What is 'force majeure' and why might sports leagues invoke it during the coronavirus pandemic?

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There was a recent report from ESPN’s Adrian Wojnarowski that stated the NBA “plans” to keep paying player salaries through April 1 as the coronavirus pandemic continues and the league is suspended during social distancing.

But in there, Wojnarowski mentions that the league “left open the possibility of recouping future salaries for canceled games on April 15,” per a memo.

That would be due to “force majeure.” If you’re wondering what that’s all about, we’re here to explain what it means, and what it could mean for sports leagues.

What does “force majeure” mean?

Per a definition from Merriam Webster: “an event or effect that cannot be reasonably anticipated or controlled.” In French, it literally means “superior force.”

Seems like this is an event that wasn’t anticipated or controlled.

You got it.

So what does that have to do with leagues like the NBA and NHL?

Actually, “force majeure” is a pretty standard clause in many contracts. From the National Law Review

A Force Majeure Clause is a contract provision present in most commercial contracts that excuses a party’s performance of its obligations under the contract when certain circumstances arise beyond the party’s control making performance inadvisable, commercially impracticable, illegal, or impossible. Force Majeure Clauses provide a list of extreme events (generally called force majeure events) that, if they occur, can excuse a party’s performance under the contract. Force Majeure Clauses can vary greatly in language and length; however, many include events like epidemics or pandemics, along with war, terrorist attacks, “acts of God,” famine, strikes, and fire in the list of events excusing overall performance or delay in performance.

What does that mean for sports leagues like the NBA and NHL, who have suspended their seasons?

It could mean they can withhold player salaries. From Wojnarowski’s story:

Force majeure allows for the withholding of 1/92.6 of a player’s seasonal salary per canceled game based upon catastrophic circumstances. …

Players on a payment schedule of 12 installments that began Nov. 15 will have been paid 90% of their salary after the April 1 payments, according to ESPN’s Bobby Marks. For the players who chose to be paid over the entire calendar year starting on Nov. 15, a projected 60% of their salary will still be owed.

If the NBA exercised the force majeure to reflect missed games now, the league could pay the players later if those games were made up during a later resumption of play.

NHL deputy commissioner Bill Daly told ESPN earlier this month that players will be paid all three of their final paychecks:

This wasn’t guaranteed for the players when the season was officially put on hold this week. The collective bargaining agreement gives NHL owners the ability to negotiate a different salary level for players in the event that the league “suspends, ceases or reduces operations” in its season due to “a state of war or other cause beyond the control of the League or of the Club.”

There’s been no word yet what Major League Baseball will do.

Who else might be affected by force majeure?

Advertisers. Digiday has an extended look about how agencies can use the clause to get back money that they might have spent on campaigns:

A force majeure clause isn’t a right to terminate a campaign because coronavirus fears have canceled a sporting event. Rather, it’s an agreement that if the virus prevents a campaign from running then terms of the contract can’t be fulfilled and the media dollars go back to the advertiser. In other words, an unforeseeable circumstance like the coronavirus won’t always prevent an advertiser’s campaign from running, particularly on TV or online where people can still see it.

This sounds like it could get messy.

It’s possible, and with so much up in the air about when/if these leagues will resume play in 2020, it’s possible we won’t hear about “force majeure” being invoked for a little while.