Coronavirus: Impact on Events & Sponsors

The outbreak of the coronavirus disease, also referred to as COVID-19, has been wreaking havoc on the world since December 2019. The fast spreading virus has been disrupting businesses and markets worldwide. In this report we identify the impact the coronavirus has had on events and sponsors.

But before we get into how the virus has affected travel, tourism, and events, let’s take a look at what this virus is: where it came from, how it spreads, how many people its already touched, and how the world is responding.

What is coronavirus (COVID-19)?

The virus strain was first identified to be spreading amongst people in Wuhan, Hubei Province, China. The first case was reported in December 2019 and has since infected 127,863 people globally and caused 4,718 deaths (as of March 12^th).

The challenge with COVID-19 is that it is primarily spread through respiratory droplets which make it easy to pass around. If you are standing within six feet of someone who is contagious and come into contact with these droplets, you could become infected.

And while this can cause panic, it’s important to also note that 68,310 people who were confirmed to have the virus, have recovered. That’s more than 50% thus far and expected to increase.

Equally important to realize is that 80% of all cases reported are MILD. The most vulnerable are elderly, people with chronic illnesses or compromised immune systems (children have not been widely impacted).

Coronavirus's Impact on Travel

Based on a survey conducted by the Global Business Travel Association (GBTA), business travel is forecasted to lose $820.7 billion in revenue due to Coronavirus.

Potential 2020 Business Travel Spend Revenue Loss Due to Coronavirus

How The World Is Responding

The World Health Organization has declared the coronavirus a pandemic. A pandemic is an epidemic (a sudden increase in the number of cases of a disease) that has spread over several countries or continents.

In an effort to prevent the spread of this virus, we have seen an abundance of travel bans as well as cancellations of concerts, festivals, parades, conferences, films, and TV shoots—worldwide.

Travel Bans

Earlier this year when the outbreak began in China, officials imposed various forms of travel restrictions ranging from residential communities being shut down to local roadways being closed off to non-essential vehicles and even closures of non-essential public venues. Beginning in February, major airlines had also halted flights to China and more than 50 countries or territories imposed travel restrictions on travelers who had been in China.

Since then, travel restrictions have grown significantly. IATA has a current updated list of all travel bans related to the Coronavirus outbreak at this link here.

• Most recently, President Trump ordered a travel ban from Europe for 30 days, beginning this Friday, March 13^th.
• Saudi Arabia followed suit by announcing its own travel ban on Europe.
• Italy is currently on national lock-down with bars and restaurants having been ordered to close for two weeks, and internal travel, tourism, weddings, and funerals have been banned.
• France announced a ban on all gatherings of more than 5,000 people and later updated that ban to gatherings of 1,000 people.

France, Spain and Germany are about 9 to 10 days behind Italy in COVID-19 progression; the UK and US follow at 13 to 16 days.

📊 France, Spain and Germany are about 9 to 10 days behind Italy in #COVID19 progression; the UK and the US follow at 13 to 16 days. In Italy we waited too long, these countries should really start implementing aggressive containment measures now. pic.twitter.com/xL7jUczpmY

— Silvia Merler (@SMerler) March 10, 2020

• Princess Cruises who has faced quarantines on two coronavirus-stricken ships has now canceled all planned trips until May 10^th.

Concerts

• Mariah Carey postponed her Hawaiian show until November
• Khalid’s Free Spirit World Tour was forced to cancel its entire Asia leg due to travel advisories
• BTS’s Map of the Soul Tour had to skip their Seoul appearance
• Stormzy has to reschedule his Heavy Is the Head World Tour shows in Asia and Zurich
• Green Day canceled several tour dates including shows scheduled in Singapore, Bangkok, Manila, Hong Kong, Seoul, Osaka, and Tokyo
• Avril Lavigne also postponed the Asian leg of her Head Above Water World Tour
• Madonna canceled two shows in Paris due to the ban on gatherings over 1,000 people
• Pearl Jam postponed their four-month North American tour
• Kiss is continuing their tour but has canceled all meet and greets on their End of the Road World Tour
• The Zac Brown Band postponed the spring leg of their Owl Tour

Festivals & Conferences

• SXSW canceled for the first time in their 33 years following an order by Austin Mayor Steve Adler. Several big brands including Netflix, Apple, Amazon, Facebook, Twitter, TikTok, and Intel has already pulled their contributions prior to the official cancellation
• Coachella postponed their music festival to October
• Stagecoach also postponed until October
• E3, the biggest trade show for video games which was scheduled for June 2020 has been canceled and plans to set up an “online experience” instead
• Houston Livestock Show and Rodeo was cut short as more than a dozen confirmed cases of coronavirus were discovered in the Houston area
• RuPaul’s DragCon LA was canceled entirely for 2020
• Prague Film Festival was canceled along with all screenings, elementary and high-school classes, sports matches, and other events by the Czech Ministry of Health
• The London Book Fair, one of the world’s largest international book festivals was forced to cancel
• Ultra Music Festival, scheduled for March 2020 in Miami was canceled along with Calle Ocho, Miami’s annual Carnival celebration
• Annual TED Conference scheduled for April 2020 will now be held virtually or postponed until July
• Tomorrowland Music Festival set for March 2020 was canceled due to restrictions on gatherings in France
• Livre Paris Book Fair also planned for March was canceled due to the restrictions on gatherings in France
• Google Cloud Next ’20 conference scheduled for April in San Francisco has been converted into a digital experience which will feature live-streaming keynotes and sessions
• Korean Times Music Festival scheduled for April has been indefinitely postponed due to travel restrictions in Asia

Sports

• 2020 BNP Paribas Open was the first major sporting event in the United States to be canceled but is expected to happen at a later date according to Tournament director Tommy Haas who says they will explore options
• Miami Open, one of the top tennis tournaments in the country was canceled as the city’s mayor announced a suspension of large events
• NCAA March Madness tournament games will go on as scheduled but fans will not be permitted to watch in the arenas
• The NBA has suspended its season after a player tested positive for coronavirus. This pandemic has forced many US Sports organizations to consider canceling events or holding them without fans present
• MLB has suspended spring training and regular season is expected to be delayed
• NHL suspended its season indefinitely
• Euroleague, the top European basketball competition suspended all games in Italy until April 11
• All World Cup qualifying games in Asia were postponed until the fall
• Japan has postponed the start of its baseball season
• The New York City Half Marathon was canceled as well as the Rome Marathon. Both Paris and Barcelona Marathons were postponed until October
• Montreal’s World Figure Skating Championships scheduled for March was canceled
• Alpine World Cup finals scheduled for March in Italy have been canceled
• The McLaren team pulled out of the 2020 Formula 1 Australian Grand Prix after a team member tested positive for the coronavirus

A plethora of teams [worldwide] not mentioned here have also experienced cancellations or have continued to play games without fans present. Several other smaller games and tournaments have been canceled or postponed.

Contractual Impacts of Cancellations

Between Events & Venues

One of the big questions right now is whether or not cancellations due to the coronavirus pandemic will fall under the force majeure clause of contracts. Those who have insurance would agree yes, but those without it would disagree.

Basically, force majeure clauses allow one side in a contract to suspend or end its obligations on account of an extraordinary and uncontrollable circumstance. These clauses can often be invoked with “acts of God”, including earthquakes, hurricanes, or other natural disasters that make it impossible or inadvisable for one or both sides to meet their obligations.

A recent survey by Meeting Professionals International showed that 73% of meeting professionals were unsure if their event cancellation insurance covers communicable disease—and another 20% said their insurance does not cover this.

Planners will need to communicate with their venue contacts to see if cancellations will be allowed or if there are other solutions that allow a reduction in event size, or potentially a rescheduling.

Joshua Grimes (MPI Philadelphia Area Chapter) of the Grimes Law Offices stated, "If the force majeure clause excuses performance ‘in part’ based on an unforeseen occurrence, the planner may have a contractual right to reduce the event without liability.”

He further added that another point to consider is what protection may be offered under the local laws in the meeting destination, a point addressed in the “choice of law” clause in contracts.

“This clause states which jurisdiction laws would govern the contract,” he says. “Some states and countries have statutory force majeure provisions that would help in something like a coronavirus situation.”

Between Teams & Sponsors

For sponsors particularly, this global disruption will likely spur legal battles over contractual obligations. While it may not be the event or sports team’s fault that cancellations are taking place, it certainly wouldn’t be fair to expect a sponsor to pay for assets they’re not receiving.

Conversations have already begun among teams who are playing games without fans. The sponsor is justified in arguing that the absence of fans in the arena significantly decreases the value of the sponsorship deal. Meanwhile, the team might argue that games are still being played and therefore the sponsor is still obligated to pay.

Realistically, because these types of business relationships are long-standing and mutually beneficial, agreements on how to handle the situation will likely be reached before going to court, arbitration, or mediation. Nonetheless, we may still see some contract disputes in the next few months.

Sources:

Frequently Asked Questions about Coronavirus Disease 2019 (COVID-19) newsroom.clevelandclinic.org

Coronavirus Live Updates washingtonpost.com

All the Concerts, Festivals, and Productions Affected by Coronavirus vulture.com

How the Coronavirus Is Disrupting Sports Events nytimes.com

Coronavirus Outbreak Could Prompt Alarming Ripple Effect Across Sports si.com

Does Your Force Majeure Clause Cover the Coronavirus? mpi.org