Coronavirus Outbreak Could Prompt Alarming Ripple Effect Across Sports

The COVID-19 outbreak may spark widespread job losses and legal battles between corporate sponsors and NBA teams.

The outbreak of the coronavirus disease in the United States and Canada could soon lead to a very different experience for NBA games. It might also spark losses of jobs for those whose employers depend on revenue from people attending NBA games and spur legal battles between corporate sponsors and NBA teams over their contractual obligations.

On Friday, the NBA sent a memo to teams indicating that they should prepare for the possibility of playing games without fans in attendance. These preparations, the memo reportedly notes, include “the possibility of implementing temperature checks on players, team staff, referees, and anyone else who is essential to conducting such a game in the team’s arena.” Earlier in the week, the NBA encouraged players to avoid contact with pens, balls, jerseys and other objects presented by fans for autographs. The league advised players to refrain from shaking hands or high-fiving fans, suggesting fist-bumps instead.

The NBA’s warnings are sensible in light of growing concerns about the spread of COVID-19 and the disturbing ease at which it can infect people. The disease has infected more than 106,000 people and killed more than 3,500 people. In the U.S., there have been at least 387 reported cases as of Saturday, with at least 19 deaths. In Canada, there are at least 57 reported cases. These numbers are expected to climb, perhaps dramatically, as the number of infected persons increase and as more people are tested.

While scientists are still learning about COVID-19, the U.S. Centers for Disease Control and Prevention warns it “spreads easily.” People being physically near an infected person (within about six feet) face a heightened risk. When an infected person coughs or sneezes, a healthy person who is seated or standing nearby might inhale droplets of saliva or mucus that contain the virus. The risk of infection also arises when touching a surface that has the virus on it—the virus is thought to live for at least several hours—and then touching one’s own mouth, nose or eyes. Those infected also don’t show symptoms immediately. It can take up to two weeks for symptoms, including a dry cough and shortness of breath, to appear, during which time a seemingly healthy person afflicted with COVID-19 could inadvertently infect others. The elderly and those with compromised immune systems are among the most vulnerable to COVID-19.

NBA’s strategy is motivated by public health concerns and is similar to other leagues

If the NBA implements a plan to play games without fans in attendance, the league would join a growing list of professional and amateur sports associations to exclude spectators.

On Friday, the Division III men’s basketball tournament featured a game between Worcester Polytechnic Institute and Yeshiva University with fans barred from attending. This was part of the tournament’s COVID-19 prevention policy to play without fans present. Professional soccer and baseball organizers in Europe and Asia have taken similar measures in hopes of aiding public health efforts.

The prospect of playing games without fans cheering is troubling to at least one NBA player. LeBron James told media on Friday he would not play if fans aren’t present. James says he plays for his teammates and fans. It’s unclear if James would actually stick to this plan or reconsider in light of valid public health concerns. Players who skip games would be subject to fines and suspensions.

Potential economic and legal consequences to NBA games played without fans

Playing NBA games in empty arenas would trigger a bevy of economic consequences.

Ticket holders who purchased their seats from an NBA team (through the league’s partnership with Ticketmaster) would receive refunds. Other reputable ticket sellers and resellers, including StubHub and SeatGeek, have likewise pledged to refund money for events cancelled due to COVID-19. Presumably a game that excludes the entry of fans would count as “cancelled” for purposes of a ticket refund. If a ticket holder encounters difficulty in obtaining a refund, he or she should review the ticket’s refund policy and determine which circumstances permit a refund. It would behoove ticket companies and sellers to be reasonable with customers, particularly since aggrieved customers could make their grievances known online.

Arena workers probably wouldn’t fare as well. Security officers, janitors, ushers, box office staff, lightening and production technicians, cashiers, cooks, concession stand workers and parking garage attendants are among those who are integral to the production of NBA games. Their employment is often classified as part-time and seasonal. They would all stand to lose wages if they are no longer needed for games.

The same could prove true for those who are paid to keep fans entertained during NBA games, including during timeouts, halftime and other stoppages of play. Dance teams, mascots and contest providers all fall into the category of in-game entertainers. If there are no fans to entertain, it’s unclear why entertainers would be needed. Workers told to stay home may or may not be eligible to collect unemployment; it would depend on the law of the state where they’re located.

Workers whose businesses are located in, or near, arenas are also vulnerable to a loss of earnings. Sports bars, restaurants, apparel stores and parking garages are among the types of businesses that pay for geographic proximity to NBA games. A steep reduction in game-related foot traffic would likely diminish these businesses’ revenue. Such diminishment could spawn layoffs and other staff reductions as well as the inability to pay rent. Taxi and ridesharing drivers who generate wages by driving fans in and out of games face the same basic predicament. The fact that many conferences and entertainment events held at arenas are being cancelled due to COVID-19 only exacerbates the underlying problem of weakened revenue for businesses and service providers that are dependent on highly attended events.

Games without fans could pose still other economic disruptions. Corporate sponsors pay millions of dollars to advertise during NBA games, including through arena signage and print advertisements on materials distributed to fans. Some of the signage would still be displayed on game broadcasts. Yet other signage is located off-camera and is only valuable if people in the arena see it.

Depending on language in the sponsorship contracts, there may be opportunities for sponsors to invoke what are sometimes called “force majeure” (French for “superior force”) clauses. These clauses allow one side in a contract to suspend or end its obligations on account of an extraordinary and uncontrollable circumstance. Force majeure clauses can often be invoked when “acts of God”, including earthquakes, hurricanes and other natural disasters, strike and make it impossible or inadvisable for one side (or both sides) to continue in a deal.

Here, a corporate sponsor might argue that the absence of fans in the arena substantially downgrades the value of a sponsorship. Likewise, the sponsor might contend that it shouldn’t have to pay the price for an act of God that is extraordinary, unforeseeable and beyond anyone’s control. The NBA team might respond that the games are still being played and thus the sponsor is still obligated to pay. Given that sponsors and teams typically have long and close business relationships, they would probably reach arrangements before going to court, arbitration or mediation. Still, the possibility of a contract dispute exists.

Television networks in contract with the NBA or NBA franchises are also likely to take an interest in how an absence of fans during games might impact TV ratings. The NBA is in the middle of nine-year deals with ESPN and TNT that pay the NBA (and, in turn, teams and players) $24 billion. Regional sports networks have separate deals with individual franchises for regionally broadcast games. Games played in empty arenas could have positive and negative impacts on TV ratings. Some, perhaps most, NBA ticket holders who are denied a chance to attend games would probably watch those games on TV instead. Broadcasts would look and sound very different. The voices of players and coaches, as well as the sounds of sneakers squeaking and basketballs dribbled, would become much more pronounced. At the same time, the lack of cheering fans would be noticeable both visually and audibly. Whether these changes would overall help or hurt broadcast ratings is unknown.

The NBA and other leagues may have no choice

The NBA might not have final say on whether spectators are allowed in games. The same is true for MLB, the NFL and the NHL and their respective games. In order to combat the spread of COVID-19, federal, state and local governments could eventually take control over events that feature large gatherings of people. The Italian government has already taken this step: a few days ago, it ordered that all sporting events played in the country take place without fans present for at least the next month.

At the end of the day, public health is far more important than the playing or watching of sporting events. That principle will guide what ultimately happens with NBA games and other leagues’ games.

Michael McCann is SI’s Legal Analyst. He is also an attorney and the Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.