10 Tips for Professional Esports Player Contracts with Esports Organizations

“Term”

It is important that the individual is aware of the “term” or length of the agreement. Accordingly, the length of time or how long an agreement lasts is very important to be aware of. A contract’s “term” may be structured as the parties’ desire including for years, months, days, or even on a tournament or seasonal basis.

This clause also usually includes any “firm” or guaranteed terms as well as lists any potential “options” to extend and renew an existing agreement to lengthen the relationship. In this case, the player and team can negotiate how an option under the contract is exercised as it might be at the sole discretion of the team, the player, or potentially upon mutual approval of both parties.

“Compensation”

Another crucial clause in a standard esports player agreement with a team is the compensation clause. As a result, it is important that a player understands their compensation including addressing the amount and frequency of a salary or other agreed upon payment to a professional gamer. While the payment amount is important to agree on, it is also fundamental to understand when a payment is due and what the procedures are in place and the potential repercussions for delayed or outstanding payments including interest or late fees.

“Player Income”

Esports player contracts also include information related to whether or not an organization is entitled to a percentage of any of the professional esports player’s social media and livestreaming advertising and other related revenues and earnings. In many cases, the esports team will not receive any of these funds; however, in certain instances, this will not always be the case and the organization will receive a portion of the funds the player earns. As a result, it is important to understand and agree in advance upon what that amount is including potentially including income limitations or “caps” to a specific number.

“Tournament Winnings”

Most competitive esports players compete in organized events, leagues, and tournaments for prize money, sometimes, for thousands or millions of dollars. Accordingly, similar to social media and streaming income, many professional esports teams receive a portion of their competitive players’ event, league, and tournament winnings. While the percentage varies, it is crucial to be aware of and agree on the percentage that is payable to the organization as well as how the amounts might be split between other players (if on a team), and potentially with the coach and other training staff who all might receive a portion of any prize money that a gamer receives.

“Independent Sponsorships”

Many esports player agreements include language addressing a gamer’s ability and procedure for undertaking independent sponsorship and brand partnership opportunities. Consequently, these documents may permit a signed gamer to enter into separate sponsorship and endorsement agreements. However, in many cases, the agreement may include language that limits and prohibits a specific good or service and some might require prior approval by the team of a player’s independent sponsorship opportunities.

As a result, it is important for a gamer to outline which brands and product categories are prohibited as well as to ensure that they have “carved-out” or exempted any previously existing brand partnerships so that they can continue to work with those companies. Additionally, some agreements have language whereby the esports team is acting as an exclusive or non-exclusive sponsorship or marketing agent on behalf of the talent which is another point to consider and be aware of when signing this type of document.

“Team and Sponsors Obligations”

Generally, an esports player agreement also lists the player’s obligations or “duties” that the gamer must undertake on behalf of the organization. These obligations might include streaming a certain number of hours as well as utilizing the team sponsor’s equipment and products during events and on stream.

There might also be requirements that the gamer participate in a set number of promotional appearances on behalf of the team or its sponsors in addition to providing an agreed upon number of social media posts that the player must make highlighting the team and its brand partners. As a result, a gamer should ensure and be familiar with the specific number of posts, appearances, and required streaming hours are outlined in the agreement as the failure to adhere to them could lead to potential liability including a payment reduction.

“Right of First Refusal” or “Matching Right”

Many esports player contracts also contain language that addresses how a player is required to proceed as their existing agreement is coming to an end. In fact, it is common for esports player agreements with teams to incorporate a “right of first refusal” or “matching right.” This clause means that the current esports team has the right to “match” any third-party offer from a different organization for the player.

If the current team does not “match” the other team’s offer for the talent, then the player may accept and sign with the other team. However, if the initial organization “matches” the other team’s offer, then the gamer is obligated to stay with the original organization. it is important to be aware of this mechanism and to understand its effect since this clause can severely impact a professional gamer’s future career aspirations.

“Right of First Negotiation” or “Right of First Offer”

In addition to or in lieu of “matching” rights, many esports player contracts also include “right of first negotiation” also known as a “right of first offer” provisions. This clause means that a player currently signed to team is required to first exclusively right to negotiate a contract extension with the player’s current before the talent is permitted to speak with or sign with any other team. As a result, the current esports organization can decide whether to make an offer to keep the player or not.

If the team chooses not to, then the player is free to look elsewhere but they cannot undertake contract negotiations with another organization until the first team declines its right or the exclusivity period times. Accordingly, it is crucial that an esports player includes a set limitation on the timeframe and applicability of this provision in order to provide the professional gaming talent with ample opportunity to secure alternative deals if needed.

“Buyout”

The term of an agreement may naturally extinguish upon its expiration. However, in some cases, the contract may be terminated early including through the usage of a “buyout” clause. In fact, many esports player contracts generally include “buyout” provisions which are a set fee or amount that may be paid by the player or another team to “buyout” or terminate the existing agreement.

The usage and inclusion of this provision enables a new team or the player themselves to pay the agreed upon “buyout” amount to be released from and to terminate their current contract. In these cases, and in order to incentivize a larger buy-out, a player might attempt to secure a transfer bonus or a specified percentage of the payment for any “buy-out” fee paid that is received by the team.

“Trade & Assignment”

Another common provision in professional esports player agreements are those clauses related to the trading, assignment, and loaning of a gamer. In many cases, these agreements provide the esports team with the opportunity to trade, assign, or otherwise loan an existing player to another team.

However, in an attempt to restrict a team’s unfettered ability to trade or loan a gamer to another organization, it is common for these provisions to include specific restrictions on a team’s ability to trade player such as a specific regional or country prohibitions or even a limitation against specific teams. Finally, there might even be the potential to negotiate for a full “no trade” clause which provides the gamer with the sole and absolute discretion to decide whether or not to approve a trade or assignment to another esports organization.

 Bonus – Name, Image, and Likeness” (“NIL”)

A gamer’s “right publicity” usage rights are another crucial matter addressed in these types of agreements. Generally, a signing organization may acquire a license to use a professional esports player’s “gamer-tag” or other identifiable characteristics permitting them to display the talent’s image, name, portrait, signature, or other protected elements for the listed purposes including commercial ones. In an effort to curtail or mitigate some of this power, a gamer might attempt to negotiate a restriction or right of approval over any usage of the player’s “NIL” during the term of the agreement.

Furthermore, a player might try to incorporate language limiting the organization’s rights to display or otherwise utilize a player’s protected persona after the agreement ends. In some cases, the parties may permit the team to solely utilize the player’s protected assets for “archival” or other “non-commercial” purposes as part of the team’s history and for no other purposes.

Again, these are just a few important considerations that a professional esports players must be aware of prior to entering into an agreement with a competitive esports team. Since the substance of every agreement differs, it is crucial that an esports professional obtain proper competent representation and advice, including working with a seasoned attorney or other knowledgeable professional.

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