Why is the Holiday Bowl suing Pac-12, UC Regents for $3 million in damages?

Less than five hours before the kickoff of the 2021 Holiday Bowl, a COVID-19-ravaged UCLA team announced it couldn’t participate in the bowl game, forcing its cancelation.

The Holiday Bowl, which filed a lawsuit Tuesday evening against the Pac-12 Conference and the regents of the University of California, which governs UCLA, now seeks more than $3 million in damages stemming from the Bruins pulling out the day of the game. The complaint, filed in California Superior Court in San Diego County, and the ongoing dispute represent a rare public display of acrimony between two long-standing partners.

Even though the relationship between the Holiday Bowl and the Pac-12 dates to the late-1990s, the two parties failed to resolve the situation over the past 17-plus months. In continued discussions with Holiday Bowl officials, the Pac-12 tried to resolve the situation through mediation, a source familiar with the talks told On3, and offered an interest-free loan to the Holiday Bowl to address financial issues that also stemmed from the cancelation of the 2020 game because of the pandemic. 

“The Pac-12 has documentation to prove that,” the source said, adding that the Holiday Bowl broke off talks with the league some six months ago.

Holiday Bowl organizers claim to have lost $7.8 million

In the complaint, the San Diego Bowl Game Association (SDBGA), the non-profit that annually hosts the game, said it has engaged and “continues to engage in good faith” with the Pac-12 to negotiate a resolution without success. Messages from On3 to SDBGA attorneys seeking clarity on the nature of the discussions were not immediately returned. Details of the Pac-12’s version of the discussions were first reported by USA Today.

The Holiday Bowl contends the last-minute cancelation of the 2021 game made finding a replacement team to play North Carolina State impossible. As a result, the complaint said, revenue losses exceeded $7.8 million. That included SDBGA forfeiting ticket revenue of more than $3.6 million, a loss of $1.4 million in revenue from title sponsorship San Diego County Credit Union and more than $2.8 million that had to be returned or forfeited from additional ticket, media rights, partner and sponsor-related revenue, the complaint claims.

Additionally, SDBGA said it incurred “substantial” expenditures from preparing for the game, including costs to secure and transform Petco Park into a football stadium, which went unreimbursed.

Pac-12’s official response

The Pac-12 issued a statement in response to the lawsuit: “Despite the Pac-12’s good faith efforts to find an amicable and fair resolution, the Holiday Bowl filed a lawsuit this week seeking to leverage for its own financial gain the global COVID-19 pandemic which led to the cancelation of the 2021 Holiday Bowl. The Holiday Bowl is now also refusing to pay the fees it owes the Pac-12 for our member institution’s participation in the 2022 Holiday Bowl, in clear breach of our agreement. The Pac-12 plans to vigorously defend against the lawsuit, which is wholly without merit, and to seek the monies owed by the Holiday Bowl under our agreement.”

The Holiday Bowl has not paid the Pac-12 the $2.45 million it owes for Oregon‘s participation in the 2022 Holiday Bowl. SDBGA said the $2.45 million would be applied toward damages for the cancelation of the 2021 bowl game. 

“The amount would be applied against the more than $3 million in damages owing for the breach of contract and failure to indemnify SDBGA due to UCLA’s refusal to play in the 2021 Holiday Bowl game,” the complaint said. “This offset was fair, just and equitable, but has not fully compensated SDBGA for its losses, the unpaid balance of which continues to accrue prejudgment interest.”

Contract language a point of contention

A central point of contention is the application of the “force majeure” provision in the most recent contract between SDBGA and the Pac-12, signed in 2019. Specifically at issue is whether the Pac-12 has interpreted it correctly as a basis for UCLA not participating in the 2021 bowl game. 

It reads: “No party hereto shall be held responsible for damages caused by delay or failure to perform under this Agreement when such delay or failure is due to fire, act of God, national emergency, terrorist acts, labor dispute, inclement weather, legal acts of public impediment making the holding of the HBG undesirable upon the part of any party hereto, actions by any member or members of the opposing team scheduled to play in the HBG, or any unavoidable casualty, which cannot be reasonably forecast or provided against. It is further understood and agreed between the parties that the HB shall not be responsible for any of the obligations assumed by other parties herein in the event that through no fault or negligence of the HB, any HBG is not played for any reason beyond the control of the HB.”

SDBGA said it has informed the Pac-12 that it disputes the applicability of the provision. The clause, the complaint said, could have been negotiated [in 2019] to “included pandemic impacts and considerations but was not. As other courts around the country consistently have found, force majeure clauses are interpreted narrowly according to their words such that the Pac-12 is not relieved of its contractual obligations under the express language of the 2019 contract.”