The sports industry is growing exponentially. In fact, today, the sport
industry is regarded as one of the largest industries globally in terms of
employment and revenue. It is driven by a large worldwide demand. The
total worth of the sports industry is estimated to be around US$500 billion.
Just under half of this amount is generated by the spectator sports sector. So,
competitive sports and all the businesses around it, create roughly 250 billion
USD in revenue each year.
For spectator sports to continue to flourish as they are, top notch quality
players are a must. Moreover, it is also necessary for a robust scouting system
to exist in an environment which is wholesome and conducive for healthy
competition. In light of these observations, contract drafting becomes of utmost
importance. It is the responsibility of the lawyer who drafts the contract to
ensure that such conditions are fulfilled.
Nothing should be uncertain, all roles must be well defined along with
remedies and adverse ramifications if necessary. Though sports and its values
can be persuasive but just like any other industry, it is risk prone and must be
dealt with a stern attitude.
In this short article, the author will try to analyse the key clauses in the
contracts related to the field of sports. Among other contracts, focus will
majorly be on contracts between athletes and the league organisers. For eg.
contracts between athletes and the Board of Control for Cricket in India [BCCI]
when it comes to the contracts for the famous cricketing tournament, Indian
Premier League, IPL.
Contracts in sports are no different than other contracts we encounter in
everyday life. Professional athletes are compensated for their services with a
paycheck just as anyone else. These contracts are mostly in the nature of
personal service contracts. That is to say that no one except the player
contracted can perform the contract. Such a nature demands stringent clauses
which are able to uphold the purposes and the intent of the parties. Let's look
at some of the important clauses.
A morals clause is simply a provision in a contract which stipulates that
certain actions or activities ostensibly done or committed in the player's
private life would constitute grounds for the termination of the player's
contract. It is often used to protect the image and reputation of the
sporting organisation and enables the body to unilaterally terminate the
contract where the other party engages in conduct which impacts negatively on
Typically, these clauses turn on some violation of law or social norms, but they
can also restrict behaviour that degrades the value of a brand. Morality
clauses were the talk of the town when Mohd. Shami, an Indian cricketer, was
accused of domestic abuse. This begets a question whether the clause should
include only such personal actions that are related to sport or league or should
it include all actions undertaken by the player in their private lives. Most
provisions which include all actions are frowned upon by the players as they
allow a very strict scrutiny of their personal lives by people who have no
business prying into their privacy.
Best Efforts Clause
The Best Efforts clause requires parties to exercise their best efforts
to perform their contractual obligations. The provision is a more specific
definition of the implied covenant to act in good faith. In sports contract,
it means playing to the best of one's ability, playing in the spirit of the game
and following all rules of exceptional conduct. It ensures that when the
deal is done, players don't merely show up but also compete with the highest
standard of skills on showcase.
In order to ensure that the best skills are projected on the field, the players
are encouraged with incentives. These incentives come as contingent clauses.
For eg. If the team wins the tournament, all members get 10% extra of their
fees/winning bid. Similarly, one may have contingent clauses with regards Most
valuable player, most runs etc. Bonus clauses ensure that the players constantly
try to excel and earn more for themselves.
Hazardous Activities Clause
Physical activities that put athletes' bodies at risk, by extension, also leave
their teams' fortunes in danger. One of the contractual ways to attempt to
mitigate the chances of an injury has been to utilise what are known as
hazardous activity clauses. In essence, the clause allows the team, at its
option, to modify the financial obligation to a player if a player is involved
in a particular type of activity outside the context of their sport and is
injured as a direct result.
Hazardous activity clauses have been in the spotlight much more today than ever
before and appear to be designed to be both deterrent and punitive in
nature. For example, if a player gets injured while paragliding or while
indulging in any other extreme sport, the cost of his absence will be borne by
the player himself/herself. However, if he gets injured in the gym whilst
practicing for the match, his injury comes under the purview of the sporting
activity undertaken. This clause is directed to promote responsibility and
ensure parity and reasonableness in terms of financial obligation.
Force Majeure Clause
Force Majeure essentially means an unforeseeable natural or human event beyond
the control of the parties to a contract which renders the performance of the
contract impossible. Force majeure clauses are often thrown in as standard
boilerplate language related to rescheduling or delaying events yet they are
seldom invoked . However, lately this clause has been invoked all throughout the
world in light of the pandemic.
Broadcasting rights which were bid sold for about INR 10,000 crores became a
subject matter of consideration under the Force Majeure clause since the
pandemic almost led to the cancellation of the Indian Premier League. This would
have cost the broadcaster, Star Sports, dearly since the provisions of the
contract expressly protected the BCCI from any financial obligation.
Non-compete clauses are employment agreements and other forms of agreements made
with the intention of restricting the employees and/or former employees from
pursuing similar professions or trade with the competitor of the employer after
the cessation of employment. 
Non-compete clauses have been a point of debate as they may be construed to be
violative of competition laws. BCCI which regulates cricket in the country
enjoys a monopoly. It is to be noted that BCCI is not a state instrument. Sports
governing bodies such as BCCI, often attempt to preserve for themselves the sole
ability to regulate the sport and to organize events. In order to prevent the
development of rival organisations, they have sought to tie players in by
prohibiting them from competing in other events, on pain of exclusion from
‘official' events, and such rules have been the subject of challenge under
It was pointed out earlier that sports contracts are always personal service
contracts and can not be transferred from one player to another with the purpose
of filling in for the initial player. The transfer clause on the other hand is
necessary when professional sporting leagues are contracting a player and then
allotting him a team. So it works the other way around. Regulating authority
transfers their obligation to a team which ultimately buys the services of the
player in the auction but the player has to adhere to the principle of personal
Such a transfer clause is essential where auction format is used for selecting
the roster of teams. The auctioneer/regulating authority contracts the services
of the player and then sells them as commodities to the teams participating in
the auction. Transfer clauses can be provisions for inter-team transfers as
Liquidated Damages Clause
Liquidated damages are those damages whose extent is predetermined. A typical
liquidated damages clause allows the parties to privately agree what
repercussion will be for a breach of the agreement.  Though liquidated
damages clause is generally inserted to preempt and avoid disputes, it can have
a punitive impact and effect as well.  It is extremely undesirable for
players, regulatory authorities or teams to waste their time and money in
ascertaining the amount of damages, especially when the playing season is in
full force. Thus, this clause should be used extensively wherever possible.
Liquidated damages also prove very useful when calculating the extent of
damages in case of a default in the future will prove extremely difficult.
The ability to end the business relationship in case of default is a sine qua
non in all contracts. The parties and the drafters of the contract consider this
as the most essential element after mutual obligations. There are a lot of long
term agreements with respect to team perpetuity, stadium lease etc. but good
drafters include the provisions of termination which allow the parties to
terminate their relationship early if necessary. These clauses must be
carefully drafted since an ill drafted agreement can lead to unlawful
termination or malpractice lawsuit. It may serve as a guarantee against
misconduct and poor organisational skills.
Governing Law and Dispute Resolution Clause
Even after all efforts are made to minimise inconsistencies and disputes, it is
extremely possible that disputes will stem anyway. In this scenario, it is
feasible that a dispute resolution clause be inserted. This clause should
expressly provide the laws which shall be applicable in case of a dispute.
Moreover, the clause apart from jurisdiction shall also lay out the procedure of
the dispute resolution mechanism. Mostly, arbitration is used as the primary
method to settle disputes as it ensures confidentiality and considers the matter
on legal merit.
Loyalty clause is an extension and conjugation of the good faith clause and
non-compete clause. It allows the employer to terminate the agreement of the
employee in the event that he or she supports a cause contrary to that of the
interests of the employee. For eg, wearing Nike Shoes whilst being an
official endorser of Reebok. A sportsperson maybe disallowed to wear any
other gear than that of his team etc.  Some consider this clause as abuse of
superior bargaining power over another.
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