As discussed in the previous article on esports players contracts, lack of a standard contract within the industry means greater thought, time and negotiation is required. Given that their use is to seek to provide contractual stability and govern relationships between parties, esports players contracts are a necessity for professional esports players, esports teams and esports organisations in equal measure.
Intellectual Property Rights
Ensuring esports player contracts specifically deal with intellectual property rights (IPR) is paramount, perhaps more so than traditional sports.
Traditional sports contracts will often address a player/athlete’s ‘image rights’ (in a ‘club’ / ‘team’ context) within a series of collectively bargained agreements. However, the scope and diversity of esports content and coverage lead to some interesting IPR issues. What about a player’s obligation to assign or licence rights to video streamers, tournament and event organisers? Many esports players have a large online presence and are active on various streaming platforms such as YouTube and Twitch. Some gaming publisher companies may allow esports players and esports teams to stream gaming content on their streaming channels without additional cost, while others may try to control such rights directly. All relevant IPR ought to be considered prior to entering into an esports player contract.
Some of the following questions will no doubt be worth exploring:
- Who is the actual owner of the relevant IPR?;
- What is the scope of such IPR?;
- Who and how does a party have the right to broadcast and stream a particular gaming session?
The global and digital nature of esports means that IPR can be complicated, as mechanisms to protect them differ between countries. An esports player contract should clearly set out:
- Ownership of IPR
- Usage of IPR – timing, restrictions, licensing
- Rights of the player and what permission is required to use images, names and recordings
- The law and dispute resolution forum that applies to the contract
Sponsorship Clauses
The esports player contract should clearly outline the position on sponsorship and sponsorship revenue shares. Questions that need to be determined may include:
- Is the player to receive a share of the esports team/organisation’s sponsorship deals?;
- Is the player prohibited from entering into their own personal endorsement deals?;
- If the player is permitted to have their own personal endorsement deals, is the esports team entitled to a share in such revenues?;
- Are there any restrictions in place in terms of personal endorsements?
Some agreements may expressly prevent a player from entering into (or already having in place) another sponsorship agreement with a brand that is a competitor of the esports team’s and organisation’s sponsors, either during the term of the agreement or, in some instances, for a set period of time after the expiry of the agreement. Strict attention, therefore, needs to be afforded to the wording of sponsorship clauses, in order to ensure that they do not overly restrict an esports player’s ability to enter into other personal endorsement deals thereby limiting their commercial earning potential.
Data Protection
We recommend that data protection is specifically addressed in esports player contracts. One relevant area of data protection law is the UK General Data Protection Regulation (“GDPR”). Under the UK GDPR, esports teams and organisations will be required to provide a privacy policy to a player explaining (amongst other things) what personal data they collect and how and why it is used. Essentially, a data protection clause in an esports player contract will state that the esports team will process a player’s personal data in accordance with applicable data protection laws.
Disputes
More often than not, disputes arising out of, or in connection with, agreements in sport are referred to the particular sport’s internal dispute resolution procedure. The most common of which is a private arbitration forum. Many professional player contracts in other sports contain an arbitration agreement clause which essentially means that parties agree that it will not be possible for a dispute to be resolved through the traditional public court system until the route of arbitration has been exhausted. Such use of alternative dispute resolution methods, like arbitration, afford parties much more flexibility in terms of procedure, which in turn has benefits of an expedited timetable, confidentiality and the ability to have the dispute heard before an expert in the particular sport.
A comprehensive disputes clause is encouraged as it provides for a clear step by step process which outlines to the parties what happens in the event of a dispute and, crucially, reduces the risks of any ambiguity.
Restrictive Covenants
Restrictive covenants are obligations on the player that extend beyond contract termination. The position regarding restrictive covenants is that they are deemed void as being in restraint of trade unless they protect a legitimate business interest and are no wider than reasonably necessary. Importantly, the very existence of a restrictive covenant does not mean an esports player is automatically bound by them. If onerous post-termination obligations are in existence already, esports players should obtain specialist legal advice as to whether they are enforceable or not.
Conclusion
As the esports sector becomes more lucrative and professionalised, greater regulation is to be expected. Obtaining specialist legal advice prior to entering into contracts is of paramount importance as it helps to ensure that the respective parties’ interests are protected as much as possible. Seeking comprehensive advice from the outset will enable parties to understand their obligations and will, hopefully, avoid a scenario whereby they find themselves in breach of contract (having unintentionally gone against the terms of an agreement).
Ultimately, the contents of an esports player contract will depend upon the status of the esports team or organisations, the status and age of the player and the competitions in which they are competing.
Our Sports Team have a number of experts who are able to help with the preparation and drafting of esports player contracts and are able to ensure that parties’ contractual rights are sufficiently protected, as well as providing as much commercial flexibility as possible.
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.
