Dick’s Sporting Goods is sending letters to landlords indicating that will reduce or outright not pay rent due to the “unprecedented situation” created by the COVID-19 pandemic.
According to two letters to landlords obtained by the Pittsburgh Business Times, Dick’s indicated it will be exercising “force majeure,” a common clause in legal contracts that allows either party to limit their liability in the face of some unforeseeable, extraordinary event.
“The COVID-19 pandemic constitutes a force majeure event,” wrote Matt Irvin Dick’s general counsel, in a letter dated March 19. He further argued that “any store closures resulting from or in response to the COVID-19 pandemic are permitted” under force majeure.
The letters come as Dick’s temporarily closed all its doors on March 17 with plans to open on April 2 although that’s been extended. A recent update on its website reads, “Our temporary store closures remain in effect. Customers can continue to shop via our mobile apps and online and through our new Curbside Contactless Pickup, available at DICK’S and Golf Galaxy locations, seven days a week.”
In the second letter dated March 27, Dick’s CFO Lee Belitsky wrote, “We have determined that Dick’s Sporting Goods has the right to abate all rent” starting when the stores were initially closed over COVID-19.
Belitsky’s letter reportedly itemizes all the different rent obligations the company expected to not have to pay due to the store closings, including base and percentage rent, charges for taxes and common area maintenance, and insurance.
“Legal rights aside, we recognize the significant and mutual financial pain caused by the unprecedented situation,” wrote Belitsky.
The Pittsburgh Business Times report said Dick’s offered different compromises to landlords based on whether the store’s closure was Dick’s call or whether it was required to by the government or the landlord because of COVID-19 shelter-in-place orders.
