The cider brewing giant Magners is refusing to pay sponsorship to the Cheltenham Festival, saying its reputation was damaged after the race meeting went ahead last year in what was widely seen as a Covid superspreader event.

Now the horse racing festival’s organisers are suing Magners and its sister company Bulmers Cider for more than £1.7 million in damages over the firm’s refusal to pay the money.

Ireland-based Bulmers had agreed to sponsor the Cheltenham Festival and other meetings at the site in Gloucestershire for £1.7 million between 2018 and 2022.

But it argues that the 2020 festival, held at the start of the Covid-19 pandemic, should have been cancelled and was widely seen as helping to spread the disease throughout the UK.

It says the decision to press ahead with the event caused serious damage to the reputation of the Festival, which attracted 150,000 spectators at a time when numerous other major sporting events were cancelled.

‘People were crammed six deep at the bars’

There was widespread concern among scientists at the site of tightly packed race goers jammed into bars and stands at Cheltenham just as Covid was beginning to take hold in Britain, with fears many will have brought the virus back to their communities on their return home after the four-day festival.

The sports writer Alan Tyers, who was there for The Telegraph, recalled: “People were crammed six deep at the bars, there was drunken shouting and singing. If you were going to design a virus dispersion hub, you could do worse than the indoor bits of a packed racecourse.”

But the Jockey Club said it was acting on publicly available health and government advice at the time.

It is now suing Herefordshire-based Bulmers, arguing that the sponsorship agreement remains in force, and seeking damages of £1,733,761.51.

Bulmers, whose cider is sold as Magners in Ireland, has hit back with a defence and counterclaim, saying the 2020 festival should have been cancelled, and that as the 2021 festival was run behind closed doors it brought no value to the sponsorship rights.

According to legal documents lodged with the High Court the cider maker also wrote in January 2021 demanding that its name and branding should not be used or referred to publicly in connection with this year’s festival, saying that would damage its brand.

The court will hear that Bulmers did not want the flagship race for the Cheltenham Gold Cup to be named after the brand, and as a result the racecourse entered into arrangements with the charity WellChild instead.

The charity, which helps children and youngsters with exceptional health needs to be cared for at home rather than in hospital, did not pay a fee for its association with the Cheltenham Festival.

The Jockey Club will argue that since Bulmers has been in default of its obligations since July 2020, it was under no obligation to deliver any of the sponsorship rights to Bulmers.

A racing industry source said: “Bulmers appear to be trying to throw mud at the Cheltenham Festival because they know their own defence is weak. The Jockey Club appear to be confident of their case, that the sponsorship contract agreed with Bulmers stands, is valid and must be honoured.”

Cancelling the festival would have been disastrous for the 270-year-old Jockey Club. 

The meeting is the leading Anglo-Irish sports event, with more than 20,000 Irish visitors and both countries’ best horses on show and it is also one of the most lucrative weeks in any sport, earning a significant proportion of the club’s £50m annual profits.

The festival’s 250,000 visitors, who spend around £100m in local hotels, restaurants, bars and clubs, are also vital to the town. 

Bulmers said it would not comment on ongoing legal proceedings.

The Department of Health (DHSC) said the decision to go ahead with the festival was taken by the racecourse.

“It was operating within clear public health guidance at the time” said a DHSC spokesman.