New York – Streaming service DAZN has told sports leagues it will not pay rights fees for any suspended or canceled games amid the COVID-19 pandemic, according to a source familiar with the matter.
The streaming service is the first media company operating in the United States that has decided to withhold fees, which are paid to sports leagues for the right to air events, as broadcast networks have traditionally continued to pay the fees when games have not aired. The move was first reported earlier on Tuesday by Sports Business Journal.
With payments due at the end of March or beginning of April, the company told partners that it will only pay for games played, said the person, who asked not to be named because of the sensitive nature of the matter.
DAZN won’t pay for canceled or postponed matches or those or without a resumption date, and will also not pay for future seasons until the company is given an update on when those seasons will begin. The streaming startup did not want to continue paying the fees because it has no clarity on when sports seasons will resume, and is focused on defraying costs, the source added.
The streaming service, which launched in Germany and Japan in 2016, is available in nine countries including the United States and Canada.
It has spent lavishly for rights, including a $1 billion partnership with Matchroom Boxing and a $365 million deal with boxer Canelo Alvarez, which at the time was the richest athlete contract in sports history.
In Japan, DAZN has become a major player in domestic and international sports over the last few years. Its local broadcasts include Nippon Professional Baseball, the J. League, the B. League, MLB, the English Premier League and the Champions League.
Asked about the report during a Wednesday news conference, J. League Chairman Mitsuru Murai said there was "no change" to the 10-year, $2 billion contract between the league and DAZN, which he called an "important partner."
In a letter to employees, CEO Simon Denyer said the company’s board is "officially placing DAZN in survive mode.”
The plan includes freezing hiring, suspending salary reviews and temporarily laying off an unspecified number of employees.
"There is no hiding that it is the biggest disaster to hit the sports world in 75 years and the biggest challenge our business has ever faced,” Denyer said. "With revenues dropping and investment not available, we can only survive by making some hard decisions.”
Led by former ESPN head John Skipper, DAZN was in the process of trying to raise at least $500 million when the global pandemic hit. It also had plans to launch some of its products in 200 more countries around the world.