Contract Law and Its Impact on the Esports Business Ecosytem
Gaming “Talent” Agreements
One of the unique facets of the esports business ecosystem is the way in which each component interacts and “contracts” with each other. While there are too many different contractual relationships to highlight, there are a few prominent ones that are explored below. These arrangements include ones where the professional gamers, coaches, and other gaming “influencers” sign a deal with a professional esports team or organization. In addition, there is information on the contractual agreements between on-air talent, including shoutcasters, and the hiring event, tournament, or league organizers. Many other types of written agreements also exist in today’s professional gaming business, including a sponsorship agreement between a brand partner and a gaming “talent,” such as a professional gamer or streamer, as well as those similarly structured deals entered into between a sponsor and an esports organization. Furthermore, there are a variety of “licenses” and other written authorizations for a gaming talent’s “likeness” rights that are acquired by an esports team, a tournament organizer, as well as a sponsoring brand. Additionally, all commercial gaming event organizers must acquire gaming licenses from the game publisher to present their competitive gaming contests, including any third-party tournament hosts. Finally, there is an exploration of some of the licensing arrangements between game publishers and event organizers with various broadcast outlets, including streaming and television deals.
A Look at Professional Gamer Contracts with an Esports Team
In order for the esports ecosystem to function properly and to best protect all of the individuals involved in it; it is prudent to use formalized written contracts between a team and any personnel member that they hire.889 This includes agreements between the team and any gamers, coaches, assistants, analysts, graphic designers, or any other third parties that they employ.890 While there is no esports-wide established “standard” professional gamer or talent contract such as those that exist in major sports,891 many professional teams have begun utilizing similar agreements that only contain slight variations in their language and structure.892 Predominantly, these often-used agreements typically outline the player’s salary, the frequency of salary payment, and any other compensation due to the person as well as include information on the individual’s obligations to the team.893 The document could also include information on the number of streaming hours that a player must adhere to, a set number of tournaments or events that a coach must attend, or any other listed job requirements that the organization wants to ensure are properly adhered to by its personnel. In a few cases, some organized esports leagues have begun implementing and mandating the use of minimum player salaries and guaranteed benefits.894
In particular, Activision-Blizzard’s Overwatch League mandated that every league participant sign the same standard written contract that included a set contract term of “one guaranteed year and [...] a second-year option” as well as establishing a minimum set salary for all competitors (the gamer can get paid more than the minimum amount, but not less).895 In addition, Activision-Blizzard’s Call of Duty League also created a required minimum yearly salary of $50,000 and mandated other traditional health benefits for its participating gamers.896 While the actual agreements used by many teams are not available publicly, some of the most important provisions that are usually included are explored below.897 It is important to be aware that the following clauses are not as detailed as typical agreement language is.898 Furthermore, the information below is meant to be a guide of the potential clauses and matters discussed within these types of contracts and should not be viewed or used as sample language for drafting a professional gaming contract. In fact, these were all abstracted from existing esports player contracts with prominent esports organizations, including those competing in franchise leagues.
Term—(a.) Tire ORGANIZATION agrees to retain the GAMER as a skilled esports professional beginning on January 1, 2021 (the “Effective Date”) and ending one (1) year thereafter (the “Term”), unless the Agreement is earlier terminated pursuant to this Agreement or the Term is extended pursuant to this Agreement.
(b.) Upon written notice to the GAMER, on a minimum of fifteen (15) days prior to the expiration of the Term, the ORGANIZATION, at its sole discretion, may extend the Term of this Agreement for an additional one (1) year period (“Option”), pursuant to the same terms and conditions contained herein.
One of the most important provisions included in a contract is the term. This is how long the agreement lasts for. The term of an agreement can be structured as a monthly, yearly, or any other timeframe that the parties select.899 As described in the provision above, it is also common for the term of an agreement to contain an option or several option periods.900 An option in a contract is the right to extend and renew the agreement’s term for an additional period of time. For example, the above language contains a one-year contract term with the option for an additional one year, meaning the total term for the agreement could be a maximum of two years.
When reviewing and negotiating the term of an agreement, a player may desire flexibility in the length of the term as well as in any included options or other contract extensions.901 This is especially true in cases where the gamer achieves a high level of recognition and individual success that did not previously exist and now the individual may desire or command a revised contract on terms different than those initially entered into.902 Conversely, an organization may desire that the term of a player agreement continues for as long as possible or as long as they desire.903 This includes the organization possessing the potential option to renew the agreement for additional time to try to ensure that the organization has the exclusive rights to the professional.904 In an effort to resolve these differences, a player may attempt to shorten the length of the term or try to reduce the number of renewal options that the team has. A gamer could possibly include specific “milestones” or other listed obligations or achievements that can either extend the term of the agreement or not. In addition, these milestones could provide the gamer with the option to terminate or re-negotiate the existing agreement if they achieve a listed milestone. For example, a milestone could include the gamer winning a major tournament, reaching a certain social media “follower” threshold, or earning a certain amount of total prize money for the team during a given time period. In these cases, if the gamer does fulfill the criteria, the language could then provide the gamer with the right to re-negotiate the contract or even with the right to terminate their existing agreement with the organization. This would be in hopes of the player obtaining a more lucrative or more favorable agreement due to achieving the agreed-upon event. Termination for the breach of the agreement might also be beneficial for a professional gamer to incorporate in a case where the team fails to make its owed payments to them or if it does not fulfill any of their other agreed-upon duties under an agreement.905
Roster Management—The ORGANIZATION’S active roster shall consist of a minimum of five (5) gamers, including the GAMER. Each GAMER shall compete in esports competitions and/or tournaments on behalf of the ORGANIZATION (the “Starting Roster”). The Company may contract with more than five (5) gamers, in which case some Gamers will be members of the ORGANIZATION but shall not actively compete in competitions and/or tournaments (the “Replacement Roster”). The GAMER is not guaranteed a spot on the Starting Roster and can be moved from the Starting Roster to the
Replacement Roster in the ORGANIZATION’S sole and absolute discretion.
When a gamer is part of a team of other competitors, another typical clause in most standard professional gamer contracts is one that addresses how the team can add and remove players from their existing roster. This includes language focused on the procedure utilized to move a gamer from a starting role to a “substitute” or “bench” spot.906 In most situations, the organization will want (and have) sole control over which gamer is a “starter” and which one is not.907 However, in an effort to curtail some of the organization’s power, a player may try to include language that requires the organization to first consult with them and discuss their plans with the gamer prior to moving them to or from the starting lineup.908 This could include language requiring written discussions between the team and the gamer in addition to mandating formal conversations with the other teammates and the team’s coaches and analysts when making this determination.909 Another protection that a gamer may try to implement on their behalf is to ensure that their monthly salary is not reduced if they are benched and are no longer on the starting roster. In some cases, the team may provide language that the organization may lower the player’s salary if they are no longer competing on behalf of them. Therefore, if possible, a gamer may try to combat this and negotiate for language that still guarantees them the same compensation whether or not they are on the starting team. While the organization may not be amenable to paying the bench player the same rate as if they were a starter, the parties may try to compromise and work out a reasonable reduced salary if such an occasion arises.
The GAMER’s Obligations to the ORGANIZATION—(a.) The GAMER agrees to wear the ORGANIZATION’S clothing, uniform, hat, and/or any other ORGANIZATION apparel as well as to utilize, and/or otherwise display any and all hardware, equipment, peripherals, food items, beverage items, and any other goods and services specified by the ORGANIZATION at any and all competitions and/or tournaments while competing on behalf of the ORGANIZATION as well as during any and all Promotional Activities on behalf of the ORGANIZATION and/or the ORGANIZATION’S Sponsors. The GAMER also further agrees to wear the ORGANIZATION’S apparel and to promote the goods and services specified by the ORGANIZATION during and while streaming on behalf of the ORGANIZATION.
- (b.) Hie GAMER agrees to use any custom stream “overlay” or other custom graphics provided by and created by the ORGANIZATION.
- (c.) The GAMER agrees to exclusively stream on any streaming service provider that the ORGANIZATION selects, at its sole discretion, including but not limited to: Twitch, Facebook Gaming, and/ or YouTube. The GAMER agrees that the GAMER shall stream on behalf of the ORGANIZATION for approximately forty (40) hours per month.
- (d.) At the ORGANIZATION’S request, the GAMER agrees to participate in a reasonable number of marketing, advertising, content production, and/or promotional activities on behalf of the ORGANIZATION and/ or the ORGANIZATION’S Sponsors (“Promotional Activity”). The Promotional Activity shall take place at such dates, times, and locations as determined by the ORGANIZATION at its sole discretion. The GAMER shall undertake any and all actions during said Promotional Activity in a first-class and professional manner and shall adhere to and shall be subject to the written and/or verbal instructions and directions of the ORGANIZATION and/or the ORGANIZATION’S Sponsors’ representatives, employees, and/or agents.
- (e.) During the Term, the GAMER agrees to be available for up to two (2) personal appearances (“Appearance Days”) per month, at a time and place as selected by the ORGANIZATION. During the Term, the ORGANIZATION has the option to request and the GAMER agrees to be available for additional Appearance Days. In the event the ORGANIZATION requests additional Appearance Days by the GAMER, the ORGANIZATION and/or the ORGANIZATION’S Sponsors agrees to pay the GAMER the additional compensation in the amount of two hundred ($200.00) U.S. dollars per day for each additional Appearance Day requested by the ORGANIZATION and/ or the ORGANIZATION’S Sponsors.
- (f.) The GAMER warrants that the GAMER’s Services set forth in this Agreement shall not be in violation of any immigration or other relevant work authorization laws; the GAMER agrees that the GAMER will not engage in any dangerous activities or other hazardous acts that may expose the GAMER to physical risks during the Term of this Agreement, including but not limited to motorcycle racing, car racing, bungee jumping, boxing, kickboxing, MMA (mixed martial arts), sky diving, wrestling, and/or hang gliding; and, that the GAMER will present themself to the public in a professional fashion, and the GAMER’s conduct will always confirm to the highest standards of honesty, morality, fair play, and good sportsmanship.
In exchange for the compensation that a gamer receives (salary) from an organization, the team usually requires a certain set of “obligations” or duties that the individual must fulfill in order for the player to receive the agreed-upon compensation such as those listed above. While the exact obligations on behalf of an organization differs in every case, most major esports organizations generally require that their signed gamers wear their team uniforms during all competitions as well as to support and utilize all of its sponsors’ products.910 Many organizations also require that the gamer display the team’s logo as well as any brand partners on their social media platforms.911 While streaming, a gamer may also be obligated to utilize or promote a team’s sponsors on-screen through product placement and on-air “shout-outs.”912
In addition to competing on behalf of the organization, a team may require that the talent participate in promotional and other marketing and content creation activities on behalf of them as well as in support of their partners and sponsoring brands.913 Some of these activities could include fan “meet and greets” at a competition or tournament.914 Other promotional events could be attending an industry convention where the gamer participates or otherwise appears on behalf of the organization or its sponsors. For example, a sponsored “activation” could be a product demonstration on behalf of a gaming peripheral company or a new product “tasting” or “sampling” on behalf of a sponsoring beverage.915
Since a player is required to comply with all of a contract’s duties, it is beneficial for a gamer to ensure that any of their organizational obligations are clearly defined in writing.916 In particular, it could be prudent to address and list the number of required sponsorship appearances as well as describe which party covers any costs associated with the gamer’s participation in these events.917 A player might also try to negotiate for additional compensation if they are requested to exceed a specified minimum promotional appearance amount. Similar to the provision above, a gamer may attempt to negotiate for additional compensation for the player’s participation beyond the set number of appearances. This insertion could be seen as a way to further incentivize the gamer’s participation in additional marketing activities that further the organization and their sponsoring brand’s marketing initiatives.
A typical player agreement might also include certain restrictions on the professional gamer’s actions. Some of these might include a limitation on which streaming platform a gamer can use when streaming as well as list a set number of streaming hours that they are required to fulfill on behalf of the organization.918 As with most agreement provisions, each party may attempt to reduce or increase the minimum required hours as well as attempt to provide additional incentives for the player to exceed the listed minimum. This could be in the form of a bonus or other additional forms of compensation to incentivize the player to stream for longer. A gamer may also try to negotiate for some flexibility in their streaming hour requirements, especially in light of their other team commitments.919 For instance, an individual may request language that provides them with “reasonable” or other fair reductions in the monthly streaming requirement for any travel time as well as for any time spent participating in competitions, tournaments, and other organization-related activities.920 This type of limitation could help ensure that the gamer does not fail to fulfill or otherwise breach their contractual obligations due to the daily time restrictions imposed by travel to and from competitions, sponsored events, as well as for any other team-related events.921
In many cases, a professional gamer agreement with an organization may also proscribe the type of equipment that the competitor must utilize.922 This includes listing what equipment the gamer uses during their stream as well as potentially during any organized tournaments or matches.923 Generally, the talent is permitted to only use gaming peripherals and equipment from their organization’s sponsors. These relationships could include ones with established brands for all or some of the gamer’s equipment, such as a keyboard, a computer monitor, a headset, or a gaming chair. However, situations may arise where a gamer is so familiar with their current equipment, especially with their keyboard or mouse that they may not perform at the same level while utilizing different technology.924 In such a case, the player may attempt to include language that accommodates or otherwise permits the gamer to use their desired equipment. This concession is rare because the team may be contractually prohibited from displaying a sponsor’s competitor during any team-affiliated or sanctioned activities. This may also be true in cases where a sponsoring brand provides all of the equipment for a “gaming house” or other training facilities that the players consistently work, live, and/or train in.925 This is because all of the provided equipment at the premises would usually be supplied by the same sponsor, such as Team Liquid’s fully-sponsored, “Alienware Training Facility.”926
Additionally, similar to the contracts signed by many professional athletes, provisions exist which forbid the gamers from participating in or engaging in any “dangerous or other hazardous” activities.927 Some of these prohibitions could be preventing the gamer from boxing, motorcycle racing, bungee jumping, or sky diving. This is important to the organization because if a player does partake in any “dangerous” or other “hazardous act” and they sustain an injury as a result of it, the injury may provide the esports team with grounds to terminate (i.e., for material breach of the provision) or otherwise rescind the agreement.928 The contract might also provide the team with the option to “toll” (put the contract on hold) the term of the contract until the gamer is healed. While this is the extreme case, with the rise of action sports and other high-risk activities, there is a need for a team to ensure that a signed professional takes care of themselves and is prevented from engaging in actions that could seriously jeopardize their ability to perform to the level that they are expected to.
The GAMER’s Compensation
- (a.) Salary—For the duration of the Term, the GAMER shall receive a salary of five thousand ($5,000.00) U.S. Dollars (the “Monthly Compensation”) per month. The Monthly Compensation shall be paid on the first day of each month by the ORGANIZATION. Notwithstanding, if the Monthly Compensation payable to the GAMER listed in this Agreement ever fails to comply with any and all rules or regulations of any and all competitions, tournaments, and/or third-party esports leagues in which the ORGANIZATION competes in or participates in, then the ORGANIZATION agrees to adjust the Monthly Compensation payable to the GAMER hereunder in order to comply with the applicable rules and regulations regarding player compensation.
- (b.) Sponsorship Guarantee—The ORGANIZATION shall provide the GAMER with a minimum guaranteed annual sponsorship payment in the amount of ten ($10,000.00) dollars per year (the “Sponsorship Guarantee”) in addition to the above Monthly Compensation. In the event at the end of the applicable calendar year, the GAMER has not earned the amount listed in Sponsorship Guarantee, the ORGANIZATION shall pay the difference to the GAMER.
As with most contract negotiations, one of the important and potentially contentious points involves the compensation from the organization to the gamer.929 This is largely due to the wide range in compensation paid to these individuals.930 In particular, there is no established maximum amount that an organization or team may pay a professional.931 Therefore, in some cases, the team may only pay a small salary or just simply cover the gamer’s competition-related expenses, such as their travel and lodging for a tournament. In other circumstances, a player may earn several hundred or thousand dollars a month depending on their notoriety and the gaming title that they compete in.932 Some listed salaries may increase over time, especially as the viewership and other avenues of monetization for a specific game increase.933 For example, the average salary for a professional League of Legends player has steadily risen. An article from January 2017 stated that the average base salary in North America was “$105,385;” and, in Europe, it was “$80,816.”934 By February 2018, the average salaries for North American competitors in League of Legends reportedly grew to “over $320,000.”935 Finally, there has been a trend of certain teams, especially those with existing brand partnerships to “guarantee” or otherwise promise that a certain amount of additional compensation shall be paid to the gamer in exchange for the promotional services that they provide for the organization’s sponsors.
While no maximum salary exists, some organized franchise leagues have established a minimum annual salary payable to a competitor.936 For example, both the Overwatch League’57and the Call of Duty Pro League738 have mandated minimum player salaries. These leagues provide each player with a minimum yearly salary of $50,000; however, this is just a minimum, as the individual gamer still has the right to negotiate for a higher salary.939 For example, former professional Overwatch League competitor, Jay “sinatraa” Won negotiated a salary three times ($150,000) the minimum amount.940 This means that he earned “$100,000 more than the league minimum” for his participation.941 However, in subsequent years, the average salary for an Overwatch League professional was “somewhere between $80,000 and $120,000.”942
Additionally, once a salary is agreed upon between the parties, it is prudent to incorporate language that permits the gamer to earn a pro-rata or other reduced amounts if they are terminated (dropped) or otherwise released prior to finishing an entire month or term of the agreement.943 For instance, if a gamer is dropped by the team halfway through a month or a contract, it is beneficial to include language providing the individual with a pro-rata payment of their salary for the accrued time to provide the player with some form of compensation for this employment period. Furthermore, some agreements may include language that permits the team to adjust the monthly compensation paid to the individual if the current salary fails to comply with any organized league or tournament. For instance, if a gamer is currently signed to an organization as a professional Call of Duty player and their team now obtains a franchise spot in the Call of Duty League, then the organization may now need to raise or otherwise re-negotiate the talent’s current salary level to adhere to the newly imposed league minimum amount so that they can comply with the league’s rules.944 Therefore, it is prudent for a gamer to request the insertion of similar language to permit the required compensation adjustment, especially when competing in non-franchise league game titles.
Prize Money—Any and all tournament, league, and/or event (“Competition(s)”) total prize pool money earned by the GAMER shall be paid directly to the ORGANIZATION and shall not be paid directly to the GAMER. However, if the GAMER does receive payment from Competition, the GAMER will immediately direct the payment of the funds to the ORGANIZATION. The ORGANIZATION then agrees to pay the TEAM eighty (80%) percent of all such Competition winnings received by the ORGANIZATION, with each Gamer on the Starting Roster of the TEAM receiving an equal share (“Team Prize Money”). For example, if there are four (4) members of the TEAM, then each Gamer shall receive twenty (20%) percent of the total Team Prize Money. The remaining twenty (20%) percent of total Team Prize Money shall be retained by the ORGANIZATION (“Company Prize Money”). All Team Prize Money payments to the GAMER shall be calculated after any and all applicable state, federal, and/or city taxes have been deducted from the total Team Prize Money.
Another common provision is displayed above and is included in most competitive gaming contracts. This clause may also be another point of serious contention depending on the size of the available prize pools. This is because it addresses how any competition winnings are divided between the gamer and the team.945 Specifically, how the funds earned from a tournament are split is of particular importance and should be discussed and negotiated between the gamer and the organization, as some takes may take as little as 5% to 10% or more, including up to “20% percent.”946 This is especially true in larger competitive titles which may provide substantial tournament or league prize winnings.947 In fact, in the last few years the total prize money available and the amounts allocated for each competitor or team has steadily risen. For instance, one of the largest annual tournament prize pools is for Dota 2's “The International” competition.948 Tit is tournament has been one of the longest running professional competitions and has boosted some of esports’ largest prize pools ever.
For example, the 2019 competition had a total prize pool that eclipsed “$30.2 million”949 and eventually “finished at $34million.”950 Of this $34 million total prize pool, the winning team earned a total of “$15,620,181.”951 This provided each competitor with “about $3-1 million” as there were five members on the winning competitive team.952 The 2019 total prize pool amount was larger than the 2018 The International, which had provided the winning team with a total of “$11,234,158”953 of a then “record [total prize pool] of $25-5M.”954 In fact, total prize pool available in The International in Dota 2 is still continuing to grow each year, including “breaking] $30 million” again for the upcoming, The International IO.955 Other competitive titles have also begun providing substantial prize money, including Epic Games’ Fortnite World Cup.956 This competition provided a total of $30 million in prizes for gamers with the winner of the “singles” and “duos” matches each receiving $3 million.95 In addition, the prize pools available for competitors in Activision-Blizzard’s Overwatch League have also increased annually.958 The organized league “has upped its prize pool from $3-5 million in 2018 to $5 million for the 2019 season.”959 Specifically, the 2019 overall season winning team earned “$1.1 million [dollars] with the runner-up team walking away with $600,000, [and additional] decreasing amounts for [the other] lower-ranked teams.”960 It is apparent from these large prize pools that the percentage that a player or team is entitled to should be determined and agreed upon in advance as this negotiation could be the difference between hundreds or even thousands of dollars.
“In-Game” Content—Any and all Gross Revenue generated from any in-game digital assets, including but not limited to any promotional items, stickers, and/or skins (“In- Game Content”) related to the ORGANIZATION shall be divided as follows: the ORGANIZATION agrees to pay the TEAM forty (40%) percent of all such income (“Team Game Content”). The Team Game Content will be divided equally among each Gamer on the Starting Roster with each Gamer receiving an equal share of the Team Game Content revenues. The remaining sixty (60%) percent of the In-Game Content revenue shall be solely retained by the ORGANIZATION.
With the rise in additional opportunities for professional gamers and for organizations to earn income from in-game transactions, it is essential for these parties to discuss how these revenues are distributed. This includes a determination on how any monies generated from the sale of a team or a player-branded in-game item is split. Some of these in-game items could be in the form of aspecific weapon “skin” or armor featuring the organization’s colors or logo or an item that includes a particular gamer’s gamer-tag, image, or other likeness. For example, Ubisoft r Rainbow Six Siege Pro League provides any participating team with “30% of the revenue [earned from] its own respective item sales.”961 Consequently, the 30% of these sales earned by the esports organization is then dispersed between the players and the team based upon their agreed-upon split for in-game item sales.962 As exemplified above, the competitive team players under this agreement would be entitled to split 40% of the total earned by the team from this source. Similarly, many other established competitive leagues have introduced revenue-sharing options for its participating teams including Rainbow Six?65 PUBG9M League of Legends?65 and Overwatch?66
In addition to negotiating the split of this revenue stream, a gamer might also try to carve out an exception. Specifically, the player may try to negotiate language that provides them with the full amount allocated for the “gamer side” of in-game revenue that the organization earns if their name, image, or gamer-tag is solely used for the in-game item instead of the monies being subject to “split” provisions.967 This could be in the form of a character skin only containing the player’s name or gamer-tag. While this might not always be possible, if a particular player has achieved a high level of notoriety that such in-game assets might be created solely utilizing their likeness, it would be beneficial for the gamer to try to receive additional compensation for this use. Ultimately, this is a point that the organization might accept in light of the bargaining power of the particular gamer and whether or not they intend to create or otherwise license gamer-specific content.
Merchandise—(a.) “Gamer-Branded” Merchandise—The ORGANI
ZATION shall receive sixty (60%) percent of the Net Profits earned from “Gamer-Branded Merchandise” sales. The GAMER and the rest of the TEAM shall divide the remaining forty (40%) percent (the “Gamers’ Share”) equally between them. “Gamer-Branded Merchandise” includes any and all items that utilize and/or otherwise display the GAMER’s name, image, gamer-tag, and/or likeness, and/or contains all or some of the Gamers of the ORGANIZATION.
(b.) “Team-Branded” Merchandise—The ORGANIZATION shall receive eighty (80%) percent of the Net Profits earned from “Team-Branded Merchandise” sales. The GAMER and the rest of the TEAM shall equally divide the remaining twenty (20%) Percent of the Net Profits earned from “Team-Branded Merchandise” sales. “Team-Branded Merchandise” includes any and all items that utilize or display the ORGANIZATION’S name and/or logo and that does not specifically list, utilize, and/or use the GAMER’s individual name, image, gamer-tag, and/or likeness and/or any use the name, image, gamer-tag, and/or likeness of any of the other players of the TEAM.
With the escalating importance of team merchandise sales, a gamer contract may address which merchandise the player generates income from (if any) and specifies how much the professional gamer earns from these sales (if anything).968 Generally, the merchandise sold by an organization falls into one of two categories, either it is team-branded or it is gamer-branded merchandise.969 Team-branded merchandise are any items created that contain the organization’s name or logo.970 In contrast, gamer-branded goods are those that possess an individual’s name, gamer-tag, photograph, or other uses of the player’s likeness.971 Similar to in-game items, in instances where only one player is featured on the gamer-branded merchandise, the gamer may try to include language that ensures that only that particular individual is entitled to the full “gamers’ share” allotment for any income generated from the sale of the specific gamer-branded merchandise.972
In addition to a specified percentage of merchandise sales, some organizations may also provide a signed player with an affiliate or other “check-out” discount code or link that is specific to the gamer.973 This player-specific code or URL can then be used by a customer at the time of purchase of any team-branded merchandise in order to receive a discount or other benefit, such as a free gift.974 In this context, the player could negotiate that the use of this specific affiliate code or URL link when purchasing any team-branded items provides the gamer with a set percentage of that purchase. This could be a technique utilized by an esports organization to incentivize their individual players to encourage their fans to purchase the team’s merchandise. As with most points, the actual discount percentage and the amount that the player earns from such a sale are also subject to negotiation and should be ironed out in advance in the agreement.
Streaming Revenue—For the duration of the Term, the GAMER is entitled to one hundred (100%) percent of any and all streaming revenue earned by the GAMER, including but not limited to any advertising revenues, subscription^), tips, bits, and/or donation(s) revenues.
As discussed earlier, one of the most prevalent forms of income within the esports business ecosystem is live streaming. In fact, many professional gamers, content creators, and professional esports organizations earn substantial and, sometimes, a majority of their revenues through this avenue. Similarly, most major player deals outline how much the streaming party is entitled to from their streaming earnings. While each agreement is different, many professional organizations permit their signed gamer to keep all of their streaming income.975 This includes any money generated from any advertisements displayed during their broadcast as well as funds earned from any commercials played on their saved content. A gamer might also be able to retain all of the money earned from any viewer “donations,” “tips,” and subscription fees. However, in some cases, the team may insist on receiving a percentage of the person’s streaming income in exchange for a set salary that the team pays them or for any other benefits that the organization provides to the streamer. TTiis may be common in situations where the individual is only a streamer or content creator for the team and does not compete in tournaments or leagues. The benefits provided by the team to the streamer could be in the form of additional exposure and promotion of the talent as well as introductions to sponsors or other potential brand partners for the streamer. As with most points within a contract, the exact percentages are generally subject to negotiation between the parties.
GAMER Housing—At the ORGANIZATION’S sole discretion, for the duration of the Agreement, the ORGANIZATION shall provide the GAMER with reasonable, fully-furnished lodging accommodations or other housing options, including providing the GAMER with all necessary computers, gaming gear, and network/internet connections, at the ORGANIZATION’S sole cost. These lodging accommodations may vary based upon the country in which the GAMER resides, and may include a separate apartment for the Gamer and/or a single gaming house for the GAMER to live in with the rest of the ORGANIZATION’S TEAM.
In addition to offering a professional gamer a salary, some teams may also provide the individual with housing accommodations. This is particularly true of organizations that require their players to move from their home market to live and train elsewhere. The actual provided accommodation may differ greatly based on the number of gamers who require housing as well as the city or geographic area that the housing is located in.976 In some cases, the team may provide a gaming house where all of the teammates live and practice together.977 This type of living arrangement may provide unique benefits and opportunities for the organization. For example, not only are all of the players able to live and practice together in the same room without much interruption but it also provides the organization with opportunity to create content within the residence as well as to provide product placement opportunities for its brand partners.978 For instance, esports organization Cloud9 had a gaming house in California for its CS:GO team.979 The premises was equipped with a gaming room, a dining room, and a full kitchen as well as having individual rooms for each gamer.980 In other situations, the team may just provide the gamers with their own apartments or other shared living quarters.981 Furthermore, some teams may not provide any housing accommodations for its signed talent. This is especially true when the gamer is not part of a larger competitive team, such as a fighting game participant, or in instances where the costs outweigh the benefits of having the team living together. While each organization determines whether to provide housing to the gamer as well as what type of housing will be provided, in instances where no housing is provided, a player may still be required to move away from his home market. If this is the case, the gamer might attempt to negotiate for some type of “stipend” or other payment from the team that can be applied toward their housing and living arrangements. While this may not be possible in many situations, as with most things, it is beneficial to attempt to negotiate for it, especially in light of the costs associated with moving into a new market.
Boot Camp Housing—At the ORGANIZATION’S sole discretion and cost, the ORGANIZATION may provide the GAMER with reasonable, fully-furnished lodging accommodations during a “boot camp.” These lodging accommodations may vary based upon the country in which the ORGANIZATION resides, and may consist of a separate apartment for the GAMER, hotel room(s) for the GAMER, and/or a single gaming house for the GAMER to live in with the rest of the ORGANIZATION’S TEAM.
As indicated earlier, a “boot camp” is the name for the intense training sessions that a competitive player or team of gamers undertakes in order to prepare for an upcoming tournament or league season.982 The language above expresses that the team will cover all of the costs of the gamer’s participation in any boot camps. Since such camps have become very common occurrences among major organizations, it is fairly common for a team to cover these expenses. In particular, these programs provide the team with the ability to simply “play games [and practice] for up to 16 hours a day [, ... ] seven days a week [to refine] their strategy.”983 For example, the pro players on esports teams Virtus.pro and Natus Vincere participated in a “joint” boot camp where each team “train[ed] for multiple hours a day over the course of four days [including ...] playing, planning out strategies, and analyzing footage from competitors.”984 In addition to playing and studying the game, the camp provided each member of both “team[s] [with] an opportunity to train under the care of both [organization’s] trainers [as well as with] a special psychologist.”985 Due to the unique benefits that many professional teams have found through these types of activities, it is fair to assume that such boot camps will continue to be part of a professional gamer’s training regimen.986
Travel and Per Diem Expenses—In the event that the GAM ER is required to travel to a location more than twenty (20) miles from the GAMER’s residence or if the GAMER is housed at the ORGANIZATION’S residence, from the ORGANIZATION’S house, the GAMER shall receive first-class travel accommodations to and from the residence to the event and/or competition, at the ORGANIZATION’S sole cost. The GAMER shall receive a per diem expense allowance of fifty ($50.00) U.S. dollars per day during the Term of this Agreement when traveling as well as three (3) meals per day while traveling to an event and/or competition, all at the ORGANIZATION’S sole cost.
While a professional organization may cover the living and training expenses of a signed player, some teams also provide their team members with funds to cover other living expenditures. For instance, a team may reimburse a gamer for the travel costs to and from a competition or other team mandated event.987 An esports organization might also offer their signed talent a “per diem.” This is a “daily allowance” that the company pays to the player to help cover their daily costs such as food.988 These additional funds are not necessarily provided in every esports player contract; however, it could be beneficial for a player to try to negotiate with the team to attempt to have the organization cover some of their other related expenses. Again, this is another point of contention that must be agreed to between the parties; otherwise, if no language is to the contrary, then the gamer will be solely responsible to pay for anything that the team does not explicitly agree in writing to pay for.
The GAMER’s Assumption of Risk—The GAMER understands, warrants, and agrees that there are inherent risks involved with participation in professional gaming, including but not limited to, any and all eye and/or retina damage, carpal tunnel syndrome, and/or other arm and wrist injuries, repetitive stress injuries, and/or other damage associated with extended periods of computer-based work. The GAMER hereby expressly assumes any and all such risks and results of participation in professional video gaming on behalf of the ORGANIZATION. The GAMER hereby releases the ORGANIZATION and the ORGANIZATION’S representatives, employees, officers, directors, and shareholders from and against any and all claims, suits, judgments, costs and/or fees, relating to and/or arising out of activities performed by the GAMER in connection with any and all injuries associated with participation in professional gaming on behalf of the ORGANIZATION.
It is important for a competitive gamer to be aware of the potential risks and hazards that they could encounter as a result of participating in esports.989 Similar to many other professional sports, an esports competitor generally “assumes the risk” of any foreseeable injury or bodily harm that they may suffer as a result of their participation.990 In the gaming world and similar to the language above, the individual usually accepts and removes any legal liability upon the organization for any of the listed injuries that manifest as a result of the player’s gaming.991 Therefore, the inclusion of such language in a player’s contract may absolve the organization from any potential liability for any injuries a gamer sustained while playing on behalf of them, including any eye or wrist injuries as well as any other “repetitive stress injuries.”992 Since incorporating this type of language is a fairly common practice among companies, a professional gamer should be aware that even if they do suffer such foreseeable injuries, they most likely have already “assumed” this risk. This then means that the organization will be held harmless from any liability and not be legally responsible for any of the gamer’s injuries.993
GAMER Restrictions—(a.) Non-Solicit—The GAMER agrees to not solicit or otherwise induce any other professional gamer and/ or employee to terminate and/or reduce their relationship with the ORGANIZATION.
- (b.) No Poaching—The GAMER agrees that the GAMER will not solicit, lure, poach, and/or otherwise make any offer of or attempt to offer employment to any currently contracted player competing in any game, whether the GAMER competes in that game or not. The GAMER agrees not to encourage any other player to breach or otherwise terminate an existing contract with any other third party, including but not limited to an existing esports organization and/or team.
- (c.) Non-Disparagement and Liquidated Damages—The GAMER agrees that they will not, at any time, publicly disparage, or make any derogatory, slander, or offensive remarks about the ORGANIZATION, the ORGANIZATION’S employees, officers, directors, shareholders, agents, sponsors, other gamers or streamers, or affiliates. The GAMER also shall not, at any time, make, post, publish, or communicate to any person or entity in any public forum any false, defamatory, libelous, and/or otherwise slanderous remarks or make public communications intending to cause injury to the ORGANIZATION’S business interest, including but not limited to making public statements questioning the integrity and/or competence of the ORGANIZATION, the ORGANIZATION’S Sponsors, and/or the administrators of any tournament and/or a league organizer that the ORGANIZATION participates in. In the event that Gamer breaches this clause, GAMER shall pay to ORGANIZATION liquidated damages in the amount equal to one ($1.00) dollar per Impression of the Disparagement. “Impression” shall be defined as “a single instance of the display or provision of the Disparagement directly or indirectly to any person, regardless of whether such Disparagement was viewed, heard, or otherwise experienced.”
- (d.) Objectionable Posts—While GAMER has the sole and absolute discretion over their Social Media posts, the ORGANIZATION may request in writing that GAMER remove and/or delete any Social Media post that ORGANIZATION reasonably believes violates or otherwise breaches any of the provisions of this Agreement; and the GAMER agrees to promptly within twenty-four (24) hours of said request from the ORGANIZATION remove or delete any such Social Media post.
- (e.) Fines, Suspensions, and Disciplinary Action—During the Term of this Agreement, the GAMER agrees and acknowledges that the GAMER may be subject to fines, suspensions, and/or disqualifications imposed by the ORGANIZATION and/or any competition, tournament, and/or league organizer, and that these fines, suspensions, and/or disqualifications are reasonable and necessary in order to maintain the integrity of competitive esports. The GAMER further acknowledges that the ORGANIZATION has the power to levy fines on the GAMER for conduct that is detrimental to the ORGANIZATION, including but not limited to the repeated failure to attend training, practice, and/ or Sponsorship Appearances by the GAMER (without prior authorization or written permission from the ORGANIZATION) and/or any unsportsmanlike or other public disruptive behavior directed at the ORGANIZATION and/or the ORGANIZATION’S other gamers, coaches, analysts, and/or managers as well as any and all opposing players and coaches, fans, announcers, casters, streamers, referees, and/or tournament, league, and/or competition organizer officials or referees. Unless challenged by the GAMER pursuant to the Official Rules and/ or Regulations, the GAMER agrees to immediately pay any and all such fines as requested by the ORGANIZATION and/or any competition, tournament, and/or league organizer or host. Notwithstanding, after prior written notice to the GAMER, the ORGANIZATION shall have the right to deduct all reasonably incurred fines from the GAMER’s Monthly Compensation and/or from any other compensation owed to the GAMER pursuant to this Agreement.
Most businesses, including those involved in professional sport, generally provide a list of limitations and obligations that a professional under their banner must adhere to. Esports is no different, as most competitive team agreements contain several prohibitions. These restrictions could include antipoaching, anti-disparagement, as well as non-solicitation provisions intended to safeguard competitive integrity as well as to ensure that all public communications made about the team or the league by a gamer are positive.994 Other restrictions could include preventing the player from attempting to solicit or otherwise “poach” another gamer or other employee signed to another team.995 Such actions could be undertaken in an effort to convince the player to leave their current organization to join the gamer’s team.996 Provisions related to these concepts can also be fashioned to protect the organization’s current employees from leaving the entity to work for a competitor, such as through a non-compete clause.997
Furthermore, similar to many traditional companies, especially those in the public light whose business may be influenced by public perception, esports organizations generally impose regulations on what a signed gamer can say publicly.998 These could include restricting the substance of the gamer’s statements on social media as well as during any on-air interviews or in any articles or other press pieces.999 In particular, the team may incorporate language to attempt to ensure that the player does not publicly disparage or otherwise defame the organization, any of the team’s sponsors, their opponents, as well as the tournament or league organizers and their brand partners.1000 Some organizations have even gone further by including a potential “liquidated damages” clause that provides a specific amount to the team for any defamatory remarks made by a gamer, either online or otherwise.1001
Analogous to many other professional sports, a competitive esports organization might impose a fine or other penalty for a violation of any of these types of constraints.1002 In addition, most organized tournaments and leagues enact their own code of conduct or other regulations that a gamer must adhere to in order to compete.1003 In fact, many tournament and competitive league rulebooks may also provide the organizer with the option to impose penalties, fines, or other sanctions (suspension, expulsion) for any infractions and other violations of any of the competition’s rules.1004 In these cases and similar to the language above, it is important that a gamer is aware of the potential penalties that exist for a rules infraction.1005 This is because many agreements generally permit the organization to impose penalties and fines upon the gamer for violations.1006 An agreement might also provide the team with the right to deduct any fined amounts directly from any compensation payable to the gamer.
In addition to the above provisions, there are several other important ones incorporated in many professional gaming contracts that affect the contract’s term. In fact, there are various ways for a professional player’s contract to end earlier than the natural expiration of the contract’s term. Some of these methods could include the team dropping or releasing a player by terminating the contract or through a buyout payment made by the player, by the signed team or by another team.1007 A professional player could also formally retire from competitive gaming or they could be subject to “loan out” or other transfer of the professional to another team, such as being sold or traded to another organization.1008
Buyout—This Agreement may be sold and/or assigned to another esports team or organization, without the prior consent of the GAMER, at the ORGANIZATION’S sole discretion, for an amount no less than twenty thousand ($20,000.00) U.S. dollars (“Buyout Amount”) payable to the ORGANIZATION. The GAMER shall also have the option to provide the Buyout Amount to the ORGANIZATION in order to be released from this Agreement.
An example of a “buyout” provision is exemplified above. This clause enables the parties to prematurely end their contractual relationship in exchange for a payment. A buyout is the monetary amount that must be paid to the organization in order to purchase or otherwise assign an existing contract to another party.1009 This sum can be paid to the original team by the individual gamer themselves or by another team who wishes to acquire the rights to the player. In many circumstances, the negotiation of the buyout amount in a contract is extremely vital. This is because the listed amount can act as a barrier to a player’s transfer or other movements within their professional gaming career. This is especially true when the listed figure is for a large amount and the original team is not willing to modify or alter the required amount. In those cases, such a large buyout could actually prevent another team from proceeding with the gamer due to the buyout amount being cost prohibitive. This could be because the new team does not feel that the significant expenditure could be recouped by them. In fact, some teams, such as esports organization G2 Esports, allegedly applied large buyout prices for several of its players.1010 Specifically, the organization is said to have applied a “$800,000 price tag per player.”1011 This reported buyout amount might act as a barrier to another team purchasing their contracts, thereby preventing them from playing for another team (or at all).1012
In addition to agreeing to a specific buyout amount, a player can also try to negotiate for additional compensation as a result of a third party exercising the provision. For instance, the gamer could try to negotiate for a “transfer bonus.” This could be in the form of a set percent of the buyout amount earned by the team being paid to the gamer. The inclusion of this language could be beneficial to both parties in the transaction. This is because a team may agree to a larger buyout with a “transfer bonus” in their contract in an attempt to incentivize the gamer to focus on performing well so that another organization desires to purchase the gamer for the large sum listed. If this occurs, then the player would also receive some compensation from the buyout. This is especially true in minor leagues such as Overwatch Contenders, whereby franchises competing in the Overwatch League look to the Contenders’ teams for replacement gamers.1013 In most of these cases, the teams are required to pay the original organization the listed buyout amount to facilitate this transaction.1014 In fact, existing organizations do sign successful competitive Overwatch League Contenders’ teams.1015 For example, esports organization Team Envy signed an entire Contenders team that finished within the top four of Season 1 of Overwatch League Contenders.^6
Retirement Clause—In the event that the GAMER chooses to terminate this Agreement and to discontinue any and all competitive esports play for at least the next two (2) years, the GAMER shall have the right to terminate this Agreement by paying the ORGANIZATION a buyout fee of five thousand ($5,000,000) U.S. dollars (“Retirement Buyout”). “Competitive play” is defined as any and all participation in any and all competitions or tournaments offering a collective tournament and/ or competition prize pool of more than two thousand ($2,000) U.S. dollars. Notwithstanding, in the event that the GAMER exercises this “Retirement Clause” and pays the required Retirement Buyout and then later returns to competitive play within three (3) years after the Retirement Buyout is paid, this Agreement shall resume and remain in full force and effect on all of its terms.
Another way for an agreement to end before the term expires is if the gamer retires from competitive gaming.1017 Similar to a professional athlete’s retirement, an individual may indicate to their team that they want to discontinue all competitive gaming for a set period of time or indefinitely.1018 In fact, this has become a common trend due to the fact that “[m]ost esports players retire by their late 20s or early 30s.”1019 In these cases, similar to the above, a player’s contract may have language that permits the player to terminate the agreement early and retire by paying the team a retirement buyout or they may just retire without any financial requirement.1020 If the player refuses or cannot pay this amount, he may potentially just stop competing and effectively “retire” from competitive play. While this player might not be playing competitively anymore, they might still be in breach of his existing player agreement for failing to perform its services (being a competitive gamer for the team). The retiring gamer’s lack of performance may not be excused or otherwise waived by the team because the gamer failed to utilize the proper protocols to correctly effectuate their retirement (i.e., paying the retirement buyout). If the player is in breach for failing to compete and for not paying the required retirement buyout, the team may be permitted to toll or otherwise stop the agreement while still retaining their exclusive rights to the individual’s gaming career. In contrast, if the gamer fulfills the agreement criteria and retires properly, they would be released from their exclusive obligation to the team as long as they comply with the listed requirements.1021 In negotiating this type of provision, a gamer may try to either reduce or completely eliminate the need to pay any type of fee or buyout when retiring before the expiration of their contract. However, the team may counter this point by arguing that they have already paid the player compensation as well as other covered expenditures on behalf of the player so that they can compete for the team and intended to receive reimbursement throughout the entire contractual time period. Ultimately, this point of contention comes down to leverage and bargaining power. In particular, in many cases, the more funds expended on behalf of a gamer, the more likely that the organization will want to ensure that they have every possible opportunity to recover these disbursements and expenditures.
Trades and Movement—For the duration of the Term, the ORGANIZATION shall have the sole right to trade or otherwise assign the ORGANIZATION’S existing rights to the GAMER under this Agreement to another esports organization or team, without the prior consent of the GAMER. The ORGANIZATION shall have the sole right to license or otherwise “loan out” the ORGANIZATION’S existing rights in the GAMER under this Agreement to another esports organization or team for a specific period of time and/or the remainder of the Term, without the prior consent of the GAMER.
Similar to other sports, a professional gamer signed to an esports organization can be traded or loaned out to another team.1022 In most instances, the team will have full and unlimited discretion on whether to assign an existing player contract to another organization as well as approval over which team the gamer is traded to.1023 The player transfer provisions can be for a specified period of time, such as a “loan-out.” In other cases, the transaction could be for the remaining period of the gamer’s contract. This is more akin to a trade or a “full assignment” of the rights that the original team had to the competitor.1024 While the organization generally has the sole right to trade or transfer a player, a gamer may try to negotiate for some limitations on the team’s power. One such restriction could be the inclusion of a “no trade clause.”1025 This type of a provision provides the gamer with the right to approve or reject a proposed trade to another team. This means that the gamer can say “no” to a potential trade offer presented to them. A no trade clause can be tailored to require a player’s prior approval for any loan-out or for the full trade of the gamer. This provision can be tailored to be applicable to every transaction involving the professional. Alternatively, if a full no trade clause is unavailable, a gamer may try to impose a geographic restriction to prevent the team from trading or otherwise transferring the gamer to a specified country or countries (e.g., no European-based teams). A player could also try to negotiate for a provision that includes an organizational restriction. This could prevent an assignment of the gamer to a specific team or list of teams (e.g., no trade to Gen.G). If such a limitation is accepted, it is essential that the parties list the country or countries that a transfer is prohibited to as well as include the names of any team or organizations that the player will not accept a trade to. Analogous to these transfer restrictions in other traditional sports, the more a team desires to sign and appease the gamer, the more likely that they will accept such player transactional limitations.
Change In Management—At the GAMER’s sole option, this Agreement may be terminated by GAMER upon prior written notice to ORGANIZATION in the event that ORGANIZATION undergoes a transfer or sale of all or substantially all of the business of the ORGANIZATION which this Agreement relates to, whether by merger, sale of stock, sale of assets, or otherwise, whether voluntary or involuntary, and by operation of law or otherwise, to any third party.
Another method a professional gamer can utilize to prematurely terminate a player agreement is the inclusion of a “change in management” clause. Similar to the one exhibited above, the language can be written to provide the player with the right to opt-out of their existing contract for any change in the team’s management or executive structure. For example, this could include if a team owner or CEO resigns or is otherwise replaced.1026 The clause can also be fashioned to operate during any change in the actual personnel of the signing team, such as the hiring of a new coach or analyst or if a current coach or player is released. This might also operate as the result of any other transfer of ownership of the team, such as new ownership buying the organization. However, in today’s esports business, this might be a point of strong contention with the signing team, because many teams look for outside investment in order to fund their organization. In these cases, the new investors or ownership group might desire to bring in their own management or other new personnel to run the acquired esports team. Therefore, in these situations, it may be tough to incorporate language that contractually provides a signed gamer with the ability to leave the team if such a transfer occurs as it may limit the organization’s growth. Again, depending on the notoriety and leverage the gamer has, the individual may be able to require these types of restrictions be included in their player contract.
Right of First Refusal and First Negotiation—If at any time during the Term, GAMER receives a bona fide offer from a third party (the “Third-Party Offer”) from any esports team or organization for the GAMER’s services and the GAMER desires to accept such Third-Party Offer, the GAMER agrees to first offer in writing to the ORGANIZATION the opportunity on the same terms and conditions contained in the Third-Party Offer (the “First Offer”). The First Offer must specify all of the terms and conditions of the Third- Party Offer. If the ORGANIZATION does not agree to match the First Offer within fifteen (15) days after the ORGANIZATION’S receipt thereof, then the GAMER will have the right to accept the Third-Party Offer. However, any agreement with such third party must be effectuated within fifteen (15) days after the rejection of the First Offer by the ORGANIZATION and the agreement with the third party may only be effectuated upon terms and conditions no less favorable to the GAMER as those contained in the First Offer from the ORGANIZATION. If such a sale is not so effectuated, the GAMER will not sign to another esports team or organization without again first offering the GAMER’s services to the ORGANIZATION as provided hereinabove. After the end of the Term of this Agreement, the GAMER hereby agrees to negotiate exclusively and in good faith utilizing its best efforts with the ORGANIZATION, for a period of thirty (30) days, to reach an agreement with the ORGANIZATION for the GAMER to continue the GAMER’s Services listed herein on behalf of the ORGANIZATION. If the ORGANIZATION and the GAMER fail to finalize the material terms of such agreement by the end of such thirty (30) day period, then the GAMER shall thereafter be free to negotiate with any other third party for the GAMER’s services as a esports player, but only on terms and conditions that are no less favorable to the GAMER than those last offered by the ORGANIZATION to the GAMER.
In situations where an agreement ends naturally, which means that it did not terminate early and the player was not bought out, released, or otherwise transferred to another team, then the above provision may be applicable. The displayed clause includes both a “right of first negotiation” sometimes referred to as the “right of first offer.”1027 It also might contain a “right of first refusal” also known as a “matching right.” This above language may be included in situations where a team only signs a gamer for a few years but they would like the opportunity to discuss extending their relationship upon its expiration.
A “right of first negotiation” provides the party, usually the esports organization, with the initial right to decide whether they want to extend and enter into another agreement with the gamer. This language generally requires that contract renewal discussions occur with the existing team before any other organization has the opportunity to weigh in on this decision. This means that the player is first required to negotiate or attempt to negotiate a new contract with the original organization prior to exploring any other options. These clauses typically include a stated period of time, such as the 30-day time limit illustrated above, that the parties must exclusively negotiate with each other in an attempt to finalize a new deal. A proscribed time limit is included in most instances in an effort to prevent the negotiations from carrying on for an unlimited period of time. In some cases, there is also included language which ensures that the parties will attempt to engage in “good faith” negotiation. This generally means that the parties will refrain from offering an extremely unfair or “low ball” offer that is completely different from anything else that was agreed to previously. If the negotiation time period expires and the parties have not entered into a new agreement, then the gamer may be permitted to start discussions with other teams to compete elsewhere.
Additionally, many agreements that include a “right of first negotiation” may also contain a right of first refusal or a matching right. In most cases, a right of first refusal provides one party, usually the esports team, with the right to “match” any proposal from another organization made to the gamer on the same terms and conditions as those offered by the other organization. If the original team does not match the third party’s offer, then the gamer is free to enter into the agreement with the other organization on the same terms presented to the original team. However, it is important to be aware that an esports organization may include contractual language that prevents the team from being obligated to accept any offer terms which cannot be filled by any other major esports team or organization. For example, if an esports organization’s owner also owns a professional football team and offers a gamer season tickets and an ownership interest in the NFL franchise to join them, this would not be a condition that the original team would be required to match if such language was incorporated. This would be because providing an “NFL ownership interest or season tickets” is not something traditionally offered by esports organizations. In some cases, this clause could require that if the gamer’s contract negotiations with another team fail, then the player is contractually obligated to re-offer their services to their original organization prior to beginning negotiations with a different team. While the structure of this contractual mechanism may differ, it is important that a professional gamer is aware of their obligations to their prior team before signing with a new one.
The GAMER’s “Likeness” Rights—Tire GAMER grants to the ORGANIZATION the non-exclusive, licensable right throughout the world to use the GAMER’s name, likeness, image, voice, gamertag, nickname, persona, voice, or any other personal indicia, and/ or biographical information that the GAMER has provided to the ORGANIZATION, as well as any and all photographs, audio, and/ or audiovisual footage taken of the GAMER and/or featuring the GAMER (collectively, the “GAMER Content”) in connection with any and all advertising, sponsorships, sponsorship materials, or other exploitation of the GAMER in any manner in connection with the GAMER’s Services hereunder, without additional compensation to the GAMER. During the Term, the GAMER agrees to allow the ORGANIZATION to film, record, and photograph the GAMER, either alone or together with others, for still photographs, motion pictures, television, and/or digital media, at such times and places as the ORGANIZATION requests. Hie rights in all of the GAMER Content shall belong to the ORGANIZATION and the GAMER shall be not entitled to any royalties or any other additional compensation for the ORGANIZATION’S exercise of such rights.
Hie above is an example of a “right of publicity” clause and is explored in further detail in a later section of this chapter. As an introduction, this right is included in most standard talent agreements, including in professional gamer contracts.1028 The negotiation and proper understanding of this particular provision is extremely important to a gamer.1029 The right of publicity is an individual’s right to “control and profit from the value of his or her name, image, likeness, and other indicia of [the individual’s] identity.”1030 Hiis means that a person “has a right in the publicity value of his photograph, i.e., the right to grant the exclusive privilege of publishing his picture” or other likeness.1031 Therefore, a third party must receive prior permission before they may utilize another individual’s likeness for any commercial purpose, which extends to the right to use a gamer’s voice, signature, or gamertag on a product.1032
In particular, the language listed above outlines the various likeness rights that the organization receives from the gamer. For instance, the team receives the right to utilize the player’s likeness for any commercial purpose that it requires. This includes the option to utilize their gamer’s real name, gamertag, any photographs, or any audio files of them as well as any using any biographical information on the player as they desire. This also means that the team can incorporate the player’s likeness, such as the player’s name, logo, or voice, on any merchandise, in any team advertisements, as well as in any sponsored content distributed by the organization.
Since the typical rights granted under most right of publicity provisions are very broad and encompass most avenues of an individual’s likeness, it is crucial that a professional gamer understands the scope of the rights that they negotiate away as well as comprehend both the short-term and long-term ramifications of such actions. If possible, it may be beneficial for a gamer to negotiate a limitation on the length of time that the organization holds these publicity rights solely to the contract’s duration. In this case, the esports team will only have the exclusive right to the gamer’s likeness for commercial purposes for the term of the agreement. While this is the rare case, a prominent professional gamer may be able to negotiate for such a limitation so that they can fully monetize their likeness after they depart from the team.
If this option is unavailable, a gamer may try to negotiate for some proscribed limit on the time that the team can use the player’s likeness when they are no longer signed to the organization. For example, a player might try to provide the organization with a stated time period, such as six months, after the expiration of the contract that the team can continue to license and monetize the gamer’s likeness. This clause could be fashioned to require that after this time period expires, the organization must pay a negotiated fee to the player in order to continue utilizing the individual’s persona for commercial uses. However, if this fee is not paid by the organization, then the team’s rights to the former gamer’s likeness completely expires. Another potential negotiated imitation might be that after the contract’s expiration, the team may only utilize the former player’s likeness for non-commercial, promotional, or “archival” purposes as opposed to any new or continued commercial ones. This way the team can still use any prior photographs and the gamer’s name as well as the gamer-tag and the professional gamer is still able to limit the for-profit avenues available to the team so the player can potentially license their likeness to other parties to earn additional income. This is particularly important as a gamer’s independent notoriety grows, which may lead to additional paid opportunities to license their likeness.
The GAMER’s Intellectual Property Rights—The GAMER acknowledges and agrees that the results and proceeds of the GAMER’s services on behalf of the ORGANIZATION shall, from the inception of creation, constitute a “work made for hire” for the ORGANIZATION within the meaning of the United States Copyright Act of 1976. If for any reason any of the Services provided by the GAMER pursuant to this Agreement do not qualify as a “work made for hire,” then the GAMER hereby irrevocably transfers and assigns to the ORGANIZATION any and all of the GAMER’s rights, titles, and interests in and to all of the GAMER’s Services rendered pursuant to this Agreement, together with all rights therein. Without limiting the generality of the foregoing, the ORGANIZATION shall have the exclusive, unrestricted, worldwide, and perpetual right to use, distribute, and sell any and all of the results and proceeds of the GAMER’s Services performed under this Agreement in any and all media now known or hereafter invented. Any assignment to the ORGANIZATION hereunder includes all rights of attribution, integrity, modification, and any other rights throughout the world that may be known as or referred to as “moral rights,” or “droit moral” (collectively “Moral Rights”). To the extent that Moral Rights cannot be assigned under applicable law, the GAMER hereby waives and agrees not to enforce any and all Moral Rights, including, without limitation, any limitation on subsequent modification, to the extent permitted under applicable law.
As illustrated above, all of the gamer’s services on behalf of the team are considered “works for hire.” This means that the individual gamer is commissioned by a third party (the team) to create a specific work for them (i.e., a YouTube or Tik Tok video).1033 This party (the esports organization) is then the owner of the work created by the other party.1034 Generally, for a work to be considered a “work for hire,” it must be prepared by an employee within the scope of his or her employment for their employer.1035 While this may seem straightforward, an analysis of who is considered an “employee” and whether the work was created “within the scope” of the employee’s employment, are determined on a case by case basis. Specifically, this distinction is adjudicated based on similar factors as those explored earlier in Chapter 4 of this text. In addition, a work may also be considered a “work for hire” if a
work [is] specifically ordered or commission for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas
as long as “the parties agree in writing that the work is a work made for hire.”1036 This is particularly important to esports as the standard language provides the team with exclusive ownership over anything that the gamer creates or provides to them during their entire contract. Typical contractual language also grants the organization with the right to utilize any recorded content created by the gamer for any purpose it desires. In these cases, a player may try to negotiate an exemption for any content that they create during the agreement term on their own personal social media platform, such as on YouTube, from the works that the team has rights to. This would mean that the gamer, not the organization, owns rights to the exempted content. Furthermore, the above language includes a “catch-all” provision that states if any of the work provided under the agreement to the team is not considered a work for hire under the law, then the player assigns and transfers any and all rights that they may have in the works to the team.1037 This is a typical clause inserted in most entertainment and talent industry contracts in an effort to ensure that anything that the individual creates under an agreement is owned by the party paying for the individual’s services.
Additionally, the agreement’s language also addresses a party’s droit moral or moral rights in a created work. Moral rights refer to the ability of the original author to control their work.1038 While this right is much broader in scope in other countries, such as France, than in the U.S., this specifically “refers to the right of an author to prevent revision, alteration, or distortion of their work, regardless of who owns the work.”1039 While a more in-depth explanation of this concept is outside the scope of this text, it is important that a gamer is aware that if their country of citizenship acknowledges such a right, they may be waiving it as a result of the above language.
As explored in depth, there are a variety of important factors that a professional gamer must be aware of when signing to a professional esports team. Without too much elaboration, the type of agreement that a gaming influencer, such as a content creator or streamer, enters into an agreement with an esports organization is similar in many respects; however, most of these individuals do not earn tournament winnings.1040 In all of these cases, it is vital that a party understands how much leverage or desire the other party has to enter into a deal with them. This is especially crucial when considering which points to strongly negotiate and which to consent to. Overall, many of the considerations for a professional gamer are similar to those of other personnel members within the esports ecosystem; however, professional coaches as well as shoutcasters and announcers have some specific issues only relevant to their careers.