The financial fallout from cancelling MWC could get messy

A lot of money was lost the moment the GSMA made the decision to cancel MWC 2020 and the process of trying to recoup some of it seems to have already started.

The GSMA itself hasn’t issued any formal announcements since last Wednesday, but it has found time to give an interview to Bloomberg. In it Mats Granryd, director general of the GSMA, said “We’re looking for solidarity and everybody bearing their own costs,” before insisting the GSMA doesn’t have much cash and what little it has it reinvests in the industry. Which industry, precisely, isn’t specified.

This may come as a surprise to Mobile World Congress exhibitors, who pay millions for their precious bits of square footage in the Fira each year, not to mention the additional costs around building their stands, catering, VIP access, etc. We don’t know how much profit the GSMA makes from MWC each year, but it must be in the tens of millions.

We still haven’t heard back from the GSMA following our enquiry about cancellation conditions, but the standard terms and conditions say “Termination less than 120 days prior to the Event Date, one hundred percent (100%) of the total cost of the Space, Advertising and/or Sponsorship cancelled.” However they also say “The Organizer may terminate this Agreement for any other reason than as stated in clause 16.3 at any time before the Event Date upon written notice to the Company provided that it refunds all fees paid by the Company to the Organizer.”

Clause 16.3 just covers failings on the part of the exhibiting company, so doesn’t apply in this case. The two stipulations above would seem to say that the GSMA is not contractually obliged to refund any money to exhibitors that pulled out before the whole event was cancelled, but is obliged to give it all back to those who had yet to pull out after that announcement.

It’s presumably this latter constituency, which still seems to account for the majority of all exhibitors, that Granryd was appealing to with his call for solidarity. How much solidarity those exhibitors feel was shown to them by the GSMA during their negotiations over the cost of attending, however, will be a matter for them to consider.

The Bloomberg interview went on to describe lengthy debates with Spanish officials who were not happy about the prospect of losing the revenue boost that comes with thousands of telecoms types coming to town for the week. The GSMA public position, however, is that money never entered its collective mind during the negotiations.

So what were they negotiating about then? Until the last minute the Spanish authorities were leaking to the press that they saw no reason to cancel. This was presumably part of the negotiation process, designed to place the decision, and thus liability, for cancelling totally in the GSMA’s hands. The final position of the Spanish authorities on the matter remains unclear, but the negotiations were apparently so important that they invited Bloomberg to take a photo of them.

The very accommodating Bloomberg piece seems to constitute initial public positioning by the GSMA ahead of the negotiations with exhibitors that may well have already started. Our understanding is that many of the companies that pulled out before the official cancellation did so without the expectation of getting anything back. But that was then.

Will they still be so sanguine if they hear their competitors have got a bunch of cash back, just for hanging in there even as the cancellation of the show seemed increasingly inevitable?  The financial implications of the cancelling of MWC 2020 could start to snowball rapidly If the Fira demands full payment and exhibitors start asking for their money back. The GSMA’s annual report doesn’t offer much information about the financial side of things, but its major members must be feeling nervous about who will end up paying the bill for this year’s MWC.