This article is the first in a two-part series on esports player contracts, which forms part of a wider campaign on esports, alerting stakeholders within the sector to the various commercial, regulatory and legal issues that must be navigated.
Across two articles, we will cover some of the following key considerations and recommendations that esports players and esports teams ought to bear in mind when entering into esports player contracts:
- Contracting with minors
- Relationship between the contracting parties
- Term and termination
- Exclusivity
- Obligations
- Remuneration
- Intellectual Property Rights
- Sponsorship
- Data Protection
- Disputes
- Restrictive covenants
Standard contracts (generally negotiated and agreed by a particular sport’s governing body and stakeholder representative bodies) are commonplace in professional sport and the main terms of a contract between the relevant parties will often not be open to negotiation. However, as things stand, unlike other ‘traditional’ professional sports, esports player contracts are generally not a regulatory requirement within the industry.
Lack of standardisation does not mean that they are less important but, in fact, the opposite: no standardised contract means greater regard should be given to the contents of player contracts and subsequent negotiations.
Contracting with minors
Careful thought and attention must be given to the age of the player that an esports team and organisation is looking to contract with. Esports players are often very young, with the vast majority under the age of 18 (i.e. minors). The age of a player in question could have potential consequences on the legal enforceability of the esports player contract.
The reason being that the general rule is that a contract with a minor will be voidable unless it is: a) A contract for ‘necessaries’ (or equivalent to a contract of employment, apprenticeship or education); and b) Beneficial to the minor.
Esports teams and organisations will need to ensure that the contract is enforceable as a whole. Otherwise, a situation could arise whereby the “beneficial” aspects of the contract are enforceable (i.e. those which relate to the provision of employment or education) but other aspects of the contract (i.e. those relating to competition prize money splits for example) are found to be severable or unenforceable.
We considered the legalities and enforceability of contracts with minors in closer detail in our recent article which can be found here.
Relationship between the Parties
An esports player contract should comprehensively address the contractual relationship between the parties and clearly set out the basis upon which they are contracting. Consideration must be given as to whether the relationship is one of ‘employment’ or merely a contract for services (for example engaging the player as a contractor through a contract for the provision of services or a consultancy agreement).
The contractual status between the parties can have varying consequences, from potential tax implications to implied statutory employment rights. Although there is often a risk that an employment relationship could exist regardless of what is written in the contract, it is still nevertheless important to address the relationship from the outset.
Term and Termination
As with any contract, it is important that both the esports team, organisation and the player know how long the contract will last, whether it can be brought to a premature end and, if so, what circumstances may trigger the right of early termination. Esports organisations and teams may want to resist the temptation of holding young players to long and oppressive contractual agreements, due to dangers of unenforceability.
In addition to the above, esports player contracts should clearly address what happens to any rights or liabilities, accrued during the currency of the contract, after the contract is terminated (whether by natural expiry or early termination). It is recommended that appropriate post termination rights and obligations are provided for under the esports player contract.
Exclusivity
Exclusivity is a fundamental commodity, highly sought after by esports teams and organisations. The parties must determine from the outset whether a player is to be contracted to an organisation on an ‘exclusive’ or ‘non-exclusive’ basis and ensure that the agreed position is correctly documented in the esports player contract.
It is worth bearing in mind that, although a player contract is not a requirement in many of the esports competitions, some competitions (like the ESL Premiership), preclude a player from entering into a contract or agreement with two or more (ESL Premiership) teams.
Obligations
Clearly outlining the obligations of the parties is key to an esports player contract’s success. Obligations act to reaffirm warranties afforded under the relevant contract. Looking at the interests of the esports player, it is important to include a clause which specifies that the esports team and organisation will act in the best interests of the player. On the esports team side, obligations may be imposed on the player to wear particular items of clothing, such as sponsored team branding or to make personal appearances, attend photo-shoots and/or engage in social media activities (on various platforms such as Facebook, YouTube and Twitch).
If a party insists that an obligation is to be included in the esports player contract then that party (particularly the esports team) should ensure that such obligation is discharged. The esports player contract should also clearly address the consequences of a party failing to fulfil a contractual obligation.
Remuneration
The financial provisions of an esports player contract will be some of the most important parts of the agreement. Clearly drafted and reasonable remunerations clauses could include, amongst other things, competition prize money splits, merchandise sales profit splits, streaming revenue splits and splits of team sponsorship deals.
The remuneration clauses should clearly set out:
- How much and when the player will get paid
- How the player is to be paid
- What bonus structures and/or profit-sharing mechanisms are in place
- What expenses (if at all any) can be reimbursed.
If you have any queries about any of the above or want to understand more about esports player contracts more generally, then please take a look at our esports page for more information.
