Rethinking Force Majeure and Other Lessons Shared and Learned

April 13, 2021 Rethinking Force Majeure and Other Lessons Shared and Learned

We had a great series of small-group conversations last week at our TicketManager All Access Round Tables. To encourage transparency, we promised to keep the participants and details private, but here are a few takeaways that don’t disclose anything proprietary.

Since the start of the pandemic, there has been near universal agreement that sponsorship contracts must become more specific about whether a pandemic constitutes an “Act of God,” as well as go into greater detail about damages and remedies for cancelled events or interrupted seasons. Easier said than done.

But resourceful brand marketers have come up with one solution that elegantly sidesteps the challenge of defining “force majeure”. The mechanism ties sponsorship fees to attendance tiers, often on a sliding scale, focusing not on the reason behind the empty seats, but something more quantitative.

For example, if attendance is over 50 percent of capacity, the sponsor pays full price. Between 25 percent and 50 percent, a lesser amount is owed. Below 25 percent and the sponsor may be off the hook for the fee. The specifics vary widely.

Acknowledging that this language doesn’t address every benefit of sponsorship—corporate partners can still derive substantial value even without live attendance—it is a vast improvement over many current contracts that are rife with ambiguous language and have no tangible benchmarks, targets or remedies.

Another takeaway of listening to the discussion among brands, properties and agencies, was simply the need for more open dialogue among sports marketing professionals. There is no substitute for an unfiltered exchange of information and ideas.

Just a single topic—the question of recouping sponsorship value lost to COVID-restricted or cancelled events—elicited a wide range of stories. Brands who had been reluctant to ask for cash refunds heard how others had successfully secured them. Teams that had struggled to make up hospitality benefits lost to the pandemic heard examples of how their peers had substituted golf outings for suite experiences.

This week’s round tables were a great reminder that as an industry, we are always better when we have the opportunity for open and honest exchange of insights, challenges, success stories and failures.