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Law in sport: behind the finishing line

Law in sport: behind the finishing line

Syndy Liew

04/05/2022

Reading time: six minutes

During a panel event of an open day I attended, the panellists shared their most interesting cases. For example, an associate mentioned being a part of a deal involving the new stadium for Tottenham Hotspur F.C. She was a fan of the club, so it’s easy to see why this is the coolest case she has worked on. 

I’ve always been a big fan of sports and watching high-performance sports like Formula 1, football, World Surf League and others. This prompted me to start researching law in the sports sector.

Read this LawCareers.Net solicitor’s practice area profile to find out more about sports law.

The role of law in the sports world 

Some examples of the role that law plays in regulating high-performance sports include drafting athletes' contracts, drafting regulations (F1 recently released new technical regulations) or securing new facilities or sports grounds. 

The impact of covid-19

Due to the cancellation or delay of many sporting events during the pandemic, there have been some legal implications concerning contractual agreements like broadcast issues, sponsorship issues and complications with player’s contracts. For example, the court faced the issue of whether a party could legally exercise its right to terminate a contractual agreement as a result of covid-19 in the case of The Football Association Premier League Limited v PPLive Sports International Limited (2022). The case involved a Hong-Kong based broadcaster.

As a result of the delayed events and other pandemic-related disruptions, the remaining fixtures of the Premier League 2019/20 season were played under different conditions. For example, the stadiums were empty, kick-off times were later in the day and there were more evening matches. This posed a problem for PPLive since the later kick-off times (early morning in HK & China) made the matches inconvenient for broadcast in Hong Kong and China. 

PPLive argued that this amounted to a “fundamental change to the format of the Competition and Premier League should have entered into “good faith negotiations … to discuss a possible reduction of the Feesas stated by one of the clauses. By failing to do so, Premier League's termination of the contract after PPLive didn’t pay the instalment on the schedule was unjustified. However, the court didn’t accept the argument and ruled in favour of Premier League who was awarded over $212 million.

Therefore, parties need to pay attention to the terms of any media rights agreement when negotiating its terms and when exercising rights under it. One consideration might include the mitigation of similar risks when negotiating contract terms. 

To learn more about contract law, read this LCN Says: ‘SQE manual series: why you should study contract law’.

Broadcasting contracts

On the topic of broadcasting, the pandemic caused strain on the contractual performance originally contemplated by the broadcasters on the one hand, and the sports leagues and their clubs on the other.

But why is broadcasting so important? 

A broadcasting right, also known as a media right, is a legal right that a broadcasting organisation owns for commercial purposes. Television organisations and media companies would often pay huge amounts for the exclusive license which equates with a right to broadcast top sporting events live.

Sky Sports owns the media rights to broadcast Formula 1 GP events in the UK. The process of securing broadcasting rights depends on the sports organisations like the European football league, English Premier League.

To gain a deeper insight into media and entertainment, read this LawCareers.Net solicitor’s practice area profile.

For most sports organizations, the sale of broadcasting and media licenses is one of their largest sources of revenue. This is because it generates the funds needed to finance major sporting events, refurbish stadiums and contribute to the sports development at different levels.

For instance, in 2021, media rights fees (formerly referred to as broadcasting fees in F1) made up 40% of F1’s revenue, followed by race promotion revenue and sponsorship fees which comprised 31% and 16%  respectively, of total F1 revenue.

Therefore, close attention needs to be paid to the terms of any media rights agreement both when negotiating its terms and when exercising rights under it when it comes to renewing broadcasting right contracts or forming new contracts. 

Read this LCN Blog to learn about smart contracts: ‘Smart contracts: a beginner’s guide’.

Emerging trends in sports 

With pandemic restrictions easing, most sports would benefit from less associated calendar disruptions and could expect the return of spectators to full capacity. In addition to that, it’s interesting to see how the sports industry has been influenced by the wider emerging trends resulting from the pandemic. 

We could expect innovation in the ways sports organisations' stakeholders develop and adopt new ways to engage with fans in more accessible ways. One example is sports non-fungible tokens (NFTs) which serve as the digital version of sports memorabilia and collectables. The global and unique nature of NFTs allows sports NFTs to grow in popularity. For instance, fans can now get their hands on limited-edition video clips of sporting moments.

To find out more about NFTs, read this LCN Blog: ‘The laws of music: the rise of fan-crazed NFTs’.

It’s predicted that NFTs for sports media will generate more than US$2 billion in transactions in 2022. Sports NFTs are becoming more popular but how are NFTs trading being regulated? Since NFTs are distributed over the internet and across many jurisdictions, several distinct areas of law including securities laws, intellectual property and tax, may apply. We could also expect increased regulation in this sphere in the coming future. 

One of the trends that have been brought to the forefront during the pandemic is the influence of environmental, social and governance across different industries.

Read this Commercial Question by Bevan Brittan LLP to find out about the investment issues relating to ESG: ‘Why all investors need to look beneath the bonnet’.

Similarly, we could see an emerging link between climate change and sport. In 2021, International Olympic Committee, McLaren, Tottenham Hotspur and several other sports organisations who are signatories to the UN Sports for Climate Action Commitment signed up to the UN Race to Zero pledge during the COP26 UN Climate Change Conference in Glasgow. The UN Sports for Climate Action aims to support sports organisations to achieve net-zero by 2040.

While I still need to do more research on what is required for the sports industry to achieve net-zero, it’s quite exciting to see how sports organisations are aligning themselves to achieve the net-zero goals. For example, last year, Spurs hosted the world's first zero-carbon football match in conjunction with Sky Sports in September 2021. McLaren Racing also announced the appointment of its first director of sustainability in November 2021.

Read this Commercial Question by Bevan Brittan LLP to find out why lawyers care about net zero: ‘Net zero and the legal profession’.

Final thoughts

I hope this post provides a broad overview of the role of law in sports. For those of you who might be interested in doing further research in this area, I used the following resources: SportingLinks (a blog by Linklaters LLP), Lexology and LawinSport (you can get three articles per month through the free subscription service).