Key legal issues for esports player agreements

With the much anticipated 2018 launch of NBA 2K, the first esports league operated by a U.S. professional sports league, which already has 17 NBA teams participating, franchises are under even greater pressure to stay ahead of the esports phenomenon. While hurrying to build their own teams of professional gamers, they would be wise to ensure careful contemplation of a range of legal issues pertinent to agreements with esports players. These issues have enormous implications considering that players selected will be given a large platform and represent valuable, brand-name franchises, just like traditional professional athletes. Some issues are specific to esports while others are included in near-all agreements with traditional players. Regardless, they are all worth considering with fresh eyes as the frenzied environment dominating the industry, rushing to capitalize on all-things esports, is notorious for serious shortcuts and missteps.

Emancipation

While the average esports player is between the ages of 24 and 27, significantly younger competitors are among the most celebrated by video game enthusiasts. Some are so young that they don’t have the capacity to enter into a binding contract. This requires teams to consider whether to simply accept the signature of a player’s parent or guardian, or proceed through what’s called a “Minor’s Proceeding” that has such an agreement ratified by the court. Frequently used by record companies when they sign young artists to recording agreements, a “Minor’s Proceeding” can serve as a valuable tool for sports franchises seeking to protect their investments in talent.

Term of agreement

Before turning pro, traditional athletes bring with them an abundance of information that goes back many years. For instance, when an NBA franchise drafts a so-called “one and done player,” it can learn about the player’s personal characteristics and work ethic from the player’s basketball trainer, strength trainer, high school coach, AAU coach and college coach. With an esports athlete, there isn’t nearly as much information available, requiring franchises to be far more careful. They need to weigh the risk of entering into a long-term agreement with a relatively unknown quantity with the risk of employing a short-term agreement that renders a successful esports player a free agent after only a few short years. Given this obstacle, the most prudent approach is a one- or two-year agreement with a team option to extend it for a handful of years.

Intellectual property ownership

Unlike traditional athletes, esports players train and compete in the rapidly evolving electronic universe. Given the unfixed nature of this medium and the constant innovation taking place therein, sports franchises must ensure ownership of all esports-related intellectual property developed by players during the term of their agreement and have the right to use, for any marketing or promotional related purposes whatsoever, the player’s image, in-game name and any recordings of the player while on team duty. Agreements should further specify that esports players waive all claims for defamation, invasion of privacy and any other claims.

Required athletic services

When a professional athlete enters into an agreement with a sports franchise, her or his agreement with the franchise requires, among other things, that she or he render exclusive athletic services to the team, be available to compete in all of the franchise’s athletic competitions and appear for practice and training at times determined by the franchise’s coaches and trainers. The same must be required of esports athletes despite differences in training and competition schedules.

Conduct

Given that esports teams are largely composed of relatively young individuals without much of a documented track record, it is crucially important that franchises include in agreements stipulations surrounding potential behavior that could jeopardize the image of the organization. In this regard, any agreement with an esports player must set forth expectations for conduct, fines for failure to follow team rules, and the team’s right to terminate the agreement for a player’s failure to follow such rules. For example, if the player is to reside or train in a particular home or apartment owned or leased by the team, there should be no alcohol or drugs permitted on premises, other than those medically prescribed or available over the counter. Failure to follow these rules must give the franchise the right to terminate the agreement.

Promotional activities

Agreements should stipulate that a franchise may take still or motion pictures of the esports player for still photographs, motion pictures, television or other media, and use them for team-related publicity or promotional purposes. Further, the team should have the right to record all of the player’s activities, thus allowing the team to develop any and all projects, from reality television programming to commercials, for the promotion of the esports team and franchise in general.

The esports phenomenon has the potential to spur exciting, lucrative opportunities across all facets of the industry. However, pitfalls exist for those who speed ahead without including precautions to ensure established sports companies and brands are protected.

Anthony Mulrain is a sports business attorney at the law firm Mintz Levin. He has represented numerous NFL, NBA and MLB players, including at least one overall No. 1 draft pick in each of those leagues.