This article first appeared as a blog on leading sports law website LawInSport.
As would be the case for any athlete, domestic or international, above all it’s important to ensure that the individual surrounds themselves with the right professional support, not only to guide them through the potential legal pitfalls we will be addressing in this series but also to ensure that their value in a commercial context is maximised to its full potential.
One of the first considerations for any professional athlete, assuming they have the right to work in the UK (which we will cover in our next blog), will be the structure of their playing contract. Typically, the type of sport will dictate the nature of the working relationship with athletes being self-employed, employed through a club, or under a centralised contract with their respective governing body. Some sports such as football will have a standard player club contract but there are opportunities to add provisions to the standard form. However, given that players employed through a club often represent a club’s most valuable asset, a comprehensive contract of employment is essential for any professional player.
Here we examine:
- finding an agent or manager
- what an employment contract should cover
- consideration of all commercial activities
Finding an agent or manager
The differences between a manager and an agent - whilst a manager’s role will involve promoting the athlete and supervising their business affairs, an agent’s role may also include a variety of other services, from organising promotional activities to negotiating contracts with third parties. Whether an athlete employs a manager or agent, a contractual agreement must be negotiated between the parties and often the agreement with the manager/agent is as important as any employment contract. Again football has a standard form agreement which cannot be altered to any real extent.
Appoint an agent/manager before coming to the UK and have their credentials checked by a local solicitor - it is important for an athlete to take this step prior to entering into the UK as often there are a number of legal considerations that may need addressing prior to arrival. Whether an athlete appoints a manager or agent, they should ensure they only take advice from an independent expert in the relevant sport who practices within the UK. We would recommend any athlete has his manager’s or agent’s contract checked by a solicitor practising in the area.
What should an employment contract cover?
The obligations the athlete is under - when considering entering into an employment relationship with, for example, a club, an athlete must first consider their obligations under the terms of the contract. Whilst these may vary from employer to employer, typically an athlete can expect to find some standard requirements concerning their behaviour both on and off the field of play and an obligation to avoid participating in social activities that could lead to injury and invalidation of insurance taken out by the club or the athlete. Bearing in mind that most contracts will be for a fixed term varying in length with no right to terminate, the duration of the contract is also important and factors such as the sportspersons’ age, ability, importance to the team and commercial worth will influence this.
What happens if the athlete gets injured? - given the potential risks involved with participating in professional sports, any employment contract, if not restricted by the regulations of the relevant governing body, should expressly cover the possibility of incapacity and/or injury. A suitable insurance policy in case of permanent incapacity should also be considered. Often the sportsperson will have an insurance policy in place in their respective home country or the country from where they are moving. Such a policy may need to be amended or changed to fit in with the requirements of UK legislation and it would be prudent to seek advice on this point.
The obligation on the employer to provide work - the obligation on an employer to provide work is an important consideration in relation to sporting contracts. Although, generally speaking, no such obligation exists in an employment context, the court has recognised the need to work in order to maintain a public profile. Whilst this case did not involve athletes, the ruling could, potentially, extend to certain sports where an individual’s ranking or league position is dependent on them regularly performing.
The bonuses the athlete is entitled to (if any) and how they are calculated - practices regarding bonuses may differ depending on the sport. Taking football as an example, a bonus may be triggered upon scoring a goal or providing an assist in a particular game or over the course of the season. Whether it was a league or cup game (domestic or European) could also have an impact. Appearance fees are also commonplace within football where clubs will provide fixed fees for every match a player appears in (some of the permissible add-ons to the standard contract). However, this should not be confused with pay-as-you-play contracts which are becoming more popular in certain team sports where an increasing proportion of a player’s income is becoming variable and subject to appearance. With a contract structure of this type, it is important to ensure that the risk versus reward is fairly balanced: this could be achieved, for example, by a higher level of remuneration if fit to play.
How the contract can be terminated - often the termination provisions of a contract can be as important as the remuneration itself, particularly in situations where an athlete’s stock has risen as a result of a good performance or tournament or where there has been a fall out with a respective coach or manager. Rarely would a player be in a position to negotiate a “right to play if fit” clause, although it is worth noting the right to terminate with “sporting just cause” under Chapter 4, Article 15 of the FIFA Regulations on the Status and Transfer of Players which could apply post the end of the season where a player has not been selected. So keen consideration should be given at the outset of any employment relationship to the circumstances in which the relationship can be brought to an end. This is especially important in a football manager’s contract and in a buy-out provision in a football player’s contract.
Consideration of all the commercial activities
Depending on the profile of the sportsperson, a large proportion of their income could derive from commercial activities outside of their sporting discipline or employment relationship. We explore in a later blog the importance of careful tax planning for an athlete prior to coming into the UK, but in the context of their employment relationship or participation in a particular event, it is important to consider what endorsements and/or sponsorship deals are already in place and what commercial activities the sportsperson is already committed to prior to entering into any contractual agreement.