Professional esports players, just like traditional sports athletes, are constantly signing deals with teams and organizations. This process involves complex contracts with various legal terms and details. Considering the high stakes and financial consequences, it is crucial for gamers to closely read an esports contract and to make all clauses clear and detailed.
Players should also be aware the industry has different standards for each game. As an example, the base salary between a League of Legends player and a CS:GO player will not be the same.
When it comes to professional agreements, the age of the player always needs to be taken into account. If the esports athlete is under 18, a parent or legal guardian needs to give their consent in order to guarantee the contract’s enforceability.
This article intends to help players have a better understanding of a player agreement and its contents.
Relationship Between Parties
The contents of the player agreement will determine if the athlete is considered an employee of the team or an independent contractor. Considering each situation has different legal consequences and obligations, it is important to clarify what sort of relationship will be established.
Since an independent contractor costs less, has more flexibility and offers less legal liability than an employee, teams usually prefer to classify their players as contractors. But this classification alone is not enough to determine the type of relationship between the parties.
Aspects like the level of control over the player or the duration of the working relationship are taken into account, and a court can establish an employer-employee relationship even if the esports contract says otherwise.
To avoid future conflicts, the parties should draft the esports contract in a clear and precise manner, describing their expectations as well as how they will be implemented.
The total amount of a player’s compensation will include multiple sources such as a regular salary, prizes, sponsorships, digital streaming, merchandise sales and so on.
When it comes to financial security, a player should always try to guarantee a fair and consistent salary since it does not depend on factors outside of the his/her control. To further ensure this, the player agreement should be drafted in a way that prohibits the team to unilaterally change when payments are made.
The agreement should also specify the profit share for tournaments’ cash prizes. Tournaments are incredibly important because they also attract more media attention, which means more fans and sponsors. The spotlight put on winners will ultimately generate additional income through new sponsorships, endorsements and viewers.
Esports players need to practice constantly to perfect their skills like any sports athlete. But unlike their traditional counterparts, they can monetize on this practice through streaming. Just to put into context, a subscription from Twitch costs $4.99, with usually half of it going to the streamer. With top streamers having thousands and thousands of subscribers, this can easily add up to a large amount. In addition, streamers can also monetize with ads and donations from viewers.
Teams will often have requirements when it comes to streaming, e.g. how often a player should broadcast and the revenue share. A player should ensure that broad terms are not used in these clauses, and instead make them as detailed as possible. Also, it is recommended to avoid provisions that take away your control of creative platforms, like Twitch or YouTube, or social media accounts.
Overall, it is difficult to determine what a fair compensation would be due to a lack of transparency in the industry. It is important to specify the amount, share percentages, when and how such payments will be made.
Sponsorship and Exclusivity
Sponsorships are the biggest revenue generator in esports and have always been highly profitable for gamers. With tournaments and streams receiving millions of viewers, big brands have recognized this incredible reach potential and want capitalize on it.
Sponsors can either sign deals with teams as a whole or with a player individually. Teams may receive greater deals considering the nature of the organization, but players should be able to seek separate sponsorships.
It is beneficial for players to discuss anti-competitive clauses and minimize restraints on trade. Teams could be more agreeable if their consent is listed as a requirement for these individual deals.
Intellectual property (IP) is a huge part of the video game industry due to its creative nature. With pro players constantly creating content through streams and personal brands, it could not be different with esports.
Teams are aware of this high publicity/marketing potential, and will often try to gain control of a player’s IP rights. The player would need to grant some of these rights to promote the team, but it is critical to carefully analyze clauses about his/her name and likeness. Pro gamers should always try to draft an esports contract in a way that maximizes control of their own IP.
As an example, players should seek to remain the owners of their gaming and social media accounts, as well as trademarks rights related to words or terms associated with them.
Termination and Transfers
Players often overlook clauses about termination and transfers while prioritizing compensation ones. Failing to properly discuss trading and termination terms could have tragic results. It is in the player’s best interest to draft these items as favorably as possible.
Esports are just as competitive as sports, where trading between teams happen often. Teams usually seek more power regarding trades by including strict clauses against poaching or provisions that give them autonomy to trade players, even if they do not agree. Gamers should fight these, and make sure their consent is a requirement when it comes to being traded.
Another example of one of the most common clauses is the buyout clause. These clauses free the player from the esports contract if he pays the stipulated price, thus allowing him/her to join another organization. But teams include absurd buyout prices in the effort to prevent or even penalize early terminations. Pro athletes should push back on these and negotiate provisions that allow their flexibility while ensuring fairness to both parties.
It is clear that teams have more facility to terminate a contract, with terminations due to poor performance, failure to uphold obligations, transgression of rules either from the team or leagues as examples.
Players should also add clauses that give them the ability to terminate a player agreement. For instance, include language that allows the termination if payment in date or amount agreed previously is not received. It should raise a red flag if a team pushes back on this, since these clauses show a compromise to uphold their end of the contract.
In addition, it is critical to stipulate the jurisdiction that will be used if disputes arise. Both parties should pay close attention to these provisions, and failing to do so can have unwanted consequences. A clear example can be seen on the ongoing lawsuit between Turner ‘Tfue’ Tenney and FaZe Clan. Tfue initially filed the lawsuit in California but since the forum elected on the contract was New York, FaZe was able to shift the dispute to NY. Since each state in the US has different laws and how they implement those laws, forum selection is a serious topic.
While future conflicts are not always avoidable, being prudent and taking your time to draft a player agreement could help prevent lengthy and unpleasant disputes. Players should always consult with experienced esports lawyers who understand the particulars of the industry. This way, you can make sure the contract is mutually beneficial and you can focus on what really matters: gaming.
The information available in this article and website are for informational purposes only and not for the purpose of providing legal advice. You should always contact your attorney or solicitor to obtain advice with respect to any particular issue or problem.