More information regarding myself can be found here (www.esportlawyer.com).
Shortly before Christmas I wanted tou publish part two of my comments on Esport and the related contracts.
As announced, this part of the series will deal with professional players. In the past, it was unusual for players to have their own contracts with clubs/teams. A large part of the esports scene operated in the hobby area. In the best case, the whole thing could be described as semiprofessional, because the player themselves had their own income via YouTube/Twitch, or because there was an agreement that profits from tournaments would be shared fairly.
As a general rule though, professional players should only work on the basis of a signed contract. Even if this is not yet customary in many cases,I must advise against this as a lawyer. Contracts generally provide security and regulate a fair coexistence.
The following list is intended to present a list of 10 problematic areas that I find important as a lawyer to discuss and to agree to. Drafting a contract is not so much a matter of whether each problem is mentioned individually, though. Topics can also be grouped together or, aftert careful consideration, left out. However, it is important to get a certain amount of awareness for problems of contract design – in case of doubt, everyone should contact a legal adviser.
For a more general summary, I refer to my first article on the subject. Unnecessary repetitions regarding the parties of contracts, notice periods and the like are therefore not mentioned in this article.
READ THE GODDAM CONTRACT!
1) Rights and obligations
Basic rights and obligations should be clarified. This includes, in addition to the game that is being played and / or for which the player is deployed, his daily tasks and his time spending. Similarly, activities in social media channels, streaming platforms and at events should be regulated. Participation requirements for tournaments (whether online or offline), including details such as travel expenses, possible illness, possible technical disruptions and precautions to prevent them, are also to be included in this section.
Since tasks and organizations can change constantly, possibilities for amendments, as well as how these should be agreed to, need to taking into consideration. Contractual consequences in case of violation of obligations are also to be covered.
Of course, the rights of players are also important, whereby a meaningful and clean contract should differentiate between general rights and remuneration.
Let’s continue with one of the most important aspects. How, when and by whom is the player beeing paid? The remuneration should derive from a fixed salary for the duration of the contract and a variable portion. The variable portion is then usually calculated as a percentage of the advertising revenues of the entire organization, tournament revenues and sponsorship fees. If the player is still successful as a streamer himself, it should be determined who receives what revenues from the respective platforms.
The remuneration clauses need to include all payment terms. It is also important to rule what happens in case of violations of the contract or if the player violates general rules of conduct or damages the team in any other way. Complaints from the team, interest, action possibilities and the like also belong into a reputable contract. Of course, bonuses should be regulated, which are usually due when certain goals are reached, whether in tournaments or in social media channels.
If a “salary” is agreed, rules should be available regarding the respective conditions. In doing so, labour laws as well as rules of game operators, such as “Riot”, must be observed. It is also important to remember to clear what and how much salary is due in the case of gaming breaks and how the compensation changes when the team descends or ascends in leagues?
THINK ABOUT WHAT YOU DEEM YOURSELF TO BE IMPORTANT!
3) Place of work
It should be regulated where and how the player acts for the team. Is there a “clubhouse”? Does everything take place digitally? When will tournaments be held? Are there training camps (eventually even in other countries)?
Particularly in the case of international associations, these terms are directly connected with questions or clauses regarding jurisdiction, applicable law and the like.
Furthermore it also is possible for a player to change his place of residence for a new contract and the team to participate in the resulting costs.
4) Holidays and working hours
Vacation and working time (with international teams time zones should be taken into account) are need for a professional team and player. Recovery phases are an important tool not only for traditional employment contracts, but also for eSports. Of course, these can be made quite flexibile, as well as include overtime and the like. If necessary, however, legal requirements must also observed, which limit the daily number of hours, set break requirements and similar issue – at least formally. This also applies to minimum requirements for vacation periods.
5) Equipment of the team and rules
With the ever-increasing professionalization of eSports, rules and possibilities, which until now were known only from the traditional sports, come into consideration. Are there manager, coaches or teachers? Is there a training ground? Since there are now even providers of nutrition for professional player, the question could arise, whether there are nutritional requirements. Rules on questions of sleep time before tournaments, the way of getting to tournaments and event and so on could be ruled explicitly. If there already is a code of behavior or anything similar for the entire team, it is of course also possible to refer to such a code or to make it part of the contract.
DON’T BE SCARED TO NEGOTIATE. A CONTRACT OUGHT TO BE A FAIR PARTNERSHIP.
6) Secondary employment / secondary income
In times of a “football leak” scandal, terms should also be established, if player are allowed contracts with their own sponsors and how revenues from activities, which are not related to the actual playing, are handled. Are they allowed at all? In which extent? Under which conditions? Is revenue getting shared?
7) Social insurance and other legislation
In parts I have already mentioned it, but in almost every country there are social insurance laws that need to be respected. In most cases social security and taxation laws affect only the team, it is sometimes necessary to examine and / or regulate vacation entitlements, working hours as well as health insurance, salary increases and pension entitlements. Some European countries, such as Germany, also have systems that share tax obligations and social security payments between employee and employer in some extent. This would have to be considered both in the remuneration clauses and negotiations and also when planning the contractual partner of the streaming portals and other sources of revenue.
8) Transfer of obligations
A mixture of questions of the contracting party and the termination of the contract are applicable in the case of investments, which are being made more and more in the eSports industry. What happens in the case of a merging of teams or companies? What happens if the team gets a new owner? Or if a new owner wants to set other priorities?
TAKE PROFESSIONAL HELP EARLY ON. WHEN PROBLEMS ARE COMING UP, IT OFTEN IS TOO LATE!
9) Termination of the contract
In addition to the regular termination of a contract, or the missing extension at a time limit, the Esport industry now also encounters problems and rules of transfer fees. Shall another team have the right to contract a player even though the current contract is still running? If so, what are the contractual consequences for the current contract, what compensation does the current team receive? It would also be necessary to clarify questions regarding the current leagues, tournaments, placings and the like. In addition to rules on dismissal, there could also be the need for rules regarding the descendants of a player, even if this topic always feels awkward to negotiate about.
Various other rules to be observed include jurisdictions, applicable law, terms, none disclosure terms, written from requirements as well as other formalities and contractual procedures. This iusually sounds extremely boring for legally uneducated people. Such details often can be particularly decisive though. Usually, just when there is a dispute, or if a party no longer wants stick to a contract, these terms take an important role. The question of the applicable rights often also affects the costs of setting up the contract and enforcing it, because while in some countries, like in Germany, lawyers’ costs are limited, they can quickly get out of control in other jurisdictions, such as in the UK or the USA.
Most important though is to discuss, negotiate and clear all the mentioned problems. Neither should a contract be unnecessarily sprawling and contain nonsensical regulations, nor should important aspects be ignored. As a player, the most important advice may be to read the goddam contract, understand the implications and obtain expert advice in case of doubt or uncertainty.
Edited by Marian Härtel