The Growth of Esports Law

Is esports law a thing?  Sports and the law are certainly ever closely connected.  Mass audiences, revenue growth and international reach have demanded it.  Major leagues have gone from virtually giving away local broadcast rights to devising sophisticated global cross-media licensing cycles, the bigger clubs are now major corporate brands and superstar players have the earning power of true A-listers.  The rewards are huge but the risks are there too and that’s where the law has come in.  Contracts, claims and culpability are inescapable.  The Court of Arbitration for Sport, located in New York, Sydney and Lausanne, exists for good reason.

This week that personification of modern sports, David Beckham, a sporting icon as well known in Los Angeles as his native London, has seen the esports team in which he owns a stake announce an intended £20m IPO.  That’s perhaps a perfect example of how the esports sector hopes to follow the lead of traditional sport and, maybe, even eclipse it.  Indeed, this year across the globe for many weeks, pretty much the only organised sport being played out was esport – from virtual horses in the UK Grand National to the tennis pros swapping racquets for consoles in a digital Madrid Open . Esports has gone mainstream and wants to remain there even as traditional sports begin to return.

Early this year, in a brief window between Storm Dennis and the Coronavirus lockdown, the games community met up in Cannes for Esports BAR, now the go-to esports event in Europe.  The International Association of Entertainment Lawyers (IAEL), led by US-based president Jeff Liebenson, attended for the first time having contributed to the Midem music market since the 1970s and Cannes’ well-known television and film events for many years.  It was clear from February’s discussions that, though hardly new, the esports sector still seeks further maturity.  “It’s always waiting for the next level” an analyst at one of the big consultancy firms had observed to me, when presenting their annual media and technology predictions.

 

At Esports BAR Cannes, one element of the debate took a familiar form: what could and should the on-going relationship between esports and other sport be?  There are many aspects to that inter-relationship and for several years already high profile link-ups like the English Premier League’s ePL or French PSG’s esports team have lead the way.  But it was forward-looking financial fundamentals that dominated February’s sessions.  Any sport, to a lesser or greater degree, essentially generates four main sources of cash: from audiences via gate receipts and merchandise; from the sport itself in prize money or player transfers; from broadcast and media rights sales; and from advertising and sponsorship revenue.

All of those require the right legal mechanics & law, from properly protected and enforced intellectual property and related rights to the need for well drafted commercial agreements appropriately tailored for the relevant parties.  In Cannes, leading figures in esports were assessing how far and how fast these revenues could grow in the European market and what that meant to the commercial outlook for stakeholders.  No-one was yet factoring in the impact of Covid, however it was obvious that esports was levelling up.  To the IAEL team it was equally obvious that so many of the legal issues that dominate discussion, not just in sports but also other parts of the media and entertainment business, would unavoidably come to the fore.

Yet esports is different.  Building an infrastructure to support expansion will require serious investment and a long term focus.  That in turn may require an esports landscape codified beyond current regimes.  Europe does not have the franchised sector structure of sport in the US, or elsewhere, from which it may have much to learn.  This, though, was less of a topic in Cannes than the evolving dynamics with publishers, platforms and other stakeholders.  Esports teams compete with the world of streaming in their demand for talent.  The two can (and probably must) co-exist for mutual benefit, and different skills are required of successful streamers, but the immediate focus is around online audiences rather than a share of traditional sports media rights.

So this cannot be just a case of reheating legal solutions & law from other sectors.  There are, however, many legal issues where knowhow from those sectors can be invaluable.  Esports must do more to address crucial concerns over safeguarding and welfare issues just as the sports and entertainment sector has done.  A potentially lucrative but highly sensitive relationship with regulated betting and gambling must be negotiated as others have had to.  Wider integrity issues have arisen in esports and not yet been as fully addressed as they have elsewhere.  Data rights and data privacy/protection are yet another legal area where esports may want to pay attention to lessons being learnt elsewhere.  There is lengthy legal agenda for esports to consider.

Of course, there are currently precious few certainties about a post-Covid future with many challenges well beyond the world of sport and entertainment.  That unavoidable reality aside, Esports BAR+ Americas could not come at a better time to continue the debate over the financial fundamentals, development requirements and legal underpinning for international esports, with the more evolved US market leading the way.  For esports, this is a marathon not a sprint, but the legal agenda will not go away.  Not least because, as British lawyers in any part of media and entertainment like to say, from experience, where there’s a hit there’s a writ.

About Author

Duncan Calow

Duncan Calow is General Secretary of the International Association of Entertainment Lawyers. IAEL members are all lawyers, either in private practice or industry, or those training in the law, whose areas of interest and expertise cover any aspect of the media and entertainment sector. If you are interested in joining or just want to know more about the IAEL please go to the IAEL website at www.iael.org.

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