The COVID-19 pandemic — and corresponding shutdown of sports — has had a major impact on the media and advertising landscape.
The financial ramifications are starting to show throughout the industry. According to Sports Business Daily, streaming company DAZN has told sports leagues that it will not pay rights fees for any games that have been suspended by the coronavirus.
Sports Business Daily’s John Ourand reports that DAZN will continue to pay for games it already streamed, although it doesn’t plan on paying for any content that has failed to be delivered, and says that payment for future seasons will be deferred until leagues know when games will start.
“DAZN is believed to be the first media company with U.S. ties to withhold rights fees,” Ourand wrote. “Most media rights contracts mandate that networks continue to make payments even when games are not played. In the past, those payments have occurred during various work stoppages.”
A Sports Illustrated article on DAZN quoted a “high-profile sports media consultant” that said, “typically it’s been a three-link value chain (distributor, channel and content provider), where risk is diversified and everyone is incentivized to work together because there is always a next season. In this case however, DAZN, as a stand-alone digital streaming platform, is both the producer of the content as well as the distributor so they’ve assumed more risk.”
DAZN, which has streaming rights to boxing, MMA, MLB, Champions League, WTA Tour and MotoGP, has told employees that a number of them will be furloughed in the coming weeks.
DAZN employees aren’t alone. Sports Illustrated announced another series of layoffs this week, while organizations all across the sports industry have begun to announce how businesses are adjusting to decreased revenue.