The world of sports has changed over the last few decades. It has become an industry worth billions of dollars. Athletes are the main source of revenue and as such, they have to be compensated accordingly. Contracts in sports are similar to those in everyday life. However, with some professional athletes being paid amounts in one year that can exceed what people make in their lifetimes, their contracts have to be carefully worded and crafted.
Sports agents have the role of securing and negotiating contracts. As do attorneys who specialize in representing athletes, although some might be against hiring their services for reasons like wanting to avoid the fees and commissions associated with it. Seeing as athletes are as unique as their skills, talents, and abilities, they are categorized as personal service contracts. Said contracts cannot be transferred to someone else. Lebron James could not assign his contract to another player seeing as his talents are so unique.
Professional athletes nowadays tend to be associated with vast financial rewards. As such, those with amateur status, should they choose to, can compete as professionals in order to be compensated for their services. As a high-value occupation, the contracts have to be written down clearly and they should have certain terms such as prohibiting participation in activities that could risk the health of the athlete.
The three main categories of contracts in sports are as follows:
- Professional service contracts (or standard player contracts)
- Endorsement contracts
- Appearance contracts
If the athlete belongs to a team, the contracts themselves are standard, with the difference being in the salary, bonuses, and options to renegotiate. Seeing as sports contracts usually involve individuals and entities that are located in different states, stating and agreeing upon the governing law can prevent issues of jurisdiction arising. The contracts are therefore set upon the laws of an agreed upon the state.
It is important to ensure that close attention is placed from the athletes’ perspectives to the provisions of the contract including the terms of termination and renegotiation. With major sports team being multi-million or even billion dollar franchises, the expectations as to how the athlete conducts himself on and off the field have become more stringent. For the professional athlete, getting proper representation seems like a savvy investment as the benefits outweigh the costs and they can serve to better protect the athlete’s interests.