Our article addresses esports player contracts, explaining the legal nature of the contract, its basic elements, remuneration and term, termination and penalty clauses, the transfer and Federation registration process and the mandatory provisions on the protection of minor players.
At the heart of the esports ecosystem lies the contract between the player and the club. In the first article of our series, we addressed the fundamentals of esports law, the actors of the ecosystem and publisher sovereignty. In this second article, we focus on the most critical legal relationship of the ecosystem, player contracts. In this field, where there are players who become professional at a young age, frequently occurring transfers and high commercial values, the sound establishment of the contract is decisive as regards the protection of the interests of both the player and the club. A poorly structured contract may expose the parties to serious compensation risks; a well-structured contract, on the other hand, places the relationship on a foreseeable and secure footing. This article comprehensively examines the legal nature of esports player contracts, their basic elements, the regulations relating to remuneration and term, the termination and penalty clauses, the transfer and registration process and the special rules relating to the protection of minor players.
1. The Legal Nature of the Player Contract
The determination of the legal nature of the esports player contract is of great importance, as it directly affects the legal regime applicable to the contract. In Turkish law, the contract between the esports player and their club is generally accepted to be in the nature of a service contract. This characterisation rests on the fact that the player operates in a manner dependent on the club, in line with its instructions and in return for a certain remuneration. However, this characterisation is not automatically valid in every concrete case; the real content of the contract and the nature of the parties' relationship are decisive. If a player's level of dependence on the club is low and it largely determines its own working conditions, the relationship may also take on another legal nature, such as a mandate contract or a contract for work. The correct determination of the legal nature of the contract affects the statutory provisions to be applied, the rights and obligations of the parties, the rules relating to the termination of the contract and the authority to which recourse is to be had in the event of a dispute. For this reason, when an esports player contract is being prepared, the correct analysis of the real nature of the relationship and the structuring of the contract in a manner suited to this nature is a basic step as regards the prevention of uncertainties that may arise in the future.
2. The Basic Elements of the Contract
An esports player contract must regulate the rights and obligations of the parties completely. The basic elements of the contract must cover all dimensions of the relationship, beginning with the identity of the parties. First, the parties to the contract, that is, the player and the club, must be clearly determined. The subject of the contract, that is, in which game, in which category and within which scope the player will operate, must be clearly defined. The player's basic obligation is to participate in competitions, to take part in training and to comply with the rules determined by the club. The club's obligations consist of paying remuneration to the player, providing the necessary equipment and training and creating suitable conditions for preparation for competitions. The contract must also regulate matters such as the expectations relating to the player's performance, the rules of conduct, social media use and compliance with the club's image policy. The term of the contract, the remuneration structure, the termination conditions and the method of dispute resolution are also among the basic elements. The clear and complete regulation of all these elements places the parties' relationship on a sound legal footing and prevents a significant part of possible disputes from the outset.
3. Remuneration and Financial Rights
One of the most critical elements of the player contract is the regulation of the remuneration and financial rights to be paid to the player. In esports, the remuneration structure may be much more complex than a traditional salary; because the player's income may consist of many different items. In the contract, first, the amount, the time and the manner of the fixed remuneration to be paid to the player must be clearly determined. In addition to the fixed remuneration, variable income items such as the share falling to the player from tournament prizes, performance-based premiums and success bonuses may also be regulated. How tournament prizes will be shared between the player and the club is a matter frequently the subject of dispute in practice; for this reason it is important that the prize-sharing ratios be clearly determined in the contract. Moreover, the shares that the player will receive from broadcasting revenues, sponsorship agreements and the commercial use of image rights must also be separately regulated in the contract. The failure to clearly determine the remuneration items may lead to serious financial disputes in the future. For this reason, the regulation of the financial rights in the contract in all their dimensions and in as much detail as possible serves the interest of both the player and the club.
4. The Term of the Contract and Mandatory Limits
In esports player contracts, the term is an element that must be regulated carefully, and certain mandatory limitations may come onto the agenda on this matter. The dynamic structure of esports, and the fact that players' careers are shorter and more variable compared to traditional athletes, require special attention in the determination of contract terms. The term of the contract is important as regards both the player's career planning and the club's stability. The regulations introduced in this field may bring lower and upper limits to contract terms; for example, there may be mandatory provisions to the effect that a contract cannot be less than a certain minimum period and cannot exceed a certain maximum period. Such limitations aim both to prevent the player from being bound by excessively long contracts and to enable the club to obtain reasonable stability. In the determination of the term of the contract, compliance with these mandatory limitations is obligatory; otherwise the relevant provision of the contract may be invalid. Moreover, the regulation in the contract of the conditions relating to the renewal of the contract after the expiry of its term and of how the parties will manifest their will to renew removes the uncertainty as to the future of the relationship.
5. Termination and Penalty Clauses
One of the dynamics specific to esports is the frequent changing of teams by players and the intensity of transfers. This leads to the termination provisions and penalty clauses in contracts gaining great importance. Termination provisions regulate under which conditions and how the contract may be terminated. In the contract, the cases of termination for just cause must be clearly defined; for example, situations such as the player breaching its performance obligations or the club failing to fulfil its obligation to pay remuneration must be regulated. The consequences of unilateral terminations made without just cause must also be provided for in the contract. At this point the penalty clauses come into play; a penalty clause is a security mechanism providing for the party acting in breach of the contract to pay a certain compensation to the other party. In esports, where a player wishes to move to another club while its contract is ongoing, the penalty clause plays an important role. However, the penalty clauses must be determined at a reasonable level; excessively high penalty clauses may be subject to reduction in law. The balanced and clear regulation of termination and penalty clauses both protects the rights of the parties and secures the stability of the contractual relationship.
6. The Transfer Process
A transfer is the process of a player moving from one club to another and is one of the most dynamic elements of the esports ecosystem. The transfer process is a transaction at which the interests of more than one party intersect and which requires careful legal management. A player's transfer depends first on the situation of its contract with its current club. The transfer of a player whose contract is ongoing is carried out either by the mutual termination of the contract or by the payment of a transfer fee. A player whose contract has ended, on the other hand, may freely make a contract with a new club. In the transfer process, the player's obligations to its former club must be completely liquidated, the contract to be made with the new club must be established in due form and all financial matters must be clearly regulated. That the player carrying out a transfer signs a contract with its new club and that this contract is registered by being submitted to the relevant federation is mandatory as regards the transaction acquiring official status. The failure to conduct the transfer process in due form may lead to serious legal problems for both the player and the clubs. For this reason it is important that transfer transactions be conducted with legal support from the beginning to the end of the process.
7. The Federation Registration Process
In Türkiye, esports player contracts acquire official status through registration with the relevant federation. The contract signed between the player and the club must be submitted to the Turkish Esports Federation for the registration procedure to be carried out. The registration process is the procedure of the contract being recorded before the federation and officially recognised. This procedure ensures the transparency of the contractual relationship and serves the protection of the rights of the parties in possible disputes. An unregistered contract, even if valid between the parties, may not produce official results before the federation; this situation may create problems particularly in matters such as transfer, participation in competitions and dispute resolution. The registration process is a stage at which matters such as the player's licence situation, the club's registration situation and the conformity of the contract with the federation's regulations are also checked. For this reason, the preparation of the contract in conformity with the form and content conditions provided for by the federation is important as regards the registration process proceeding smoothly. The timely and due completion of the registration procedure is decisive as regards the player being able to take part in official competitions and the protection of its rights.
8. Minor Players and the Consent of the Legal Representative
One of the most notable features of esports is that professional players often begin their careers at a very young age. This makes the protection of minor players one of the most sensitive matters of esports law. The ability of a minor, that is, a player under the age of eighteen, to make a contract is subject to special protection rules. In Turkish law, for a player under the age of eighteen to be able to sign a contract with a club, the permission or the ratification of its legal representative, that is, generally its mother or father, must be obtained. This rule aims at the protection of the interests of the child and the young person; it prevents an individual who does not yet have full capacity from making, alone, a contract that binds its own future. The consent of the legal representative is a mandatory element as regards the validity of the contract; a contract made without this consent may face a validity problem. In contracts made with minor players, not only the consent of the legal representative, but also matters relating to the protection of the child's education, health and general development must be observed. This protective approach aims to prevent the exploitation of the young audience of esports and to support a sustainable career development.
9. The Best Interests of the Child and Age Restrictions
The protection of minor players is not limited only to the consent of the legal representative; in the esports field there are more comprehensive protection rules observing the best interests of the child. Foremost among these rules are age restrictions. In esports regulations, there may be mandatory provisions to the effect that children under a certain age cannot take part in prize tournaments; such restrictions aim to prevent children of a very young age from being drawn early into an environment where competition and commercial pressure are intense. Alongside age restrictions, the working conditions, the training periods and the competition schedules of minor players must also be regulated in a manner observing the child's education and health. A child's professional esports career must not take precedence over its school education, its social development and its physical health. This balance is the common responsibility of the family, the club and the regulatory institutions. The principle of the best interests of the child must be at the centre of all decisions in the esports context too. This approach, while protecting the young talents of esports, at the same time serves the development of the field on a sustainable and ethical footing.
10. The Player's Obligations and Rules of Conduct
Player contracts regulate not only the player's obligation to participate in competitions, but also a broad set of rules of conduct. In esports, since players are the public face of the club and its brand, their conduct directly affects the club's reputation. For this reason, the rules of conduct that the player must comply with are regulated in detail in contracts. Among these rules are compliance with training and competition discipline, adherence to the rules determined by the club and adherence to the principles of honesty and sportsmanship. Moreover, the player's social media use, public statements and general conduct may also be regulated in the contract; because an inappropriate post or conduct of a player may harm the player, the club and the sponsors. The prohibition of conduct contrary to honesty, such as doping, match-fixing and betting, is also an important part of contracts; such breaches may lead both to contractual sanctions and to disciplinary penalties. The clear regulation of the rules of conduct both enables the player to know what is expected and protects the club's reputation. It is also important that these rules be balanced and be determined in a manner that does not excessively restrict the player's personal rights.
11. Conclusion and the Continuation of the Series
Esports player contracts constitute the most critical legal relationship of the ecosystem and require careful legal design. The basic considerations set out in this article may be summarised as follows. The legal nature of the player contract, although generally accepted as a service contract, must be assessed in every concrete case according to the real nature of the relationship. The basic elements of the contract, the remuneration and financial rights, the term, the termination and penalty clauses must be regulated completely and clearly. The sharing of tournament prizes and the variable income items must be clearly determined in order to prevent financial disputes. The transfer process must be conducted in due form as regards the liquidation of the existing contract and the registration of the new contract. The registration of the contract with the Turkish Esports Federation is mandatory for the relationship to acquire official status. In contracts made with minor players, the consent of the legal representative must be obtained, the age restrictions must be complied with and the best interests of the child must be observed. In the third and final article of our series, we will address the dimension of image rights, intellectual property and commercialisation in esports, that is, the commercial use of the player's name and image, licence relationships and revenue models.
Esports player contracts are closely connected with the other layers of sports law and contract law. Our article on the introduction to esports law: the ecosystem, publisher sovereignty and the institutional structure in Türkiye and our analysis of the enforcement of foreign arbitral awards in Türkiye and the 1958 New York Convention address the matters connected with player contracts.
For advisory services on the preparation of esports player and club contracts, transfer and registration procedures, contracts made with minor players, and the resolution of esports disputes, you may contact us at info@guzeloglu.legal.