08/05/2020 by Peter Halpin 0 Comments
PREMIER LEAGUE CLUBS FEAR SPONSORSHIP FALLOUT AMID SEASON DELAY
Clubs in English football's top-flight Premier League are potentially facing a string of contract negotiations and legal battles with sponsors due to the delayed season finish from the Coronavirus pandemic.
A number of lucrative contracts between brands and clubs in English club football’s top-flight had been set to expire at the end of the 2019/20 league season, which traditionally concludes in May. But the COVID-19 outbreak has forced the Premier League to suspend play until at least 30th April, with the campaign now unlikely to be concluded until the summer at the earliest.
Many of those sponsorship agreements do not contain clauses enabling either party to unilaterally extend or cancel. It means that negotiated settlements or court cases could be the only way to resolve disputes if the season continues beyond the term of the existing contracts.
It poses the prospect of a summer of commercial chaos for teams. The likes of Liverpool, Newcastle United and Watford are all approaching the end of their current kit deals with New Balance, Puma and Adidas respectively. Five Premier League clubs are also due to have new front of shirt sponsors from 2020/21, and another five are hunting for new sleeve sponsors for next season.
The situation could cause major issues for Liverpool and their new kit deal with Nike. The tie-up with the US sportswear giant from 2020/21, which could be worth more than UK£75 million (US$91.7 million) per year depending on bonuses, is due to kick in after New Balance’s current arrangement expires on 31st May. However, the current Premier League campaign is highly unlikely to have finished by then.
Liverpool have already won a legal tussle with New Balance last October, which freed the club to sign their deal with Nike. Now the Premier League champions-elect could be set for another court date to decide who will supply their kit if league play continues into the summer. It is apparently hoped a negotiated settlement can be reached instead.
Nike's global contracts are signed in Amsterdam for tax reasons and the company's intellectual property rights and logo are registered in the Dutch capital, and therefore subject to the country’s law. In the Netherlands, force majeure clauses do not entitle either party to damages or the right to alter or cancel a contract.
Liverpool will reportedly look to honour their commitment to New Balance until the end of the campaign in order to ensure full bonus payments, but they are unable to guarantee this until a resumption date has been agreed.