Too frequently do eSports players find themselves in situations where they feel trapped in a contract with their team. Fortunately, there are ways to negotiate terms to a player contract that would allow the player, or team, to exit the contract with no further obligation during the initial contract negotiation. These specific provisions are called escape clauses.
This post will focus on how players can utilize escape clauses to their advantage, should they successfully negotiate such terms, through the lens of a very recent example involving a League of Legends player who went by the tag name of Kori.
The relevant facts
Kori was a player for Supa Hot Crew ("SHC"), a European-based League of Legends team, and was owed several months of pay from the organization. Meet Your Makers ("MYM"), another European-based League of Legends team, purchased SHC's roster at the end of 2014, which included Kori's contract. Given that AK3 GmbH and their CEO Sascha Ackerman, who owned SHC, were also involved in the business management of MYM, Kori was concerned about similar non-payment issues with MYM.
Upon informing MYM's business manager that he wanted to leave the team, the manager made several threats, effectively holding Kori to his contract. Kori then fled the team (and Europe) to play for Roar, a North American team in a different league. Upon Kori's departure, MYM contacted Riot Games (the game developer and effective league office) asserting that Kori breached his contract. Riot responded by disallowing Kori to play for any other team worldwide while still under contract. Subsequently, Kori returned to MYM. Riot then performed an investigation into the allegations of Kori and MYM, issuing punishments to both parties.
How escape clauses could have allowed Kori to leave
Escape clauses allow either party to cancel a contract if certain conditions are met. The beautiful thing about escape clauses is that they can be drafted around almost any desired set of circumstances. The tricky part, obviously, is to get both parties to agree to the clauses' inclusion in the contract, and the specific triggering circumstances. I haven’t seen Kori’s contract, but here are a few different kinds of escape clauses that would have allowed Kori to cancel his contract if they were hypothetically included.
One example of an escape clause would allow a player to cancel his contract under a change in management. Under such circumstances, Kori would’ve been able to cancel, or effectively opt-out of, his contract when SHC’s roster was purchased by MYM. An example of a similar clause in action can be found in the professional sports world. Earlier this Baseball offseason, Joe Maddon, the then manager for the Tampa Bay Rays, canceled his contract when the General Manager left the team for the Los Angeles Dodgers. Maddon’s contract had an escape clause which allowed him to cancel his remaining duties under his contract should the General Manager change. Within days of exercising his escape clause, Joe Maddon was signed as the manager for the Chicago Cubs.
The “change in management” language can be so general as to include a change in the management structure/personnel of the signing team, or can be as specific as to limit the player’s opt-out rights to a change in team/organization. Of course, a team may be more agreeable to an escape clause that is limited to a change in team/organization, as the signing team will no longer be paying and playing the player anyway.
However, if a purchasing team is made aware of a player having such a clause, it may devalue the purchase price of the roster due to the uncertainty of that player remaining with the team. If a player or their agent wanted to get really creative with such an escape clause, they could add exclusive renegotiation windows with the purchasing team to negotiate a contract extension in lieu of the player opting out. Doing so may make that player’s contract a bit more valuable in a purchase as it can add stability.
Importantly, this kind of escape clause is time sensitive. Each clause will specify a window by which the clause must be utilized, or else the right lapses. That means if the circumstances arise which would trigger the escape clause, the player would only have X days to affirmatively choose to cancel the contract. If that time period expires without the contract’s cancellation, the player cannot then try to cancel his/her contract without being in breach.
Another kind of escape clause is one that will allow a player to cancel their contract upon nonpayment. Following a missed payment date, these clauses allow for a period of time (generally a few weeks) by which to make the payment. If the payment is not made in that window, the clause would allow for the Player to cancel their contract. If Kori would have had such a clause in his contract (assuming there were no other barriers to payment), following his first date of nonpayment, he would have entered into the timeframe where he could cancel the contract. Should that timeframe have passed, he would not have the right to cancel the contract until the next date of nonpayment.
This kind of escape clause is frequently found in ongoing service contracts, which a player contract technically is. Negotiating this kind of escape clause can also be particularly telling of how secure a team is financially. Significant push back from a team on this provision could indicate unstable financials, because why would a team worry about a player leaving for nonpayment if timely payments are not an issue. It is important to note that some jurisdictions may consider nonpayment a material breach of contract, thus cancelling the remainder of the contract. However, even in those jurisdictions, an escape clause tied to nonpayment can be effective because it clearly spells out (for both parties) that nonpayment is a viable reason to cancel the contract and neither party would need a lawyer to tell them of their contractual rights.
These are just some examples of escape clauses as they hypothetically would have applied to Kori’s contract dispute. The tricky part with escape clauses, or any clause a player desires, is negotiating their acceptance by the team. That’s where leverage comes into play. Different players of different abilities and “star power” will have differing amounts of leverage to utilize in negotiations with a team, and will thus be able to command differing levels of contractual protection.
I hope this sheds some light on a way that player contracts can be utilized to define and protect players’ rights in the absence of a union.
TL;DR- Escape clauses in player contracts can offer some protection to players
Last week, I appeared as Chris Kidd's guest on the Price of Business radio show on Business 1110AM (KTEK Houston). I discussed the legal ramification of people not being provided with the Super Bowl tickets that they purchased. Unfortunately, thousands of people found themselves in this position. Take a listen!
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