European eSports lawyers Jas Purewal and Pete Lewin from Purewal & Partners break down the first in a series of big incoming changes to LCS contracts and what teams need to do about them.

Riot has announced the first part of a series of minimum contract requirements for pro players competing in the League of Legends NA and EU LCS, two of its official regional tournaments. By making these mandatory requirements, Riot is continuing its evolving approach of requiring minimum legal standards in League. Let’s take a look at what these initial requirements are and what they actually mean for the teams and players.

Maximum Contract Length of 3 Years

Riot’s first requirement is that no player contracts are to last for more than 3 years. They state this is a long enough time for teams to fairly lock down their star players, but not so long as to unfairly deprive them of moving teams or renegotiating terms.

Thoughts

A good proportion of player contracts generally in eSports only last for 1-2 years as a basic term, but 3 years is not unprecedented. In practice, the most frequently encountered issue regarding the duration of player contracts is not the basic duration. Instead it is about what ability the team has to extend the contract beyond this, generally for recurring future periods. In some cases, teams would even attempt to have indefinite duration contracts, despite the fact that this is legally complicated and may help neither the team nor the player.

Riot could have made a number of additional mandatory changes about contract terms, but it hasn’t (yet). Consequently, it may be that Riot’s intention was really to prevent a few of the extreme cases out there.

Reserve Players to Get Minimum Compensation

Riot’s second requirement is that reserve players (i.e. subs) are to receive an unspecified level of minimum compensation per split (there being 2 splits per year – spring and summer – each lasting 10 weeks).

Thoughts

An obvious benefit to players who start on or are moved to the reserve list.

The amount is currently unspecified and is only mandatory during the splits – currently uncertain whether it’s acceptable for reserve players to receive compensation below this minimum level outside of these periods.

It actually brings League into line with a number of traditional sports, which guarantee minimum remuneration to reserve/benched players.

This is clearly a step in the right direction but its impact will lie in the details – how much are reserves to receive, what happens when players are moved mid split and so on.

No ‘Non-Compete’ Clauses

Riot’s third requirement is an express prohibition on ‘non-compete’ clauses. A non-compete clause normally prevents a player from joining another team once his/her contract with the old team expires or is terminated, usually for a limited time period.

Thoughts

Non-compete clauses are common in business contracts generally and are well recognised in law. They are intended to strike a balance between the parties’ business interests. So that if you quit a deal, you can’t then take advantage of it with someone else for a limited time period. There are many laws about when non-compete clauses do and don’t work.

In theory, non-compete clauses are valuable in eSports: it might stop, for example, a star player from being heavily involved in a new team initiative and then quitting to take the same thing to another team (thus depriving the original team of a competitive advantage).

Just because a contract contains a non-compete clause doesn’t mean the clause is legally enforceable – there are a whole bunch of relevant legal tests here (varying by country), analysing whether or not it’s ‘reasonable’ in the circumstances.

The problem in eSports is that at times non-competes are not written or used in a sufficiently reasonable manner and so would not have been enforceable (but were relied upon anyway). Although prohibiting non-compete clauses may have little technical legal effect (since many of these were arguably ineffective anyway) this is a strong move in favour of players who often would not have had the resources, ability or expertise to legally challenge such clauses themselves. It is worth bearing in mind that this removal does not necessarily mean that a player can just quit a contract at any time. He/She would still be tied to the contract for its duration (unless there was a termination right). But, if they did legally exit the contract, now he/she could join a new team fairly quickly.

More Termination Rights for Players

Riot’s fourth requirement is to ensure contracts give players the right to terminate their contracts if the team they play for is removed from the LCS due to rule violations (but not simply due to relegation). The idea here is to prevent players from being locked into contracts for teams which can no longer actually compete in the LCS.

Thoughts

There have only been a few examples in the past where this would have been relevant. For example, Lemondogs in 2014 and Rich Gang earlier this year – both involved teams being banned from the LCS (or OCL, Oceania’s LCS equivalent) due to breaches of Riot’s rules.

One question here is what it might mean for teams which are relegated and then lose their players. By contrast, in traditional sports like European soccer it’s fairly common practice for a relegated team to be given a parachute payment by the league to help cope with relegation and train the team for re-promotion (though not if the team was relegated due to rule breaches).

Although this change will probably only ever impact a minority of players, nonetheless it gives those players greater protection.

Closing thoughts

Riot’s current requirements are not a radical change for League teams or players, but they are a sensible step in the right direction, intended to moderate some of the more extreme cases. It means that Riot’s approach remains the most activist of the major eSports. It still remains a long way short of the approach taken in many traditional sports, where player and team matters often are regulated much more tightly (that would not necessarily be helpful in League or eSports generally).

Still, this is a useful lesson towards educating teams, players and the industry in general about what is and isn’t acceptable (at least in Riot’s eyes) in terms of contractual requirements. Does all this mean player contracts are OK then? No, not yet. Player contracts are continuing to go through rapid evolution, as they should do, in order to reflect the developments and changes in eSports. In the long run this is helpful for both teams and players, but along the way there will inevitably be problems from time to time. We’ve written more about that here if you’re interested.

Does this have implications for other eSports? Not directly. Could other popular eSports game publishers introduce similar requirements? Theoretically yes, but other big publishers like Valve and Blizzard have – thus far at least – taken a market-led laissez faire approach to these issues. The same applies to the eSports leagues themselves, although that may change with the big developments afoot for 2016. If they choose to become more active in regulating player contracts, it will be more to protect their interests and less to follow in Riot’s footsteps.

In the meantime, like we said earlier, Riot have made clear that these are only the first round of changes – let’s see what they have in store for us next.

WHAT SHOULD TEAMS DO NOW?

Pretty simple: check your standard player contracts – in particular the term, termination and non-compete sections. Make sure they already cover, or are amended to cover (with your players’ agreement), the above minimum terms. Riot will be expecting you to confirm all this quite soon!