This article is written by Mohd Aman Khan Afghani, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.

Introduction

It is a known fact that the entertainment and media industry has seen tremendous growth over the last few years. Professionals who are in the entertainment industry are in need of some level of protection and that protection can only be granted when those professionals have legal agreements so that they can avail the rights and fulfil the obligations they are required to fulfil. As we all know that the economy in the entertainment industry is very uncertain and is also filled with uncertainties. The companies which are involved in the entertainment field continuously merge or dissolve and this adds to the uncertainty.  

Professionals in the entertainment industry like athletes, performing artists, and other professionals who are part of the entertainment industry are required to abide by certain legal requirements which govern their profession in the entertainment industry. The laws and legal procedures which are required in the entertainment industry are very unique and cover the broader aspects related to the entertainment industry.

We all can observe another fact that the sports industry is also growing at a fast pace. In today’s scenario, it would not be wrong to say that the sports industry is one of the largest industries in terms of revenue and employment generation.

As far as entertainment contracts for athletes are concerned, they are more or less similar to those contracts which we come across in our everyday routine life. These play the role of binding mutually two parties through an agreement/contract between them. It is pertinent to mention that these above-stated contracts also define the rights and responsibilities between the parties.

Normally these entertainment contracts are express and the parties to the aforesaid contracts give their assent either expressly or impliedly.

Contracts for athletes

Contracts for athletes are not very much different from normal contracts. In these types of contracts for athletes, the athletes are compensated for their services. These contracts are more like personal service contracts as the athletes are going to give their personal service which is very much similar to the performer’s performances. The athlete’s contracts are personal service contracts because no other person than the athlete himself can perform those contracts. The nature of the above type of contracts demands very stringent clauses for the strict upholding of nature and the intent of the parties to such types of contracts.

Some of the important clauses which can form part of the entertainment for athletes

• Best efforts clause

This clause puts obligations on the athlete or the sportsperson to give his best efforts in fulfilling their contractual obligations. This clause is more like a clause binding the athlete or the sportsperson to act in good faith. According to the above clause, the athlete would be required to play or perform in the game to the best of his ability and if he can’t perform he has to try to the best of his abilities to perform first. The athlete is supposed to maintain the spirit of the game and that can only be done when he will put his best efforts and will follow the rules of conduct for the particular game. The athlete will not be required to just show up for the game, rather he is supposed to compete with the highest standard of skills which he is going to showcase to the viewers who are watching the game.

• Morality clause

It can be a clause in a contract that would specify or set down certain actions or acts which if done by the athlete in his private life would result in termination of the athlete’s contract. These types of clauses were often used in the contracts in order to protect the sporting organizations and also help these sporting organisations to terminate the contracts entered into between them and the athlete if the acts of the athletes are such that would have a negative impact on the sporting organization with which the athlete was engaged. These types of clauses normally contain grounds like a violation of some law or social norms, but at times these types of clauses also restrict the acts or behaviour that deteriorate the brand value.

• Bonus incentive clause

For the purpose of ensuring that the best skills of any athlete are being showcased by him on the field, the athletes are being given rewards and incentives. These incentive clauses are mostly in the form of the contingent clause which means that the athlete will get rewards or incentives on the basis of their performance on the field. These types of clauses help in ensuring that the athletes constantly try to give their best performances and try to show their best skills in the arena.

• Hazardous activities clause

The activities which are of such a nature that they put the body and physical health of the athlete at risk and also put the destiny of their team in danger are covered by the above type of clauses.

The abovementioned type of clauses help in the mitigation of the chances of injuries to the athletes which would have an impact on their performances. These clauses allow the team or sporting organization to modify the financial obligation of a player or athlete if he gets involved in any activity which is out of the context of their sport and gets injured. These types of clauses are much more in use in today’s scenario and these clauses are used both for deterrence and for punitive measures. The main aim of these clauses is to promote a sense of responsibility among the athletes.

• Force majeure clause

Force majeure means any unforeseen or unpredictable natural or human event which is beyond the control of humans. These are such events that render the performance of the contract impossible. These clauses are normally boilerplate clauses that talk about delaying or rescheduling the events in which the athlete is supposed to perform. It is pertinent to mention here that these types of clauses are very seldom invoked or come into play and that too on the occurrence of the events which are covered by the force majeure clause.

• Non-compete clause

These clauses are there in order to restrict the athletes or former athletes from joining the organisations which are competing with the organisations of which the athlete was a part. 

• Transfer clause

We all know that contracts of athletes are in the form of personal service contracts and they cannot be transferred from one athlete to the other athlete in order to fill the position of the initial athlete. But these types of transfer clauses are very much necessary when some professional sporting leagues are contracting with athletes and then allotting that athlete a team. So in the above scenario, the regulating authority transfers their obligation to a team that would buy the services of the athlete in the bidding or auction but that athlete has to follow or comply with the principle of personal service. These types of clauses are mainly used and are essential where the auction format is used. In this, the regulating authority or auctioneer contracts the services of the athlete and then sells those to the teams which are participating in the auction as commodities. The above types of transfer clauses are very much important where the format of the auction is being used for the purpose of selecting the roster of teams. The above transfer clause is also used for inter-team transfer as well.

• Liquidated damages clause

Liquidated damages are those damages the extent of which is determined from before. The above type of clause helps the parties to decide among themselves as to what would be the consequences in case there is a breach of contract. The liquidated damages clause is normally added in the contracts so that future disputes or controversies can be avoided but in exceptional situations, the above type of clause also has an impact of punitive nature. When the sports season of the athletes or sports persons is in full force at that time spending time for the purpose of calculating damages would not be that fruitful and therefore the above type of clause should be used extensively as that is when there is an extreme need for using the same.

• Termination clause

This clause is a very important clause as it contains the procedure to end the contractual relationship in any type of contract. This is considered to be the most important clause for the purpose of deciding how the contractual relationship will be terminated. It is a very well known fact that contracts of athletes are normally long term but these contracts should also contain the termination clause which can give the option to the parties, i.e., athlete and the other party to end their contractual relationship beforehand if the need for the same arises and in this hardships and controversies between the athlete and the other parties can be avoided and the contractual relationship can come to an end amicably.

• Loyalty clause

This type of clause is much similar to the non compete clause. The abovementioned clause prohibits the athletes from engaging in any such activity which can go against the team. This clause puts restrictions on the athletes from engaging and acting in any such thing which can prove to be harmful to the company which has hired them.

• Dispute resolution clause

This clause is also very important as it states how disputes will get resolved if they arise between the athlete and the hiring or engaging organisation.

Conclusion

It can be said that the entertainment contracts for athletes are similar to the contracts which we come across in our day to day life but the aim of such contracts is to build a contractual relation between the sporting organization and the athlete in which both the parties are under obligation to perform their part of the contract. The above types of contracts try to mitigate the risk factors and also try to protect both the athletes and the sporting organizations.

References

• Kristi E. Swartz, Lawsuit: Thrashers Owners Have Been Trying To Sell Teams Since 2005, (2011) Atlanta Journal Constitution
• Matthew J. Parlow, Professional Sports League Commissioners’ Authority and Collective Bargaining, 11 TEX. REV. ENT. & SPORTS L. 179, 185 (2010)
• https://www.mondaq.com/india/contract-of-employment/614370/enforceability-of-non-compete-clause39-under-an-employment-agreement
• http://sportsbarng.com/morals-clauses-in-professional-player-contracts-their-uses-and-limitations/
• Ross GN. The Determination of Bonuses in Professional Sports. The American Economist.(1975) Volume 19 Issue 2
• https://www.indialegallive.com/special/force-majeure-clause-an-act-of-god/

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