Contract advice for teams, organisations & players: An interview with an esports lawyer
News - 6 Dec 2016
Like traditional sports, player contracts are a necessity for professional Esports players and teams alike. But what should teams/organisation think about before drawing up a player contract and what should be covered in the contract?
In this interview, we ask Sheridans’ solicitor Chris Paget for the expert lowdown.
kind of things should an esports organisation owner consider when creating a
Chris Paget : What should be included in an esports player contract will, ultimately, depend on the context of the team, the player and the competitions in which it competes. However, there are a couple of important points outlined below that should be considered before drawing up a player contract:
Fairness and Enforceability:
There is no point in having a very long and complicated contract which the player is unlikely to understand. First and foremost, it may not be enforceable. It may also be advisable to include an executive summary of the main contractual terms.
Thought should be given to the age of the player that the organisation is looking to sign. If the player is under the age of 18 then the contract may be unenforceable against the player. Therefore, it will be important for the player’s parent or legal guardian to sign off on the agreement, and then put in place a plan of action for when the player turns 18.
The agreements will have to meet the minimum legal thresholds to constitute a legally binding contract, namely; contain an offer, an acceptance of that offer, consideration, intention to create legal relations and certainty of terms.
Relationship of parties:
The agreement should set out the basis on which the parties are contracting. Is the relationship an employment relationship or is the player providing services on a consultancy/contractor basis?
While the agreement may not be determinative in this regard (for example there could be an argument that the relationship is actually an employment relationship) if the organisation knows how they want to contract with the player/individual (ie: as a contractor not employee), then it can be drafted in such a way as to alleviate a certain amount of the risk of an employment relationship being created.
The relationship between organisation and player will also have other consequences, such as tax, implied statutory employment rights and the right to a pension.
Will the player be contracted to the organisation on an exclusive (i.e.: the player can’t play for another organisation) or non-exclusive basis or will parts of the engagement be exclusive and other not?
How will the player be paid, when and what bonus or other remuneration structures (such as profit shares) will be in place and what expenses and other benefits will the team make/reimburse?
The agreement should clearly set out what the obligations are on each party, how they are to be performed and when they are to be performed. Such as the player must use their best efforts when competing for the team, always wear team clothing when on team duty and comply with applicable integrity rules and regulations (whether put in place by the organisation, the leagues or competitions that the organisation compete in, or otherwise). The agreement should also set out the consequences if a party fails to perform their obligations.
Restrictions & Security:
Will there be any restrictions in place on the player, for example, the player’s ability to enter personal endorsement agreements or other third party agreements that may compete with agreements/arrangements that the organisation/team has entered into?
There may also be the possibility to include certain post-Term restrictions. However, whether or not these should or can be included will be dependent on the type of agreement you have in place, as well as the leagues/competitions in which the organisation/team participates
Is it appropriate to have a form of buy-out or release clause? This is a clause in the contract that requires that certain obligations (such as a payment of money) must be performed before the player can be released from the contract. Specific advice should be sought in relation to these buyout or release clauses to ensure that they are given the best opportunity of being enforceable.
The agreement should set out how long the contract will last, and whether it can be ended (or terminated) early. If it can be ended early, what are the circumstances that trigger this right?
It is especially important in esports contracts for the products of the services (and the IP created) to be dealt with. Who owns the IP, are there any restrictions on how it can be used, or where it can be used, or the timings of when it can be used. For example, what rights to the organisations/teams have to use the player’s image, in-game names or any recordings of the player while on team duty?
Contracting law and jurisdiction:
The agreement should set out what law governs the contract and which courts have jurisdiction to hear disputes.
Why are contracts important for
There are numerous reasons why esports organisations should have contracts in place with their players, a few of these reasons are touched upon below:
If they are constructed and executed correctly, they provide a legally binding document confirming the exact terms of the agreement/relationship between the organisation and the player, which is to the benefit of both parties
They provide a source of security to both the organisation and the player regarding the relationship between them.
- For the player, this covers their rights and welfare; and
- For the organisation, the players are its greatest asset (both in terms of their gaming expertise and also the value that they add to the organisation from a sponsorship/marketing/commercialisation perspective) and the contract provides a form of stability. It should facilitate the organisation in building a stable roster, which in turn should lead to the ability to create fan and public engagement, a team identity and a narrative around the organisation and its players. All of this should also assist with sourcing sponsorship and funding.
The contract indicates to the market that the organisation is a professionally run organisation, which (provided the contract is reasonable and fair) demonstrates the value that it places in its players and sophistication in the way that it approaches participation/business.
What are your views on players
not having a salary with amateur teams, but instead taking a split of any
potential prize winnings? Should the players play without a contract in this
case, and trust the organisation?
The first part of the question is hard to answer as it is predicated on the context and situation of the organisation. However, in relation to the second part, my view is that the agreement in relation to the commercial terms of the player’s engagement should be documented clearly and unambiguously in writing, and preferably in a formal written contract.
Is there any other advice
around contracts you'd like to give to UK teams, players and organisation
For teams, it would be to acknowledge that your players are your most important asset, so they should treat them as such.
For players, it would be to always understand what is being asked of you (whether in a contract or otherwise), and what the potential implications and ramifications are to you. So, taking the example of a player contract from a team, make sure that you understand what it means, what is expected of you, what is in it for you and what you can or can’t do.
Please note that this does not constitute legal advice so please do not rely on it and always take advice specific to your situation and the relevant facts and circumstances.