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Impact of COVID-19 on the Football Industry

*Shreyash Vijayvargiya



Can you imagine football without fans cheering for their teams or stadiums left with empty seats? What if I tell you 2020 made it happen! Doesn't it sound strange? The whole thing kicked off with the Coronavirus disease outbreak (“COVID-19”) in late 2019. By February 2020, most nations were encapsulated by the disease, which leads to stringent shutdown measures imposed by countries to curb the disease.


COVID-19 has caused a considerable impact on the sports industry. However, this article will specifically deal with the result and disruption caused in the football industry due to COVID-19. With the entire football industry coming to a halt, the league operations have been primarily impacted, explicitly disrupting the Big 5, which forms the central part of revenue for the football industry. The Big 5 is composed of England (Premier League), La Liga (Spain), Italy (Serie A), Germany (Bundesliga) and France (Ligue 1).


Significant impacts on the Big 5 are [1]: -


1. All countries in Big 5 except France suspended the league for three months and resumed it with utmost caution and safety measures. France was the only country among the Big 5 to cancel the 2019/20 season, and Paris Saint-Germain was awarded the title of Ligue 1.

2. Football clubs in England have been required to ‘furlough’ workers under the ‘Government Job Scheme’ to obtain grants. A similar scheme has also been adopted by Spain, Germany, France and Italy.

3. In England, the English Football League (i.e., divisions 2-4) and the National League have obtained funds from the Premier League (divisions five and below). The EFL has also developed relief funds.

4. Football Trade Unions are striving to negotiate with clubs on their behalf.

5. In various instances, it was seen that a club had negotiations with the players to cut their wages.


Even after the tournaments resumed, the impact was no less, as [2]:


1. There has been a change in the routine of football. The players, fans and stakeholders adjusted quickly to the new pattern of football. But once the fans are back on the stands, the clubs have to make sure about the fans’ safety.

2. Since the lower clubs were the ones that were hit the hardest, they had to come with some innovations on the match days. FC Midtjylland, the top Danish club, converted their stadium car parking into a drive-in to watch large-screen football.

3. Since many clubs would be hard-hit by the recession, they won’t be having enough funds to buy new players. This would be the time when the clubs would invest time in their youth squads.

4. Clubs and broadcasters have to find new ways to entertain their audience per the new normal.


The Disruption in the Indian Football Industry


On 24th March 2020, the Prime Minister of India announced a 21-day nationwide lockdown to curb the impact of COVID-19. Subsequently, the same was extended partially for another three months till June 2020. In its continuous efforts to control the spread of the disease, the government and states issued guidelines and steps barring all social, political, sport, entertainment and cultural activities during the lockdown period. The impact of the same is no such less on the Indian football industry, as [3]:-

  1. The 2019-20 Indian Super League season was scrapped, and the final was played behind closed doors.,

  2. Initially, the I-league and other current top levels of Indian professional football were suspended. Later on, AIFF decided to conclude the 2019-20 season of the I-league, declaring Mohun Bagan as the winner. AIFF suspended all other football-related activity.


Force Majeure: The Reason for impacting the Football industry


The central principle that played a massive role in the player to club contract was the principle of Force Majeure. What does Force Majeure mean? Force Majeure unforeseeable circumstance, which prevents performance of contractual obligations by any or all the parties to the contract. a. In other words, an “Act of God”, beyond the parties’ control to fulfil their contractual obligations.


The Court of Arbitration of Sports (CAS) has dealt with force majeure issue in PAOK FC v. Union des Associations Européennes de Football[4] (2006). It was the first case of force majeure in the sports industry, whereby the Court underlined that “Force Majeure, in reality, implies an intrinsic impediment beyond the reach of the ‘obliged party’ rather than a personal impediment, which is unforeseeable, which cannot be resisted, and which makes it impossible to fulfil the obligation. And, since force majeure introduces an exception to the contractual force of an obligation, the requirements for the occurrence of force majeure are to be strictly interpreted”.


It is therefore clear, as per CAS jurisprudence, that “force Majeure”:

1. Implies an objective challenge;

2. Beyond the jurisdiction of the obligated group;

3. That's unpredictable;

4. That cannot be withstood;

5. That makes the fulfillment of the obligation impossible.


Analyzing the above judgment, the suspension/cancellation of the I-League in the Indian season would primarily amount to ‘force majeure’ as:

1. Objective impediments are incorporated in the form of unexpected incidents outside the control of the parties.

2. Since it has no cure or vaccine, it cannot be resisted.

3. Which made fulfillment of duty impossible.



In the Indian context, the concept of force majeure can be construed narrowly. It can be seen in Energy Watchdogs & Ors v. Central Electricity Regulatory Commissions &Ors. [5](2017). In India majorly the contracts have the clause of Force Majeure in it as it opens the option of suspension of contract in case of impossibility. [6] In case of impossibility of the contract, the clubs can also rely on the Principle of Frustration. Frustration is enshrined under 56 of the Indian Contract Act. [7]


FIFA COVID-19 Guidelines


Article 27 of the FIFA Regulations on the Status & Transfer of Players (“FIFA RSTP”) provides that the decision of the FIFA Council shall be final in force majeure cases. For FIFA and football, the COVID-19 situation is a case of force majeure. [8] Further, a FIFA Confederation Working Group was set up by the FIFA Council office to determine the need for changes or temporary dispensations to protect players and clubs and alter registration periods for players on account of such a force majeure event.

There were three key concerns [9] among the several different issues analyzed during these meetings that the working group found needed addressing:


1. Expiring agreements (i.e., agreements that expire at the end of the current season) and new agreements (i.e., agreements that have already been concluded and are scheduled to begin at the beginning of the next season);

2. Agreements which cannot be executed as originally expected by the parties as a consequence of COVID-19; and

3. the required timing for registration periods (“transfer windows”).


FIFA has published guiding principles in each of the core matters


In May 2020, AIFF and the Government of India released Guiding Principles with due regard to FIFA's guidelines and recommendations. To provide clarification and discuss the following regulatory and governance concerns in football, AIFF has provided this correspondence [10]:

1. The required timing for the forthcoming registration periods (“transfer windows”).

2. The expiring agreements, i.e., the agreements terminating at the end of the current season, and the new agreements, i.e., the agreements that have already been signed, will begin with the start of the season.

3. Agreements that cannot be adopted as initially expected by the parties as a result of the pandemic of COVID-19.

4. Additional regulatory matters. It encompasses:

a. Regulation of decisions taken in the light of RSTP matters by the AIFF PSC or the AIFF Disciplinary Committee.

b. Regulatory deadline for annual intermediary data to be released. [11]


Conclusion


COVID-19 had a significant impact on the world, and the sports industry was not more minor a part of it. Football too was strongly hit by the effects. Leagues were cancelled or were delayed; the organizers, players, athletes faced losses; earnings were cut; sponsors faced suffered hardships.


In all, the disruption changed the dimension of the sports from the perspective of the players, fans and clubs. Even the Broadcasting companies had to face huge losses of it. According to a Group of Experts that came together in August 2020 at the World Football Summit, the football industry will be in a transition by 2022 and will get lesser by every year. The same summit also underlined that the geographical impact on football will be largely impacted in Europe, considered the football hub. [12] They also discussed the transfer market and stated that more than the Managers and the Players, Agent will get affected as there will be no transfers the commission of the agents will get involved.


FIFA and many football federations (like AIFF in India) have issued guidelines to safeguard the interest of the players and the club. The clubs and players are also in negotiation for finding the best options for them. However, football evolves slowly; this pandemic has shown us that the fans and players can evolve quickly and adjust to new situations.



*The author is a law scholar from Maharashtra National Law University, Aurangabad. (The image used here is for representational purposes only)


References:


1. Coronavirus and Its Impact on Football - A Sports Law and Policy Centre and LawInSport Joint Survey - LawInSport.” Https://Www.Lawinsport.Com, A Sports Law and Policy Centre And LawInSport Joint Survey, www.lawinsport.com/topics/COVID19-impact/item/coronavirus-a-and-its-impact-on-football-a-sports-law-and-policy-centre-and-lawinsport-joint-survey. Accessed 10 Mar. 2021

2. Cole, G. John. “How Is COVID-19 Affecting the Football Industry?” Https://Www.Masterstudies.Com, Keystone Masturstudies, 10 Dec. 2020, www.masterstudies.com/article/how-is-COVID-19-affecting-the-football-industry.

3. PM Modi Announces 21-Day Lockdown as COVID-19 Toll Touches 12.” The Hindu, 25 Mar. 2020 at www.thehindu.com/news/national/pm-announces-21-day-lockdown-as-COVID-19-toll-touches-12/article31156691.ece.

4. PAOK FC v. Union des Associations Européennes de Football, CAS 2006/A/1110, award of 25th August 2006.

5. Energy Watchdogs &Ors. v. Central Electricity Regulatory Commissions &Ors., (2017) 14 SCC 80.

6. Supra note 1.

7. Section 56, the Indian Contract Act, 1872.

8. COVID-19: Football Regulatory Issues, FIFA (Apr 7, 2020), https://resources.fifa.com/image/upload/1714-COVID- 19-football-regulatory-issues.pdf?cloudid=x9q8h6zvyq8xjtfzmpy9.

9. Ibid.

10. AIFF Media Team, AIFF addresses COVID-19 Football Regulatory Issues, All India Football Federation, (May 29, 2020), https://www.the-aiff.com/article/aiff-addresses-COVID-19-football-regulatory-issues.

11. Ibid.

12. World Football Summit, COVID-19 Implications on the Football Industry, (Aug 2020), https://worldfootballsummit.com/archivos/Report-WFS-2020-AUG.pdf.