By Eric G. Kramer
The University of Utah (Utah) filed a complaint against Fresno State University (Fresno State) over a contract dispute regarding the cancellation of a men’s basketball contest this season. A game contract was executed between Utah and Fresno State on May 5th, 2020 to play a men’s basketball game on December 19th, 2020 at the Huntsman Center, Utah’s home basketball arena. Utah subsequently cancelled the contest citing “uncontrollable forces” caused by the COVID-19 pandemic, which posed significant financial and logistical challenges. This article will review the background of this case, along with the specifics of the complaint filed by Utah.
Background
The University of Utah is a member of the Pacific-12 Conference (Pac-12), which is considered a Power Five conference within NCAA Division I athletics. On August 11th, 2020, the Pac-12 initially postponed all basketball competitions for its member institutions until at least January 1st, 2021, citing health and safety concerns for student-athletes due to the COVID-19 pandemic. However, approximately six weeks later the Pac-12 revised its initial decision and allowed basketball competitions to commence on November 25th under stringent COVID-19 testing protocols. Given the later start date of the basketball season, and the complications associated with COVID-19, rescheduling non-conference opponents for the 2021-21 season has proven to be extremely challenging. Some of the COVID-19 impediments related to rescheduling non-conference games include state and local restrictions on travel, varying testing/contact tracing protocols, in-conference game scheduling, budgetary concerns, and individual institutional health and safety measures. These hindrances forced basketball programs across the country to reschedule and/or cancel several non-conference opponents.
Guarantee Games
It is commonplace for a Power Five men’s basketball program to schedule “guarantee games” with non-conference opponents prior to the start of in-conference competition. Guarantee games are designed for higher profile men’s basketball programs (i.e., Utah) to host lower profile programs (i.e., Fresno State) at their home venue in exchange for financial compensation. This concept allows higher profile programs to schedule almost certain wins to fill their home non-conference schedule against lower profile programs that benefit from the financial payout associated with the game.
Game Contracts
Game contracts in college athletics commonly include a range of provisions that attempt to protect the interests of both parties, given the payout for such games can be more than six figures. Such provisions regularly include the purpose and specified date of the event, the agreed upon rules of the game, game officials, eligibility of participants, tickets/credentials, media rights, etc. While each of those provisions are significant, the focus of this article will be on two other common provisions that are central to this case: uncontrollable forces and liquidated damages. The uncontrollable forces (e.g., exigent circumstances, force majeure, etc.) provision is designed to eliminate liability for the parties involved due to reasonably unforeseen circumstances that were beyond their control. Unsurprisingly, greater attention has been given to this provision in game contracts this year due to the COVID-19 pandemic. In addition to the uncontrollable forces provision, the liquidated damages provision is also essential in this case. If either party breaches the terms of the contract, the liquidated damages provision outlines the amount of money owed to the aggrieved party to be paid by the breaching party. In many game contracts, liquidated damages equal or exceed the amount of the financial guarantee to the visiting team.
Utah and Fresno State Men’s Basketball Game Contract
A game contract between Utah and Fresno State’s men’s basketball programs was agreed to on April 17th, 2020 for a game to be played on December 19th, 2020 in Salt Lake City, Utah. Subsequent to the verbal agreement, both parties signed the game contract on April 20th (Fresno State) and May 5th (Utah). The game contract included standard language for a guarantee game by outlining payment to be received by Fresno State in the amount of $90,000, two nights lodging in Salt Lake City, and 50 complimentary tickets to the game. The contract also included an uncontrollable forces provision in Section 7 of the contract which read:
Uncontrollable Forces: It is understood that neither party hereto can foresee exigencies which may arise by reason of unusual circumstances beyond their reasonable control, including acts of God, acts of nature, or actions of any governing regulatory body, including but not limited to the NCAA or any governing athletic conference. Either party may delay or cancel any scheduled Game for reason due to uncontrollable forces by providing written notice of delay or cancellation to the other party immediately upon the occurrence of any such uncontrollable event.
In addition, the liquidated damages provision within the contract states that a cancellation or failure for either team to participate in the contest for reasons beyond the uncontrollable forces listed in Section 7, or an inability to reschedule the contest at a mutually agreed upon alternative date, will result in a $200,000 payment to the aggrieved party.
Case Details
Utah filed a complaint with the Third Judicial District Court in Utah on November 12th, 2020 seeking a resolution to a contract dispute with Fresno State regarding an Intercollegiate Athletic Event Agreement between their men’s basketball programs. Proclaiming a controversy has occurred between both parties, Utah seeks a judicial declaration to settle the disputed terms of the contract.
Utah cited the challenges that men’s basketball programs throughout the country encountered with the COVID-19 pandemic. The pandemic forced the NCAA to push back the start date of men’s basketball competitions to November 25th (originally scheduled to start November 13th), thereby limiting the window in which teams could schedule non-conference games prior to the start of conference season. In addition, many conferences limited the number of non-conference games it allowed its member institutions to participate in. Consequently, a vast number of non-conference games had to be cancelled or rescheduled, both within the current season and for future seasons.
Specific to this case, Utah identified two primary reasons why the pandemic, an uncontrollable force, has fundamentally altered the agreement between these two parties stemming from the limitations set forth by the Pac-12 conference. First, Utah acknowledged the Pac-12’s restraints on the number of non-conference games allowed for the 2020-21 academic year. Second, the Pac-12 also prevented its member institutions from allowing fans to attend games in person, thereby negatively impacting gate revenue. Utah has been able to reschedule non-conference games or renegotiate the game contract terms with all other institutions on their 2020-21 non-conference schedule given the aforementioned circumstances. Fresno State remains the only institution on their non-conference schedule in which they have not come to a resolution.
Fresno State claimed that they have made a good faith effort to renegotiate the terms of the game contract with Utah with the understanding of the difficult circumstances presented by the pandemic. In response to Utah’s offer of a lesser financial payout for the contracted game, Fresno State proposed a counter offer to accept the lower payment for this year’s game in exchange for a commitment to a game to be played at Fresno State for the 2021-22 season or another mutually agreed upon season.
Upon Utah’s rejection of this proposal and consequent cancellation of the game, Fresno State requested that Utah pay the liquidated damages stated in the game contract. Fresno State asserted that Utah’s claims of a limited non-conference schedule and reduced gate receipts are not sufficient to meet the standard of uncontrollable forces resulting in a cancellation or fundamental alteration of the terms within the game contract. First, while acknowledging Utah’s non-conference schedule was limited, Fresno State also recognizes that Utah had control of which non-conference games that they play and don’t play this year. Second, basketball games are still being played across the country without fans. Given the fact that Utah offered to play this game under a reduced financial payout proves that not having fans does not prevent a basketball game from being played. For these reasons, Fresno State does not believe that the pandemic should be considered an uncontrollable force that would prevent basketball games from being played in the state of Utah, and thus the terms of the contract have been breached.
Declaratory Judgment
Utah is seeking a declaratory judgment from the court to determine that the elements associated with this case, in light of the COVID-19 pandemic, should be considered Uncontrollable Forces identified in Section 7 of the game contract. Such a declaration would permit Utah to cancel the game without being subjected to the liquidated damages outlined in Section 8 of the game contract.
Eric G. Kramer is an Associate Director of Athletics for Compliance and Sport Administration at Missouri Western State University and a Ph.D. candidate at Troy University specializing in research related to legal aspects of sport, sport governance, NCAA compliance, and student-athlete development.
