Last month, it was reported that the value of the overseas broadcasting deals entered into by the English Premier League (‘EPL‘) nudged past the £5 billion threshold for the 2022-25 rights cycle, whilst also surpassing the value of domestic deals for the same cycle for the first time.
Given these substantial investments, it is no doubt worth considering what protections and assurances broadcasters can expect under the terms of their media rights agreements, and, on the other hand, what degree of flexibility rights holders can seek in the delivery of the relevant rights. This is particularly the case in light of the disruptions to the organising and staging of sporting events across the world over the course of the last few years. It is almost two years to the day that the 2019-20 EPL season was interrupted, before resuming in June 2020, albeit with empty stadiums and on a rescheduled basis.
It was against this backdrop of ‘football behind closed doors’ and the further changes to the schedule that the High Court recently considered, amongst other things, the level of flexibility afforded to rights holders in meeting their delivery obligations under broadcasting agreements and how this could turn on the particular terms agreed.
When Hong Kong based broadcaster PPLive Sports International Ltd (‘PPL’) entered into agreements with the EPL to broadcast its football matches in China for the 2019/20 to 2021/22 seasons, it was the EPL’s most valuable overseas broadcast deal ever. The deal comprised two agreements: the Live Package Agreement (‘LPA’), granting PPL the rights to broadcast matches on a live and delayed basis, and the Clips Package Agreement (‘CPA’), for highlights. PPL agreed to pay US$701m and US$8.02m under the LPA and CPA respectively
However, PPL failed to pay two instalments due in the first season. These were a US$210.3m sum due under the LPA on 1 March 2020, as well as a US$2.673m instalment under the CPA due on 1 June 2020. These occurred during the severely disrupted 2019/20 EPL season, which was suspended on 13 March 2020, before resuming on 17 June to conclude the remaining 92 fixtures in a condensed schedule.
When the EPL applied to the High Court for summary judgment against PPL for the sums due, PPL’s primary argument for non-payment centred on two issues. Firstly, that the season was interrupted. Secondly, that the conditions under which the season was resumed constituted, according to the contractual terms, a ‘fundamental change’ to the format of the competition. Mr Justice Fraser (the ‘Judge’) was satisfied that these arguments could be dismissed summarily and we consider his rationale below.
- The interrupted 2019/20 season
In relation to the season’s interruption, the contractual terms gave the EPL wide discretion in scheduling each season. Each ‘Season’ was defined as ‘…ending with the last scheduled Match set out in the Fixture List for that season (which shall usually be scheduled for April or May of the following year) but including any extension of that season so as to include postponed or rearranged Matches’. Although temporary suspension and resumption of the 2019/20 season meant that it ran until late July, in the Judge’s view, this did not amount to non-delivery by the EPL since such rescheduling was clearly contemplated by the inclusion of the caveat ‘usually’ and the allowance for ‘any extension’ of the season for postponed or rearranged matches.
- The format of the competition
Under its agreement with PPL, the EPL did, however, warrant that ‘the format of the Competition will not undergo any fundamental change which would have a material adverse effect on the exercise of the Rights by the Licensee’. For the purposes of this warranty, a ‘fundamental change’ was expressed to include a reduction in the number of clubs below 18 or the competition ceasing to be the premier league competition played between professional football clubs in England and Wales. If such a fundamental change occurred, PPL would be entitled to enter into negotiations with the EPL to reduce the fees due.
As the Judge acknowledged, the conditions under which the season resumed would certainly have impacted PPL’s exercise of the rights it had acquired. The remaining fixtures were played in empty stadiums, with viewers having to settle for a lack of crowd atmosphere. Perhaps more significantly, in order to accommodate the condensed schedule, a large proportion of matches were also rescheduled to midweek evenings, meaning that they would be kicking off through the night in China. These changes would undoubtedly have affected PPL’s viewing figures (and, consequently, PPL’s advertising and commercial revenue generated from its coverage); whilst more hardy fans may tolerate staying up to the small hours to support their team without any crowd atmosphere, more casual viewers would likely be put off. However, whilst these changes may have affected PPL’s exercise of its rights, the key issue was that which arose under the particular contractual terms – i.e., whether the amended circumstances of the Season’s resumption amounted to ‘a fundamental change‘ to the ‘format of the Competition‘.
The Judge was satisfied that they did not. Firstly, they did not fall within the examples listed in the relevant clause. They also could not, in the Judge’s view, fall within any proper construction of the term ‘format’. Although this term was undefined, it was referred to in the definition of ‘Competition’ which stated that its ‘format requires that the first team of each Club is scheduled to play the first team of each of the other Clubs twice in each Season’. Further definitions of ‘Match’ and ‘Club Match’ clarified that these related to home and away fixtures that are played for points between two clubs as part of the competition.
The ‘format‘ therefore concerned how the competition was undertaken between the 20 member clubs, including how many times they played against each other, how many points were awarded for different results and the fact that each club played each other both home and away. All these elements remained unchanged upon resumption of the 2019/20 season.
The ‘format‘ of the competition could not, in the Judge’s view, be construed as including kick-off times, the days of the week on which matches were played, or whether fans could attend. In any event, the references to kick-off times and dates in the LPA demonstrated that these were at the discretion of the EPL. Any kick-off times were slated ‘as a general rule’ and there was no provision that kick-off times would be chosen to suit the Chinese market.
Consequently, the Judge was satisfied that the conditions in which the 2019/20 fixtures resumed did not constitute a change to the ‘format of the Competition‘, let alone a ‘fundamental change‘. Therefore, it was not necessary to examine, for the purposes of the contract, their effect on PPL’s exercise of the rights, and summary judgment was granted in favour of the EPL for the unpaid instalments.
The EPL member clubs will no doubt have been pleased with the judgment, which highlights the value for rightsholders in crafting, through careful contractual construction, a broad degree of flexibility in relation to their delivery of the broadcast rights (particularly with respect to scheduling). This is not always achieved, as is evidenced by the unfolding of other sports media rights arrangements which were affected by the pandemic and left broadcasters in a stronger position contractually.
The judgment provides a useful and timely reminder for both broadcasters and rightsholders that the court will not rewrite the commercial bargain that they have agreed so as to accommodate the particular circumstances of later events.
In any case, with reference back to the resumption of football ‘behind closed doors’, whilst Sir Matt Busby’s famous adage that ‘football is nothing without fans‘ may ring true in a number of contexts, this may not, without careful drafting, necessarily be the case in broadcasting agreements.