DAZN will withhold rights fees- announces layoffs coming

The uncertainty of the Coronavirus outbreak and the tenuous economic situation in the U.S. has forced a first major broadcaster, DAZN streaming, to take drastic action on Tuesday.

Sports Business Journal broke the story mid-morning that they had obtained an email from DAZN CEO, Simon Denyer, telling employees that the streaming company will be furloughing, or laying off, a good portion of their workforce in the coming weeks.

Further and more significant for its long-term sustainability, DAZN has begun reaching out to sports leagues worldwide saying they will not be paying rights fees for games that are not being played due to the COVID-19 pandemic:

DAZN has started telling sports leagues that it will not pay rights fees for games that have been suspended or cancelled because of the coronavirus pandemic, sources say. DAZN is believed to be the first media company to make such a decision. Story coming in SBD.

— John Ourand (@Ourand_SBJ) March 31, 2020

The email SBJ obtained read in part,

This would involve your job remaining open for you after the crisis period. Full details of this will be communicated as soon as possible,” Denyer said. 

“I know for many of you that this message will create anxiety and uncertainty. I am deeply sorry for that, as I know all of us have our own personal challenges and stresses at the moment. This is the biggest disaster to hit the sports world in 75 years and the biggest challenge our business has ever faced.”  

DAZN has rights deals with Major League Baseball (U.S.), Champions League (Europe) soccer, the WTA tennis tour and obviously, with boxing promotions to stream fights all over the globe.

With boxing, like all other professional sports having shut down earlier this month and postponing or outright canceling fight cards all the way through the end of May, it was inevitable that entities, like DAZN, would the forced to make tough decisions.

What is unclear is what this means for DAZN’s relationships with Matchroom Boxing and Golden Boy Promotions? They are the two main suppliers of DAZN’s boxing programming.

More than likely, it’s simply means that if there was any money being guaranteed as an advance to those promotions, that’s now obviously not going to be paid without the fights.

What’s bigger is: something like a situation with four division World Champ, Canelo Alvarez. Alvarez signed an historic 11 fight deal for over $330 million with the the streaming service in the fall of 2018. That money is obviously predicated on Alvarez fighting, which he has done three times on the deal. So more than likely, DAZN doesn’t owe Canelo anything unless there is an actual fight card put together.

We wrote previously early in the month that John Skipper, the DAZN top executive who negotiated most of their massive deals with sports leagues and the boxing promotions, went and met with Canelo personally to set their schedule into motion for later this year. That included guaranteeing a May 2nd fight date in Las Vegas, which was most likely to have been against WBO super middleweight champ Billy Joe Saunders.

That fight has been on hold because of the COVID-19 outbreak and now, may not happen at all, due to Saunders being suspended by the British Boxing Board of Control on Monday for comments he made on a social media video about domestic violence over the weekend.

The bigger agreement that Skipper reportedly got from Alvarez in their face to face meeting was to have a third fight with IBF Middleweight title holder, Gennady Golovkin (shown above) in September. That potentially lucrative mega-fight still could possibly take place, depending on the virus outbreak subsiding and boxing returning to normal by this fall.

Still, the biggest issue is that DAZN is based purely on subscriber revenue. And, without the games and the fights, etc. they have to be losing monthly users by the thousands, if not greater each week. And, that’s revenue in the millions, if not tens of millions monthly. DAZN doesn’t make subscriber info public to know what they’ve had, what they’ve lost, etc.

Now, we wait to see what other outlets are entities will follow suit to what DAZN has elected to proactively do with layoffs and not paying sports entities, etc. to beginning in April.