A Summary of the Premier League v PPLIVE Sports International Limited



Background

The Premier League (‘PL’) and PPLIVE Sports International Limited (‘PPTV’) entered into two separate contracts:

Contract 1 – PPTV obtained the rights to show full PL football matches on TV in China from August 2019 to June 2022 (three seasons in total). PPTV agreed to pay the Premier League US$701 million. 

Contract 2 – PPTV obtained the rights to show highlights of PL matches on TV in China during the same three seasons. PPTV agreed to pay the Premier League US$8.02 million.

On 1 March 2020, the World Health Organisation declared Covid-19 to be a pandemic. PL matches were temporarily suspended on 13 March 2020. PPTV missed two payment instalments. US$210.3 million which was due on 1 March 2020 under Contract 1 and US$2.673 million which was due on 1 June 2020 under Contract 2. 

All 92 remaining PL matches in the 2019/20 season were played between 14 June 2020 and 26 July 2020. The PL continued to provide live feeds and highlights to PPTV for the remaining 92 matches. 

The PL terminated both contracts on 3 September 2020 because PPTV had still not paid the instalments. A claim form was issued by the PL on 3 September 2020 to the court seeking payment of the two outstanding instalments. The PL then applied for summary judgement of the whole claim.

What is Summary Judgement?

Summary judgement (under CPR Part 24) occurs when a judge determines the outcome of a whole claim or specific issue within a claim without the need for a trial. For the PL (the claimant) to obtain summary judgement, the judge had to be satisfied that PPTV (the defendant) had no real prospect of defending the claim or issue, and there was no other compelling reason why the claim or issue should go to trial. 

When determining this, a judge must consider the following principles:

  • The defendant must have a realistic, as opposed to fanciful, prospect of success (‘realistic’ means the defendant’s defence is more than merely arguable).
  • A summary judgement application is not a mini trial (however, the judge must still properly analyse the defendant’s evidence).
  • A judge must not only take into account the evidence submitted for a summary judgement application, but the evidence that can be reasonably expected to be available at trial.
  • Whether reasonable grounds exist for believing a fuller investigation into the facts of a case would add or alter the evidence available at trial and so affect the outcome of the case. 
  • Whether the judge is satisfied that he has all the evidence necessary, and the parties have had an adequate opportunity to address the evidence in their arguments. 

Main Legal Issues 

The PL had promised to PPTV that:

Clause 12.1(d) “…during the Term the format of the Competition will not undergo any fundamental change which would have a material adverse effect on the exercise of the Rights by the Licensee and, for the purposes of this sub-clause, a fundamental change shall include any change which results in:

(i) the total number of Clubs being reduced to less than eighteen (18); or

(ii) the Competition ceasing to be the premier league competition played between professional football clubs in England and Wales.

If any such fundamental change to the format of the Competition occurs during the Term, then (without prejudice to its other rights and remedies) the Licensee shall be entitled to enter into a period of good faith negotiations with the Premier League in order to discuss a possible reduction of the Fees…

PPTV’s main argument was that the format of the competition had been fundamentally changed due to the schedule interruption, and the way in which the remaining matches were played (i.e. without fans and at different times). PPTV contended that these changes had an adverse effect on their use of the rights granted.  

The judge noted that, in his opinion, PPTV would have a realistic prospect of success at trial on the issue of material adverse effect. However, this issue would only be relevant if there was a fundamental change in the first place. 

In determining whether there had been a fundamental change, the judge considered the differences between matches before the competition was suspended and after:

  • Following the suspension there were no fans. One of the most recognisable and important features of PL football is the atmosphere created by home and away fans.
  • The proportion of weekend fixtures fell from approximately 79% (prior to suspension) to 43% (following the suspension); the proportion of midweek fixtures correspondingly rose from 21% to 57%. 
  • The overall frequency of fixtures also increased to an average of 2.3 fixtures per day (compared to an expected average frequency of approximately 1.4 fixtures per day).
  • The proportion of fixtures scheduled to kick-off at or after midnight (China Standard Time) rose from 33% to 67%, and the number of fixtures scheduled to kick-off at or after 2am (CST) rose from 16% to 32%. 

The PL argued that there had been no change at all to the format of the competition, let alone any fundamental change. They highlighted the examples of changes to the format set out under Clause 12.1(d)(i) and (ii) (see above), for example, a change to the number of clubs in the competition. The PL explained that there was no such change to the actual format of the competition in the sense that 3 points were still 3 points, and each team played each team home and away, etc. 

Ultimately, the judge agreed with the PL, he found that there was no such fundamental change to the format of the competition for the following reasons: 

  • ‘Format’ of the competition does not include kick-off times.
Due to the wording of the contracts, the dates and times of matches were entirely in the discretion of the PL, and PPTV was given no rights to be consulted or involved in this decision. Further, there was no provision or warranty provided by the Premier League that kick-off times (or the days of matches) would be chosen to suit the Chinese market. 

  • ‘Format’ of the competition does not include the days when matches are played. 

Again, the wording of the contracts assisted the PL. ‘Season’ was defined as follows:

    "…any season of Matches during the Term commencing with the first scheduled Match set out in the Fixture List for that season (which shall usually be scheduled for August in each year) and ending with the last scheduled Match set out in the Fixture List for that season (which shall usually be scheduled for April or May of the following year) but including any extension of that season so as to include postponed or rearranged Matches." 

The use of the word ‘usually’, and the express provision that season includes ‘any extension’ to include postponed or rearranged matches made it clear to the judge that the resumption of the season in June 2020 (which ran into late July 2020) did not impact upon the nature of the contractual rights and did not alter the format of the competition. 

  • ‘Format’ of the competition does not include the number of fans in attendance. 

There was no express wording in either contract referring to the presence of fans or how many fans would be in each stadium.  

PPTV’s Main Defences and Counterclaim

  • The instalments were ‘advance payments’ and by paying the outstanding instalments they will have paid more than one third of the total fee but only broadcast one season out of three. 

The judge dismissed this argument, it was not one third of the fee per season, for three seasons. It was one fee (payable in instalments) for three seasons. Failure to pay an instalment of the fee would give rise to termination rights. It would wholly rewrite the contract terms were the court to permit this argument. 

  • The PL’s ability to terminate the contracts, reclaim the rights to live games and highlights, while at the same time claiming payment from PPTV amounted to a disguised penalty clause which is not allowed.  

Again, the judge dismissed this argument; a penalty clause is a secondary obligation that imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of a primary obligation. In this case, PPTV’s obligation to pay the instalments is a primary obligation, not a secondary obligation. 

  • PPTV counterclaimed that the PL had breached the contract by not entering into good faith negotiations under clause 12.1(d). 

The obligation on the PL to negotiate the fee arises if there was a fundamental change to the format of the competition, and as already discussed above, there was no fundamental change. 

Overall, the judge was critical of PPTV’s arguments, describing them as “practically unarguable” and “wholly misplaced”. He concluded that PPTV had no real prospect of defending the claim and there were no other compelling reasons why the case should go to trial. 

Afterthoughts

This case highlights the importance of having a well-drafted contract. Many of the issues and arguments in this case were easily decided because the judge was guided by the express wording in the contracts. Broad wording such as ‘usually’ and narrow wording such as ‘format of the competition’ were expertly used to put the PL in a stronger position in the event of a dispute. 

Going forward, it will be interesting to see whether broadcasters negotiate greater protection against changes to the kick-off times and dates of matches, as opposed to just against changes to the ‘format of the competition’. While the PL ultimately owns the rights and may not agree to such protection, broadcasters in countries (like China) where the time difference is significant may want to consider the ability to renegotiate the value of such rights or have rebate provisions if a certain number of matches are broadcast, for example, after 2am or midweek. 

Click here to read the full judgement from Mr Justice Fraser. 



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