Categories
contracts legal USL USL Championship

USL seeks to have Force Majeure Clause

Note: It now appears that USL will return to action; details are forthcoming.

MIAMI, Fla. — (4 June 2020) As negotiations go on between the USL Players Association and the USL Championship involving a return to play as well as pay cuts for players, the league is seeking to have a force majeure clause inserted into players’ contracts.

The force majeure clause would become effective if the 2020 USL Championship season is cancelled due to the COVID-19 pandemic.

As the present time, the standard USL contract does not contain a force majeure clause, which is a contractual clause that excuses a party or parties to a contract from performing their side of the contract without being liable for breach of contract. 

The USL’s proposed force majeure period began on March 12th — when the league began its suspension of play due to COVID-19 — but would not affect standing player contracts until on or after May 31, 2020.

The document sent to the USL players association contains two potential large payment reductions and vary depending on whether a player is provided housing by his club. Players with families often opt for their own housing separate from team-secured, multi-player units. The document also includes a proposed new pay scale if play resumes more than 30 days after May 31st, and covers players who receive club housing as well as those who do not.  

The section outlining these changes is referred to as Article 1.B.1 and reads as follows [without grammatical errors left unchanged]:

  • If a player receives housing from their club, their housing will not be affected, and the rest of their salary may be prorated and reduced to $1,500 per month if it previously exceeded that figure. If the season resumes, the player’s first $1,000 of salary per month would be unchanged, but each additional $1,000 would be reduced in increasing increments of 20% (i.e., any amount above $4,000 per month could be reduced up to 80% after the first $1,000).
  • If a player does not receive housing from their club, their salary may be reduced to $1,800 per month if it previously exceeded that figure. If the season resumes, the first $1,300 per month would be left untouched, and each additional $1,000 would be reduced in increasing increments of 20% (i.e., any amount above $4,300 per month could be reduced up to 80% after the first $1,300). 

The force majeure document also outlines payment for a “Hub” scenario where play resumes at one or more designated places serving as “home” for multiple clubs. If that scenario played out for more than 14 days, players would receive either the compensation set forth in the pay cut scale summarized above, or any per diems they would have been entitled to otherwise (whichever is larger).

It is estimated that these clauses would likely combine to cut a maximum of $100,000-to-$200,000 off of many clubs’ wage budgets.

Players were very anxious over the possibility of the season being cancelled, since Addendum B of the standard USL contract states that payment shall end on either the last regular season or playoff game, or a fixed later date. Many clubs set that final date for November 30th — a full week after the USL Championship final, which makes a full ten-month contract dating back to February. However, if the league were to cancel its 2020 season, clubs who elect for the first option in player contracts [i.e. payment ends on the last regular season game] could cease payment to its players without breaching the contract. This could easily become the subject of a legal battle clubs and players, since the livelihood of the player is at stake. Players would likely argue that their compensation period should not be affected due to something out of the club and players’ shared control. The clubs would also be able to counter by asserting various defenses to contracts.

Hence the reason the league is seeking a force majeure clause. That clause basically stands for the proposition that if the league cancels its season before October 1st, the pay reduction summarized above would apply for no more than 30 days from the date of cancellation. After that point, a club would not be obligated to pay a player any remaining compensation or benefits for the 2020 season. 

Sources say the players did not take these potential cuts kindly. The USL already has low salary figures overall. It is unclear whether MLS-affiliated clubs would also cut payments. It’s also unlikely that the strongest independent clubs would ratify such a change, with one prominent club telling its players that they wouldn’t move forward with these changes even if the USLPA agreed to terms. 

The pandemic has hit smaller clubs harder due to their reliance on matchday revenues such as ticket sales, concessions, merchandise and parking. Without a large media rights deal as in other major leagues across the country, the USL boils down to being a live-event business that currently has no live events. While many USL clubs have a relatively small number of front office staff compared to MLS, a significant number of clubs have been forced to furlough staff (as has USL HQ) as well as implement other cost-saving measures.

To understand the league’s predicament, as of now, roughly 40 percent of total annual compensation across the league has been paid to players (their full wages to this point) despite only 3% of total matches occurring. From the players’ perspective, they are obligated by contract to continue training regardless of the postponed or cut matches. Given the fact that a lot of players have their payments end as soon as the season ends, any extension of the season could help preserve the ongoing paychecks for a significant number of players. 

USL president Jake Edwards recently highlighted the league’s upcoming expansion launches on ESPN’s “Banter” with Taylor Twellman. Edwards named four Championship expansion pushes in Monterey, California (with the same primary owner as Fresno FC), Baltimore, Cleveland and Milwaukee; the league also has agreements with Des Moines and Providence (Pawtucket, RI) if the markets can secure funding for a soccer-specific stadium. Meanwhile, third-division League One could announce five new markets by the end of this year with another 10 cities in active conversations about joining down the road. The league also unveiled its detailed USL Academy League protocol this week, with participation likely from clubs in both the Championship and League One, as well as developmental summer League Two.

Cover Photo: El Paso Locomotive defender Mechack Jérôme breaks out against the OKC Energy in the inaugural game of the USL club at Southwest University Park (Photo: Ivan Pierre Aguirre for El Paso Locomotive FC)

By Ken Russo

My work in the business of soccer applies skills acquired in law practice with a focus on the sport's commercial, communications and sporting components. Russo Soccer aims to inform, educate and engage in dialogue on news and relevant issues in the game.

Um advogado por formação, concentro meu trabalho nos negócios, comunicações e operações de equipes no futebol mundial. | Abogado con fundación avanzada en comunicaciones, enfocado en los negocios del fútbol y las comunicaciones. | Je suis un avocat experimenté dans les affaires de football.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s