Understanding eSports Contracts

What You Should Know When Negotiating eSports Contracts

Professional athletes negotiate deals and play under contracts which compensate them for their services. Not only does this ensure that athletes are getting paid, it protects the team and/or professional league in the event the athlete breaches the contract. While not exactly relevant to the typical athlete, such protections can be quite strange, such as Dez Bryant’s (of the Dallas Cowboys) no alcohol, no strip club policy.

Esports, or competitive video gaming broadcasted online, is becoming a popular industry, and it’s not stopping anytime soon. According to CNN, eSports is expected to reach global revenue of $1 billion by 2019. That means that professional and semi-professional players need to be proactive about protecting their profits and signing contractual agreements.

What general factors do eSports contracts cover?

Esports player and team contracts essentially have the same purpose: they’re providing players and team organizations security and outlining the general duties that are expected from both parties. According to the British Esports Association, some of the critical factors outlined in a contract include:

• Working hours
• Salary figures
• Figure percentages taken from winnings by the organization
• Sponsorship guidelines
• Company information
• Holiday and sick time information

Though the items listed above are essential, The Esports Observer recommended adding the following talking points to a contractual discussion:

• Merchandise – Will players receive a percentage of the merchandise sales?
• Streaming – Do players keep a percentage of the streaming revenue? If so, how much?
• Bonuses – Is there a potential for bonuses? If so, why and how much?
• Additional expenses- What kind of expense deduction can the players expect?

Understanding restrictions and limitations

Grasping general guidelines and understanding compensation is important, but esports players should be aware of the restrictions and limitations within their contracts as well. Some of the points that need to be considered include:

• The duration of the contract – How long does the agreement last? Will there be a discussion to reconsider when the contract is up, or will it be automatically renewed?
• Roster status – Will players be on the active roster permanently? How often will a player be benched? What does that mean for the prize money?
• Non-competes – Are there restrictions in the contract that state players can not sign with competing organizations after the contract is up?
• Code of conduct – How will the player be penalized if the contract is breached?

For example, Riot Games, an esports tournament organizer,  does not stand behind a non-compete rule.

“Restricting players from joining another team once their contract expires is simply unfair and risks the player missing out on key months (or even years) of their career,” Riot said in a statement. Diving into these crucial talking points can help players decide how they’ll establish themselves throughout their careers.

Advice for eSports players

Esports players who are new to the industry should understand the importance of protecting their earnings after providing their services. Up-and-coming eSports players should consider the following advice from The Esports Observer when signing their first contractual agreement:

• Read the contract – It should be drafted professionally, but fluently so non-lawyers can read it. Don’t skim over your contract – read through it and understand what you’re getting into.
• Understand it – Again, make sure you know what you’re signing. If you’re unsure of something in fine print, ask the organization for a better explanation. Better yet, discuss the issues with an attorney (your own, not the team’s).
• Review it – Ask for enough time to review thoroughly before negotiating.
• Negotiate – Don’t settle for what’s in writing because you feel like you don’t have another choice. Be willing to negotiate, but be reasonable. Keep things civil and be realistic.
• Prepare yourself – If the contract doesn’t meet your personal requirements and the organizations isn’t willing to haggle, you may consider walking away from the deal.

It is recommended, especially now that eSports is a booming industry – that all players and organizations develop written contractual agreements, and that all players have a thorough understanding of what they’re agreeing to.

If you’re an eSports player who’s unsure of a contractual agreement, or if you’d just like to learn more about the facts and figures of eSports, reach out to one of the attorneys a Scarinci Hollenbeck. Our professionals can provide information on legal counseling, protection, contracts and more. Therefore, if you have any questions or if you would like to discuss the matter further, please contact us at 201-806-3364.