Counsel Concerns: COVID-19's Impact On Sports Lawyers

Michael Kuh, a New York-based partner at Hogan Lovells who has worked with Olympic committees and major sports franchises, said there has been a slight decrease in work at his practice. But more so, he's just been focusing on different issues. "I've been spending time advising clients as they think through health and safety issues for their employees and remote deployment," Kuh said, "and more recently about what federal and state benefits may be available to them."

Kuh said he expects legal work surrounding sponsorship expansions and new ventures to come to a standstill, but contract review work to increase. Thus far, Kuh said, everyone has been playing the long game when it comes to handling matters, noting that relationships are king in the sporting world. "They are working cooperatively with one another to make it through to the next day," Kuh said. "We have not seen — not yet anyway — any real uptick in clients taking adversarial positions."

While three of the four major American sports leagues are dealing with some degree of delay in their seasons [when this article was published, the NFL had not postponed the start of its 2020 season], the biggest news of late was the announcement that the 2020 Olympics have been postponed until 2021.

Bryan Cave's Smith, who represents international federations and national governing bodies in the Olympic movement, said he was not surprised the games were moved to next year. "It's easy to be critical, and maybe they waited a bit too long to make the decision," Smith said. But "I don't have complaints about how they handled it. It isn't a U2 concert that you can just move to a later date."

Jon Israel, New York-based partner at Foley & Lardner and co-chair of the firm's sports industry practice, said the number of issues that will need to be sorted out regarding the Olympic postponement should create a lot of work for sports attorneys "What do you do with the athletes who have trained so hard?" Israel said. "How do you do qualifying events? Sponsors are all lined up. What happens with them?"

Smith noted that the force majeure clause in contracts, normally an afterthought during the negotiation process, is now in full view. Force majeure is "historically one of the least paid-attention-to clauses," he said. "Not now."

While there are sure to be numerous negotiations around how sponsors, athletes, governing bodies, and the host city and country are to be made whole, Smith, like Kuh, said if his dealings with other entities around contract renegotiations are any indication, he expects that everyone will play nice and be understanding. "People are being pretty reasonable about it," he said. "They know the Olympics can't be done this year, so let's make this work for 2021. Fortunately people are being realistic about it. They realize they will have to do business with these people again."

The Olympics, now slated to begin July 23, 2021, will cost an additional $3 billion to $6 billion dollars, according to a report from ESPN.

Sifting through the various sponsorship contracts, totaling over $3.3 billion and more than twice that of previous Olympics, will require lawyers. Broadcasting rights and renegotiation over such things as use of the Olympic Village, built to house over 11,000 athletes in apartments that were to be sold after the games, will create more legal work.

Smith estimated that the Olympic governing bodies in the United States, of which there are 45, will lose an estimated $120 million, leading him to wonder whether those organizations will be able to recoup the loss or simply write it off.

Israel, of Foley & Lardner, mentioned that the fallout from cancellations hits not only the sports leagues and teams, but the ecosystem of venues, retailers, restaurants and bars and people that work in the arenas.

Some changes to the sporting world already in progress, such as the rising popularity of esports, might have their flames fanned by the current ban on large gatherings, a key component of sporting events. But Israel believes that, in time, a return to sport will see fans back in the stands. "We will probably see more of an online consumer of sports. But nothing can replicate the stadium experience. That stuff will never go away."

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Patrick Smith is a New York-based ALM reporter covering the business of law. He can be reached at [email protected] and on Twitter @nycpatrickd.