Fubo under fire over sportsbook closure and $12.4m New York Jets deal
NFL team asks for court intervention over “defaults and bad faith” overdue sponsorship monies owed by shuttered brand
Fubo Gaming is potentially facing a court claim for $12.4m in damages from its sports betting sponsorship partner, NFL’s New York Jets.
A five-year agreement between the two was concluded in September 2021 and was Fubo’s first sportsbook sponsorship deal with a professional sports team.
The partnership centered around the creation of a Fubo Sportsbook Lounge at the MetLife Stadium for Jets’ home games. In addition, Fubo agreed to become the presenting partner of the Jets’ mobile app, with the deal utilizing the Jets’ advertising-led data partnership with sports data firm Sportradar.
Fubo Gaming agreed to pay $12,432,670 in sponsorship fees over the five-year term of the agreement.
However, in August 2022, Fubo commenced a strategic review of the sports betting business, citing changes in the “rapidly-evolving macroeconomic environment” in the US market. This environment would lead to Fubo shuttering the Fubo Sportsbook brand last month.
Under its agreement with the Jets, Fubo was due to pay an installment of $1,181,250 on October 1, 2022, monies which the NFL side have not received.
In a letter dated October 25, the Jets took aim at their sportsbook partner, suggesting it had “fully performed” under the terms of the deal and provided substantial marketing assets, as well as incurring significant expenses to build, staff and operate the Fubo Sportsbook Lounge.
“The Jets were shocked to learn late last week, from public reporting, of an additional default by the filing for dissolution of Fubo Gaming in Delaware and its ceasing of all operations, both at the direction of the Board of Directors of its parent company,” the letter states.
“These actions by Fubo are a blatant act of bad faith. The Jets intend to take all actions necessary to recover the damages suffered as a result of Fubo’s defaults and bad faith,” it adds.
The Jets’ letter suggests the NFL side is willing to discuss a “mutually agreeable resolution” of the deal, but with payment of the amounts owed.
Conversations between the general counsels of both parties have already been undertaken, with Fubo suggesting its willingness to engage in discussions to agree an “amicable resolution” to the deal, but only once its other creditor claims are satisfied.
In response, the Jets demanded financial information including a copy of Fubo’s balance sheet to assess its ability to pay its debts by October 28, a deadline which has not been met by the embattled operator.
As a result, the Jets have asked Delaware’s Chancery Court to appoint a receiver for Fubo Gaming to ensure the sponsorship monies can be reclaimed. The court, which is a non-jury trial court, adjudicates cases involving commercial litigation.
A court appointed tool, receivers are paid any assets of a defaulting company which can be liquidated in order to pay back the outstanding debt to the aggrieved party.