Getting Esports Contracts Right: The Basics

Shareholder/Founding Partner at Hart David Carson LLP, representing & counseling mid-market, pre-IPO companies.

Within the field of esports, there is a multitude of moving parts handled through contractual agreements. Getting these agreements right is essential, especially in a field with a relatively young — and quickly evolving — regulatory environment.

Types Of Esports Contracts

Depending on the role you intend to play in this field, there are various types of agreements you’ll need to work with and account for. These include the following:

• Player Contracts: Agreements for players are essential, and it’s important to make sure they represent the interests and rights of players while still safeguarding the needs of teams and leagues. Given that many esports players are fairly young, it’s important to make sure there’s a balance in power between them and potential employers when it comes to negotiating these contracts.

• Endorsement and Sponsorship Contracts: Endorsement and sponsorship contracts may be made between businesses and leagues, teams or even individual players. These agreements represent a significant investment opportunity for businesses while also composing a substantial proportion of revenue within the industry. As such, the details of these agreements must be properly constructed.

• License Agreements: Game producers license IP to merchandisers and leagues, and individual leagues and teams may license their own IP for monetization purposes. This is a growing field, and licensing may be subject to exploitation if handled without the requisite amount of care.

Details To Consider

When negotiating these types of contracts, there are a number of details to consider. These are often sensitive areas that could either lead to unfair agreements (and thus an eventual dispute) or legal liabilities as the regulatory landscape evolves.

• The Basics: When it comes to player contracts, many details need to be worked out, such as fees, payment, working hours and other obligations that will need to be met on the part of both parties. Younger players will also need provisions to make sure their education isn’t negatively impacted by the rigorous training they may need to perform.

• Intellectual Property: In an industry that’s carried on the back of videogames and other media, intellectual property plays a major role. In agreements with players, care should be taken to make sure player-created content is handled appropriately. Licenses from game developers or businesses looking to have teams endorse their products should be carefully constructed so as to make sure IP rights aren’t infringed upon while still making the agreement profitable. All details, rights and responsibilities must be clearly defined.

• Endorsement Guidelines: The FTC has various guidelines when it comes to endorsements. Endorsement agreements should be designed to support these guidelines, such as disclosing whether an endorsement deal exists or setting limits on what can or cannot be legally said about a product.

• Clear Terms and Details: The terms and provisions set forth in any contract must be absolutely clear. In addition, they should also be robust enough to cover the full extent of each party’s rights and responsibilities under the agreement. Striking a balance between clarity and completeness can be difficult, so it’s important to be precise when hashing out these details.

• Termination Details: If a breach in contract occurs or it becomes necessary for both parties to part ways, clear provisions for terminating the agreement should be set forth. These details should make it clear what steps are necessary to end the agreement without sacrificing enforceability.

Best Practices For Esports Contract Negotiations

To make sure your agreements in this industry are able to hold up in the event of a dispute — and to help prevent those disputes in the first place — you’ll need to follow some best practices.

Do your due diligence. Make sure you have as much information about the parties involved as possible. In addition, get to the bottom of what is being asked in a proposal, what the individual rights and responsibilities might be and whether there may be any liabilities attached. Know in full clarity who is involved and what is legal in your specific context.

Take it one piece at a time. During contract negotiations, focus on one item at a time, and prioritize those that are most important. This can help you avoid getting bogged down with too many details at once while making sure each part of the agreement is well constructed.

Keep the main purpose in mind. Finally, keep the purpose of the agreement in mind. You want to make sure it is fair and profitable for all parties concerned. That means prioritizing terms that are most important while allowing compromise on less important ones. That way, you don’t get lost in arguing over extraneous details that ultimately have little impact on the agreement as a whole.

Avoiding Disputes From Esports Contracts

Given the evolving nature of esports as an industry and the budding potential it offers to players, leagues, developers and sponsors alike, it’s important to keep reviewing the agreements you make with others in the field. Doing so can minimize the odds of disputes and litigation that may arise as the regulatory landscape changes.

The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.

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