As a near 20-year qualified lawyer, I was surprised to learn just how fragmented parts of the esports ecosystem are when I attended my first ESI London at Boxpark Wembley last year. This point was highlighted further when comparing the way contract matters are handled in esports as opposed to traditional land-based sports.
Some of esports’ main pain points that were identified included commercial contract arrangements, brand protection, sponsorship endorsements and player/organisation contracts.
The latter is probably one of the most important to get right for any organisation, whether or not it is just starting out, or has been operating for some time.
Just like any employment matter, having a comprehensive player contract not only protects the interests of both player and team, but it also ensures a healthy and sustainable relationship moving forward. Clear terms set out details like contract length, renewal options, remuneration, bonusing, responsibilities, personal branding, appearance obligations, transfer and buyout clauses, non-disclosure and non-compete arrangements and dispute mechanisms, to name a few.
Player transfers are common in esports, no matter the game. As such, it’s crucial to get contracts right in the event players are put up for sale. Having already established terms around confidentiality, including business plans, game strategy and data, is paramount. In addition, disputes between players about different levels of remuneration can arise, unless contract terms make clear the confidentiality of such arrangements.
In addition, actions on social media and personal branding not only affect individual players, but can have an impact across a whole team. If one player causes uproar, the impact can ripple through to the team and other members. This is something to consider when looking at these types of agreements and what happens if a team member suddenly is in the spotlight for something negative.
Then there’s the issue of what happens when a player wants to move on during the term, either because the relationship has broken down, or they simply want to go to pastures new. Disputes can become widely publicised and having appropriate terms to handle such scenarios is sensible.
Readers may well remember the well-publicised issues between North American Fortnite content creator and streamer Turner ‘Tfue’ Tenney and his previous organisation FaZe Clan.
For those unfamiliar, in 2018, Tfue signed a three-year contract with FaZe Clan, which outlined the terms of the partnership, revenue sharing, branding and other financial arrangements. During his agreement with FaZe, TFue’s streaming following grew from several thousand to millions across his Twitch and YouTube channels. Quite early into his contract, he was apparently banned from Twitch several times and after a short period attempted to exit his contract with FaZe.
The matter became heated and very public, with TFue taking to streaming channels citing confidentiality provisions meaning he couldn’t discuss the contractual provisions in the public domain. With legal teams involved, the matter became contentious. Tfue’s legal team argued his contract was unfair because it allegedly restricted his ability to pursue his individual brand and denied him certain opportunities. His legal team claimed FaZe Clan had disproportionate control over Tfue’s earnings, including a significant portion of his sponsorship and appearance fees.
During the public battle which ensued between Tfue and FaZe Clan, legal action to determine whether or not the contract was fair, was ultimately settled out of court. Earlier this month, Tfue announced an indefinite hiatus from streaming.
The TFue/FaZe situation does highlight the importance of correctly handling player contracts within the industry. Whilst it may seem like a simple document, ultimately these contracts decide the rights and responsibilities of organisations and players, and the need for proper arrangements to protect both sides. As a result, it should be dealt with properly by professionals.
This article was written by Kosnahan Law, an esports law firm based in the Isle of Man, which offers services regarding organisation structures & management, player contract terms & transfers, brand & IP Rights protection and licensing, team sponsorships and endorsements, general commercial contracts and much more.
Disclaimer: This article is written in collaboration with Kosnahan Law.