to work on during the pandemic.
But for now, the focus is on completing the 2019-20 season to mitigate losses. “We’re allowed to play football again, which is important as we’re already between €10 million and €13 million out of pocket for this season,” said Stephan Schippers, Gladbach’s CEO. “If the remaining games didn’t take place, the TV money would disappear too, which would result in a much higher loss. Borussia Mönchengladbach is healthy, but not rich. We will get through this crisis, but we’ll only know the full extent of the cost somewhere down the line.”
Germany, the world is watching.
Which American sports will be the first to return to play?
Last weekend (and with all due respect to Professional Bull Riding and the American Cornhole League), the Ultimate Fighting Championship became the first major organization to resume play in the United States. UFC 249 was held on Saturday, May 9, 2020, without fans, at the VyStar Veterans Memorial Arena in Jacksonville, Florida. This weekend, horse racing is scheduled to return to Louisville, Kentucky’s historic Churchill Downs; and NASCAR will return to the track at Darlington, South Carolina. We take a moment to look at each of these events, including health and safety measures adopted to minimize COVID-19 related risks.
UFC 249: Ferguson vs. Gaethje – May 9, 2020 (Jacksonville, Florida)
On Saturday, May 9, 2020, the Ultimate Fighting Championship produced a major pay-per-view fight card headlined by Justin Gaethje’s knock-out win over Tony Ferguson to claim the UFC Lightweight Interim Title. All in all, 11 fights (five on the main card) were contested on the night at an empty VyStar Veterans Memorial Arena in Jacksonville, Florida. By all accounts, the event was a success. The same arena will host two more events in the next week, also behind closed doors.
This was UFC’s first event since most live sports were sidelined in early March due to concerns over COVID-19, after several earlier attempts were abandoned. Dana White, the UFC’s longtime President, had not been shy in his multiple efforts to have the UFC known as the first sport to return to business. Several earlier events were ultimately postponed when states refused to sanction bouts or when political pressure was brought to bear. An event planned for April 18, 2020 on tribal land at the Tachi Palace Casino Resort in California was postponed due to pressure from California politicians and UFC’s broadcast partner, ESPN. UFC then planned to stage events on a private island in international waters. However, when Florida declared professional sports an essential business, the UFC moved forward with plans to stage three successive events in Jacksonville.
Although final numbers have not been released, media reports suggest that more than 700,000 ESPN+ subscribers each paid about $65 to stream the main card of UFC 249. Earlier, around 1.5 million viewers tuned-in to the preliminary fights on ESPN, the second-highest rated program on cable television that night. Overall, the numbers were good for an event not headlined by UFC’s star attraction, Conor McGregor, but fourth out of the four pay per view events staged by UFC in 2020. White did not confirm the exact sales figures, but expressed “satisfaction” with the results, stating that the event “was a home run by every measure.”
Substantial risk mitigation efforts were implemented to allow the UFC to stage this week’s fights. Dr. Donald Muzzi, President of the Association of Ringside Physicians, and Dr. Jeffrey Davidson, the UFC’s Chief Physician, developed health and safety precautions in an effort to create a safe environment for the fighters. Upon arrival at the event hotel, each fighter and their corners went through mandatory medical screenings and tests, including both diagnostic and antibody tests for COVID-19. The UFC administered 1,200 tests during the week on 300 different people.
Fighters and their corners were asked to self-isolate within reason while at the hotel until their initial test results were received. Additional medical screenings took place every day that the fighters and their corners were on hotel property, including temperature monitoring. Virtual media day replaced customary in-person media obligations. Each team was given an individual workout room for training during the week of the fight, equipped with mats, mat sanitizers and a personal sauna. Around-the-clock room service was provided, along with an on-site market. Fighters also had the option to have meals prepared and delivered to their doors by the UFC’s meal-prep sponsor. Hotel housekeepers were equipped with hospital-grade sanitizer and personal protective equipment. For official weigh-ins, each fighter had a scheduled time to weigh in to limit the number of people in the room at any given time.
One fighter, Ronaldo Souza, tested positive for coronavirus, necessitating the cancelation of his scheduled fight with Uriah Hall. Prior to receiving his positive test result, Souza had participated in Friday weigh-ins and a “socially distant” stare-down with Hall, which included a fist bump while the fighters wore masks and gloves. Once the positive test result was received, Souza and his two cornermen were required to leave the hotel and self-isolate off-premises. However, the 23 other athletes participating in UFC 249 tested negative and the rest of the bouts continued as planned.
The fight itself was closed to spectators. Drug testing administrators were present during the fight, as were commentators and some members of the media, along with limited UFC personnel. The referees wore gloves, but no masks or eye protection. Corners and other ringside personnel wore masks and the UFC cleaned the Octagon thoroughly between fights.
Participants were reportedly required to sign liability waivers, including a non-disparagement clause, prior to the event. According to media reports, the non-disparagement provision prevented participants from commenting that the fights were held without appropriate health, safety or other precautions. Violations of the non-disparagement clause could have resulted in the revocation of prize money or awards. Participants also released the UFC from liability if they were infected and/or tested positive for coronavirus.
Horse Racing: Churchill Downs’ Spring Meet – scheduled to begin on May 16, 2020 (Louisville, Kentucky)
Despite the pandemic, horse racing never completely stopped. Seven tracks in five states continued racing, without spectators, allowing patrons to bet on races online where permitted. Churchill Downs – the world’s most famous track – closed on March 21, 2020. As a result, the Kentucky Derby – the crown jewel of horse racing’s Triple Crown – was postponed until September. The Derby, traditionally held on the first Saturday of May, had been run every year since 1875, delayed only in 1945 during the height of World War II.
On April 29, 2020, Churchill Downs received approval from the Commonwealth of Kentucky to reopen the stables to horses, riders, trainers and other key personnel, beginning on May 11, 2020, under a phased, systematic and controlled approach. Opening day of a shortened Spring Meet is now scheduled for Saturday, May 16, 2020.
There will be no onsite wagering. No spectators will be allowed at the track, with even family members and guests excluded. Those allowed on the grounds will be required to wear masks, take COVID-19 tests and pass a medical screening including a questionnaire and temperature reading. Anyone failing the medical screening will be denied entry, asked to self-isolate and be logged to ensure compliance with CDC guidelines. Those who pass the medical screening will be given a fresh color-coded wristband each day.
Everyone on the grounds will be required to practice social distancing, including avoiding group gatherings of any size and maintaining a six-foot distance for all interactions. In addition, personnel are encouraged to wash their hands, use hand sanitizer and not share equipment. Jockeys and staff will be adequately spaced in the jockeys’ room; jockeys arriving from out-of-state will be separated in another dressing room. Backside dormitories and bathrooms will be cleaned regularly. Paddock access will be limited to the trainer, assistant trainer, groom and horse only.
Churchill Downs worked with state and local officials, along with public health experts, to develop their reopening plan. Kentucky Gov. Andy Beshear praised Churchill Downs’ plan to reopen, commending it as “one of the most detailed plans we have seen about specific security checks that everybody has to go through and be temperature checked, to masking, to having a very limited group that is there.”
NASCAR at Darlington 2020 – scheduled for May 17, 2020 (Darlington, South Carolina)
NASCAR’s first race since March 8, 2020, the NASCAR at Darlington 2020, is scheduled to take place in Darlington, South Carolina on Sunday, May 17, 2020. This will be the first of seven races in an 11-day span that will also include races at Charlotte Motor Speedway in North Carolina. All event procedures will follow CDC, OSHA and state and local government recommendations. There will be no practice sessions. NASCAR is mandating the use of personal protective equipment, health screenings prior to entering the facility and social distancing protocols.
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