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May 19, 2020

Esports Contracts

Innovation & Fintech

A.       INTRODUCTION

In today’s world, esports shows a tremendous popularity as a sports field developing outside of traditional sports branches with the effect of digitalization and technological developments and this acceleration also brings areas of legal assessment in terms of the legal texts organized in the field of esports and the contracts between the players and teams, which are the most important actors of esports.

The most important point to be mentioned before proceeding to detailed reviews and evaluations regarding the contracts concluded between esports players and esports clubs is that the esports player, one of the parties of the contractual relationship, is a Professional athlete. The professional athlete is a person who is engaged in sports in an organization in order to gain a financial gain, and the contract between the esports player and the esports team has a special feature due to the status of the esports player.

The legal nature of the contract to be concluded in accordance with the aforementioned matters is the service contract within the framework of the Turkish Code of Obligations No. 6098. It is important to state that; when the paragraph 4/g of the Turkish Labor Law No. 4857 (“Labor Law”) is considered, it will be seen that the contracts arising from the business relations of the athletes are exempted from this law. As a result; it should be noted that the provisions of the Turkish Code of Obligations, especially the terms of the service contract, will be applied in the contracts to be concluded between the esports players and the esports clubs.

B.     CONTRACTS BETWEEN ESPORTS PLAYERS AND TEAMS

As mentioned above, in essence, unlawful provisions are added to the esports contracts, which have the nature of service contracts, on behalf of players or teams, or the obligations that may be significantly difficult for one of the parties are determined and it is faced with the results that compel the parties during the execution of such obligations. Within the scope of this Memorandum, it is aimed to prevent the emergence of such problems and a wide range of problems and disputes that may arise from the contracts, with mentioning the legal disputes arising from esports player contracts that have been issued and signed nationally and internationally.

a.           Fees

When esports contracts are examined, it appears that fee items within the scope of the contracts are concentrated under the headings of “basic guarantee fee”, “performance bonuses” and “tournament bonuses” distributed from tournament revenues.

The provisions regarding the determination of the basic guarantee fee have a great importance while drawing up an esports contract between the parties. As stated above, the issue of fee is one of the most possible conflicts between teams and players since the esports player, who has the status of a professional athlete, also continues his sports activities in order to achieve economic benefits. Thus, the basic guarantee fee is one of the clearest predictable issues for both the player and the team in terms of economic cooperation of the parties in the signature phase of the contract. Accordingly, the amount of basic guarantee fee, payment terms, form and time of payment, currency in which the payment will be made, the bank account to be paid and the terms of payment must be clearly defined.

Deciding the types of bonuses to be selected in determining the performance bonuses and tournament bonuses, the size of performance, the reward amount or typically; the payments to be made for leaping to league, ranking in the leagues or stages such as skipping/championship/finals in tournaments will prevent possible conflicts. The fact that such fees cannot be concretely determined in the signature phase of the contract increases the importance of the protective effect of the provisions for the parties and the limits on the fees must be clearly drawn for the benefit of both parties.

In addition to the determination of fees and the principles regarding fees within the scope of the contracts; the practices, obligations and sanctions in case of failure of one of the parties should also be clearly determined by the contract. Since, in addition that default and penal clause provisions can be applied in case the team, as the responsible party for paying the fee, does not fulfill this obligation without a justification; the outcome of the payment obligation in case the violations of players’ contractual obligations, or the termination of the contract by one of the parties, must be arranged in detail under the contracts as well.

b.           Working Hours

Due to its nature, esports is a much more dynamic sports field compared to traditional sports branches, and it is possible to keep training and working hours flexible. Although the relationships of esports players accepted as professional athletes with the teams is not covered by the Labor Law, it is important to determine working hours in accordance with humanitarian conditions and human rights and to prevent violations. One of the points that need to be taken into consideration and be arranged in a wide range should be working hours in the contracts between the teams and the players.

c.            Secondary Obligations

Besides the primary obligation that the contract between the esports player and the club imposes on the player is that the player continues sports activities for the success of the team, requests are made by the clubs to increase the brand value and awareness of the club in the form of giving interviews from the esports players to the public at certain intervals and frequencies, sharing posts from social media accounts, or broadcasting via sites that enable broadcasting on the internet or not broadcasting for various reasons.

It is recommended that such requests are accepted as clear obligations within the scope of contracts in order to avoid conflict between the parties. For example, rather than a general social media clause to be included in the contract, obligations determining the number of shares the player is obliged to make daily, the social media platforms, the minimum elements that these shares should contain or authorized people (team/player) to determine content of shares will prevent disagreements between parties on these issues.

On the other hand; since the broadcasting platforms also have important effects in terms of esports games, the obligations of the player to broadcast over the broadcasting platforms or the provisions regarding the prevention of broadcasting should also be clearly defined in the contracts. Besides, the boundaries of obligations regarding organizations such as product marketing or promotion which are excluded from the tournaments where the participation of the esports player is determined as a liability, should be clearly drawn.

d.           Sponsorships Contracts

In addition to the sponsorship agreements that esports clubs have, players may also sign various sponsorship agreements. Therefore, the esports player contract should also include obligations and limits arising from sponsorships in order to prevent a conflict of interest due to sponsorship contracts between the players and the team. Within this scope; before the player concludes a sponsorship contract, an approval procedure can be envisaged from the club that the contract to be concluded does not fall into a conflict of interest with the club’s existing sponsorship contract.

e.            Intellectual Property Rights

Within the scope of intellectual property rights, which is one of the most important points for esports players and esports clubs; it appears that many disputes arise in terms of the rights that are strictly connected to the player side of the contract, such as the player’s name (“game tag”), the unique phrases or expressions he uses, or the content he has previously produced and the publication from their social media accounts. Clarification of critical points such as the limits or the durations of the licenses or permits given to the team in terms of the use of the intellectual property rights of the player, whether it is considered within the scope of provision of the contract regarding fee and whether a separate charge will be determined for the use of such rights need to be clarified by contract in order to prevent occurrence of these situations and to operate in full compliance with the team and the players’ intellectual property rights.

f.            Image Rights and Other Rights

It is important to determine all the details regarding the product sales to be made by making use of the image rights of the player or the name of the game (“personal gamer tag“) by contracts in terms of the relationship between the player and the team.

g.           League Rules and Effects Between Esports Player and Club

Considering that the companies that own the leagues are the sole authority in determining league and tournament rules, it is also important to determine the effect of the obligations that these companies will bring to esports teams on esports players.

For instance, in the United States in 2014, within the scope of the contract of the game owner company Riot Games Limited in the league known as “League of Legends Championship Series (LCS)”, there have been many disputes between teams and players at the point of fulfilling the provision by teams, which prohibits broadcasting of other games on digital platforms. In this regard, any factors that may externally affect the relationship between the two parties is also taken into account and the rules regarding the tournaments, leagues and all kinds of organizations which the team will participate and teams’ contracts with companies that are the organizers of these organizations also need to be integrated into the contract between the parties while creating the contract between the team and the player.

h.           Compulsory Education Process of Esports Players

Esports players sign contracts with teams at a very young age and become professionals. This whole process brings with it the possibility that the education lives of esports players will be negatively affected from the intense training and tournaments. Regulations regarding esports players, who continue their education within the scope of compulsory education processes determined by the state, and necessary provisions in order to avoid practices that might disrupt the basic education processes of the players should be definitely included in the contract.

i.             Termination and Penalty Conditions

The unique dynamic structure of esports, many transfers of teams and frequent team changes of players cause that termination provisions or penalty conditions in the contracts become more important. It is possible to envisage criminal conditions to prevent esports clubs from being damaged economically in case of termination. Likewise, in which cases the esports players can rightfully terminate the contract should be determined.

Since the concept of time is very valuable for the players especially in the esports world, unlike traditional sports fields, the situations such as the player being unable to take part by being excluded can come into question as a means of rightful termination.

C.          EVALUATION

Contracts between esports players and esports teams are discussed under the section entitled “I. Contracts in the Esports Area” of this Memorandum and important points are addressed by compiling disputes arising from these types of contracts nationally and internationally and issues to be considered are specified.

Although there is no law that directly regulates esports law in our country, it is seen that some countries have made legislative studies in this area. For example; within the scope of the Law No. 2016–1321, which entered into force in France in 2016, special regulations regarding the contracts of esports players are included. Especially within this scope, special regulations have been made in the field of esports law with many mandatory provisions such as having a ministry approval in order for a team to have a contract with the professional esports player, the contract between the team and the player cannot be less than 1 (one) season, this contract cannot exceed 5 (five) years and esports players under the age of 12 (twelve) will not be able to take part in an award-winning esports tournament. In our country, legal regulations are important in the development of the ecosystem of the esports and ensuring uniformity.

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