With an unprecedented $1.5 billion in revenue in 2017 and a projected $2.3 billion by 2022, the esports industry is experiencing explosive growth. So much so that traditional sporting franchises have begun getting in on the ground floor, with multi-million dollar investments from owners of the Texas Rangers, Cleveland Cavaliers, and Golden State Warriors in 2017 alone.
And at the heart of it all is the players. Esports athletes are far more than casual gamers. They’re media personalities, content gurus, marketing mavens, and merchandise monarchs.
Given the rise in expectations, game complexity, and league competitiveness, players need to scrutinize their contracts more carefully than ever before. Having a lawyer explain your contractual rights and responsibilities is fantastic — and having an esports lawyer negotiate on your behalf is invaluable!
Below, we’ll discuss five key topics that esports players should pay attention to before signing professional agreements.
Esports Contract Consideration #1: Core Compensation
The typical esports athlete compensation package includes a base salary, performance-based bonuses, and tournament purse shares.
Securing an adequate, regularly paid base salary is priority #1. Esports athletes should double check that their contracts don’t allow management to arbitrarily alter payment schedules.
Performance-based bonuses take on a range of different flavors; however, it’s important to make sure that the metrics are realistic and proportional to the bonus amounts. Typical industry bonuses include:
- League qualification;
- Advancements in elimination rounds; and
- Ranking benchmarks.
Tournaments are won on the backs of esports athletes – plain and simple. No amount of marketing, team swag, or viewership matters when it comes to game time: it’s all about the skills. And when a team wins, the media hype ultimately induces income for the club via sponsorships and endorsements. As such, many player contracts include tournament incentives — a win-win for both athlete and team.
Esports Contract Consideration #2: Non-Gaming Responsibilities
It’s no longer enough to just dominate at a game. To compete at the highest levels, esports athletes need to possess marketing savvy, social media prowess, and regularly engage with fans. The players’ individual social media followings and online personas are becoming every bit as coveted as their gaming skills. Accordingly, teams are imposing stricter streaming and social media posting requirements.
Protect yourself by making sure that the streaming and posting requirements are clearly spelled out (e.g., you must make a minimum of 3 Twitter posts per week) in your contract. If your agreement has a mandatory social media clause, make sure it doesn’t include broad language like “upon request” or “as necessary.” Furthermore, if the contract limits individual streaming privileges (i.e.. cannot independently stream on Twitch or YouTube), it’s reasonable to request additional compensation. While exclusivity is not an uncommon request, you should be compensated for it. Also, avoid terms that would have you relinquish access to, or control of, your social media or platform accounts.
Teams also require players to attend a slew of live events outside of tournaments, including promotional galas, content production events, and interviews. Make sure that all attendance expectations are clearly delineated, and push for extra compensation if the team wants you on a tighter schedule or forces attendance at non-listed events. Also, esports player contracts should require the team to provide reasonable advanced notice for events. Hey, your time is money!
Esports Contract Consideration #3: Sponsorship and Non-Gaming Revenue
Sponsorship and non-gaming revenue can be highly lucrative for professional esports athletes. With respect to sponsorships, they should be examined at both the team and individual levels. Teams often have connections that lead to big-name team sponsorships, but players should also be allowed to seek independent sponsorships.
Moreover, be aware of team exclusivity requirements or clauses that disallow private agent representation. Instead, see if management would be amenable to letting you secure non-competing independent sponsorships (oftentimes, the team’s consent will be required).
Going hand-in-hand with sponsorship considerations are uniform, gear, and food/beverage requirements. While team uniform and food/beverage mandates during tournament play will be unavoidable, you can push for more flexible terms. For instance, you could comply with a team’s uniform requirement by wearing their jersey during tournament play, but simultaneously promote a non-competing, independent sponsor by wearing a hat or sipping on an energy drink. Win-win.
Merchandise sales are another prime area for sizable passive income. It’s not uncommon to request compensation for any merchandise and in-game content that references your name, persona, logo, or likeness. For instance, the team may pay a premium to use your personal gamer tag or individual logo to help drive t-shirt sales.
Esports Contract Consideration #4: Intellectual Property
While a player’s gaming skills may seem like their biggest asset, the intellectual property they create are potentially even more lucrative. Esports pros create content via webcasts, interviews, and promotional material, plus develop online personas that attract loyal fans from around the world. Teams are increasingly trying to capitalize on such individual intellectual property by aggressively claiming near all rights to their players’ name and likeness during their time with the team. Read all terms pertaining to intellectual property and licensing very closely and have your lawyer push to minimize the scope of any license granted to the team. The more control you have over your IP, the better.
In reviewing a contract’s IP terms, keep in mind that you want to do everything in your power to maximize control over your brand, which is distinct from the team’s brand. As a player, your gamer tag, online persona, and fan following are all integral components of your personal brand. It’s important to maximize the degree of ownership and control that you have over that brand and over your personal intellectual property. Specifically, over such elements as:
- Ownership to the trademark rights in your gamer tag and any reputable phrases or expressions associated with you;
- Ownership to your past content creation; and
- Ownership of your gaming (e.g., Origin, Steam, and Xbox Live accounts) and social media accounts.
Whenever you part ways with the team, you’ll want to take as much of your brand and related intellectual property with you as possible – after all, you created it!
Esports Contract Consideration #5: Termination and Trading
Crafting favorable clauses to address termination, incapacity, and trading is every bit as important as a strong compensation clause, but these areas are frequently neglected by players. Improperly negotiating these items could have disastrous consequences. Esports teams are increasingly resembling their traditional sports counterparts by including lofty buyout prices as a penalty for a player’s early termination. It is crucial to fight for a termination clause that will give you maximum flexibility and allow you to leave on terms that are fair to both parties.
Given the extreme competitiveness of the esports industry, player trading is becoming more common. Teams typically push for more control over their players and often seek restrictions that prevent players from being ‘poached’ for a higher salary by a competing organization, or retaining the exclusive ability to trade a player – even without the player’s consent. You should request that the team obtain your consent to be traded and push back against any contractual parameters that require you to notify the team of offers from competing teams – your business should be kept your business.
Also watch out for broad language that empowers the team to ‘bench’ you at their discretion for an indefinite amount of time. Try to ask for specific metrics with regards to benching so that you understand where your performance needs to be to remain league-competitive and compliant with your contract – and to keep you off the bench. Make sure you have an out, in case things don’t work out with the team or you’re being unfairly benched. Along the same lines, note how the contract defines “player incapacity” so that a minor illness or injury will not provide grounds for termination.
Connect With An Esports Lawyer
Gordon Law Group works with esports athletes on everything from intellectual property protection to contract negotiation and counsel. Got questions? Give us a call.