As Esports Take Off, Questions Abound Over Players' Rights of Publicity
The esports industry is growing rapidly, but with that influx of investment and revenue may come some unique complications over player rights and how they find their way into contracts.
November 21, 2019 at 09:00 AM
4 minute read
A new esports-centric survey released last week by the firm of Foley & Lardner projects that esports revenues will climb above the $1 billion mark this year. But the increased stakes and growing sophistication of the industry will likely not be without their headaches.
Survey responses were collected from more than 200 executives working in esports, traditional sports, media companies, agencies and industry consultancies. When asked which intellectual property issues were likely to drive disputes and litigation within the industry, 68% of respondents said noncompete and exclusivity agreements between players and teams or publishers and teams. Another 39% selected rights of publicity.
The latter has already emerged as prominent issue within the domain of traditional sports. Last month, the NCAA board of governors voted unanimously to permit student athletes to benefit from the use of "their name, image and likeness." Whether or not a similar push occurs in esports may largely depend on how savvy individual players, teams and game publishers are at navigating yet-unrealized opportunities in a quickly growing industry.
"What I'm finding and I think what we're seeing is that as the industry sort of matures and the business side of things gets a little more sophisticated, I think you're seeing a much harder focus on how those contractual rights are included in contracts," said Jon Israel, co-chair of Foley & Lardner's sports and entertainment group.
Negotiation of contractual stipulations such as noncompetes or rights of publicity may ultimately wind up being reflective of the delicate power balance between players and game publishers that fuels the esports industry.
As Israel pointed out, one of the major differences between traditional sports and esports is the lack of a regulatory body in the vain of the NCAA. Publishers may be the next closest thing, but their intellectual property rights pursuant to images or really almost anything having to do with gameplay might give those companies a level of control not even found in professional sports.
"The NFL can't shut down football entirely if it wants to. Somebody else could start their own league and the NFL couldn't stop them. So because the publisher could do that, that changes a lot," said Ryan Fairchild, an attorney specializing in esports at Brooks, Pierce, McLendon, Humphrey & Leonard.
For example, control of a game's IP often gives a publisher control over how revenue flows within an esports league, including the amount that reaches the various teams contained therein.
Per Fairchild, the vast majority of teams are not turning a profit—which can lead them to play hardball when it comes to negotiating rights with their own players.
"They try to capture more player rights in terms of likeness and image so that they can market against those. Since those rights are getting captured, players don't have a lot of opportunity to go and pursue sponsorships," Fairchild said.
The majority of today's esports athletes may not even recognize such a possibility as a legitimate option, but that could be slowly changing. Israel at Foley & Lardner pointed to venture capital that is continuing to flow into the industry at large—and with money tends to come stakes and opportunity.
"It brings a lot of experience to the table and perspective that I think will help the stakeholders in this industry understand how to better secure their rights and form the right kinds of contracts," Israel said.
That experience could arrive in the form of agents or even players's associations. But unions seem unlikely to form any time in the near future. Israel pointed to factors ranging from the sprawling nature of the industry—there is no one game—to relatively young age of the average esports athlete.
"The idea of complex union involvement in their business may not be at the forefront of their considerations when they are looking for the opportunity to sign professionally somewhere," he said.
Still, business interests may be accomplishing what unions cannot. Irene Scholl-Tatevosyan, a labor and employment associate at Nixon Peabody, said that esports contracts are more sophisticated than they were three or four years ago.
She attributed at least some of that development to the publishers themselves, who are responding in part to interest from investors in seeing more standardized player contracts.
"It legitimizes the industry, so that was of benefit to the publishers as well," said Scholl-Tatevosyan.
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