12 top tips for Indian athletes working with sports agents
Friday, 25 July 2014
In this article, prominent Indian sports lawyer, Nandan Kamath, gives his top tips for Indian athletes who are considering or currently working with a sports agent.
1. Who is a sports agent?
An agent is a person employed to do any act for another or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the “principal”.
A sports agent is a person or organisation that represents you in your professional dealings with other people and organisations. In essence, an agent is someone you would appoint to do things you would normally have done yourself but would rather have someone else do for you or on your behalf. For example, an agent would deal with your sponsors to sign contracts, receive payments, organise ad-shoots, etc. and with the press and other persons to make sure you getting exposure for your performances. The reason for appointing an agent is so that you can focus on your sport rather than the various other aspects that need to develop and keep moving at the same time. Moreover, a good agent will have the right contacts, connections and expertise to open the right opportunities for you.
A proactive sports agent usually plays all these roles but also adds additional value by coordinating regularly with coaches, trainers and others monitoring your progress and performances and giving you feedback from these various sources. The agent will also assist you with planning your career, finding the right balances between practice and rest, fine-tuning you mentally and getting you access to the various services such as coaches, trainers, psychologists, massage therapists and others who contribute to your growth and success. The role of the sports agent can be played by a person, a company or another organisation such as an academy or a club.
2. How do I go about choosing my agent?
It is very important that you know and like your agent because it is going to be one of a few very important relationships as your career grows.
As you become successful or show success potential, there will be a number of people who will contact you seeking to represent you. In India, there is no qualification to be a sports agent, which means anyone can become one. As a result, you should be careful with the choices you make. Agents come from all sorts of background such as former athlete, advertising or marketing executive, accountant, lawyer, etc. As much as a good sports agent can advance your career, a dishonest or unethical one can limit your professional growth.
The important thing is that this person’s interests and approaches are aligned with yours. This means that they must have your interest in mind at all times and should not have conflicts of interest. Conflicts of interest lead to mixed motives and if they exist your agent could compromise your interests to further his own. Agents represent you to the outside world and it is important they convey the image that you are seeking to portray.
One of the best ways to identify a good agent is by speaking with your fellow athletes. The network of information among professional athletes is very strong and senior athletes who you trust will be able to advise you on their experiences with their own agents, their practices and ethics and the pros and cons of associating with them. Ask around among many players before making your choice. Once you have made your choice, sign a written legal contract with your agent that governs your commercial and other rights and obligations. While everything seems rosy at the beginning of any relationship, it is important to have a written contract to avoid ambiguity and to deal with situations where the relationship might no longer be working.
Do not succumb to pressure tactics when signing with anyone – statements and ultimatums such as “sign right now or the deal expires” or “don’t bother about the wording of the contract, just sign here” should alert you that things aren’t quite right. Also, be aware that no one gives you anything for free, they are looking to get it all back with interest in the future. So that free car you are given as a sign-on bonus might not be all that “free” in the long run. You must respect your agent and they should respect you. If you take all the right steps you will find the agent you deserve. If you are hasty with your choice or desperate it is possible that you will associate with the wrong people.
3. Should I consult a lawyer before signing contracts?
Yes, it is always a good idea to consult a lawyer or, at the very least, someone who understands the legal implications of contracts before you sign an agreement with a sports agent or a sports management company or for that matter any other contract or commitment that you Register to.
It would be natural to look at the amount of money you are receiving under a contract and end at that. However, there are many contractual clauses that could possibly severely limit or even completely prohibit other commercial opportunities that may arise down the line. As a result, you must receive the advice of a lawyer or equivalent advisor who will help you understand all the implications of and obligations under the contract you have been offered.
You must also be aware that, most often, contracts are not “take it or leave it”. A contract presented to you by someone else will be drafted in a manner most favourable to that person and the first draft offered to you should act as a starting point and not the last and final offer. There is (almost) always room to negotiate the terms and conditions of such a contract and it is very important that you make sure all of your interests are protected and documented in the contract. It is customary to provide your comments and feedback on a contract and to attempt to have the contract reflect the positions you want through a negotiation process. A failure to negotiate means that you are likely to leave a lot on the table and lose out value that you might have otherwise been offered were you just willing to ask. An athlete who is aware of his rights and is willing to stand up for his/her own interests is always likely to be taken more seriously and, in the long run, will always get a better deal.
4. What are my commercial rights?
Simply put, you are the sole owner of all commercial rights relating to your name, likeness and image. This means that no one can use, for commercial purposes, your name or photos or other images that represent you without your permission. Anyone seeking to use these for commercial purposes needs a license from you. Commercial use does not include journalistic use but does include use in advertising, launches, catalogues, etc.
Moreover, in the current environment you also have a few rights with regard to the “tools of your trade”, i.e., the opportunity to display logos on your equipment, external protective gear and shoes. There are specific regulations with regard to the type of sponsor that can put a logo on your equipment as well as on the size and location of the logos on each such item. You should consult a lawyer, your manager or your local association to understand what these regulations might be before signing a contract with a sponsor.
There are a number of other commercial opportunities that will arise in the course of your career. You might be invited to appear at public events such as product launches, inaugurations, etc. or to participate in corporate activities such as team-building, speaking opportunities, dealer meets, etc. Each of these presents an opportunity to receive commercial advantage for your time and presence.
5. Can I determine what my agent says on my behalf and whom he or she contacts?
Yes, you can (and must) make sure you are aware of whom your agent is contacting and what he or she is saying to them. As an agent, the person represents you and you have a right to know about, supervise and control what is said and done on your behalf. The law says that you are responsible for the acts of your agent and that your agent is, in some circumstances, capable of binding you into contracts with others. In this scenario, it is important that you know what is going on. Included in your agreement with your agent must be a clause on what he or she can and cannot do on your behalf. There should also be reporting obligations under which the agent reports to you whom he or she is speaking with and what she is saying.
Most importantly, with regard to entry into contracts or other legal obligations, your agent should drive the process and create the opportunity but the final call should always be yours. Regardless of the pressures involved, never be forced by your agent (or anyone else) to enter into a contract that makes you uncomfortable. At the beginning, rejecting commercial offers may not seem like the best strategy but in the long run you will come to realise that rejecting bad or inappropriate offers is as critical to your growth as an athlete and commercial brand as is accepting good opportunities.
6. How do I make sure my agent is honest?
t is difficult to be completely sure that your agent is being honest with you. There are a number of unscrupulous elements attempting to make a quick buck off athletes so while you do not need to be unnecessarily suspicious it is very important to be aware of what is going on.
As described earlier, your contract with your agent must make it clear that you expect your agent to be open and honest with you and to report everything that he or she does on your behalf. Often, athletes have a very hands-off attitude to their commercial arrangements. While this might work fine in some cases, it won’t in many others. Most of the top athletes either have had long relationships with managers they trust or have a close family member monitor all their agents’ activities if they don’t have the time to keep track of them yourself.
Before signing up with an agent, you must talk to other players about the agent’s reputation and behaviour. Over a career, an agent will develop an ethical track record and it is important you have this information before making the decision. While the agent’s ability to do deals on your behalf is important it is also critical that the agent represents you honestly and with the spirit that reflects you and your personality. You must get to know and trust your agent.
Finally, you must also maintain direct relations with your sponsors, the press and others the agent communicates and deals with. Even if you do not spend a lot of time with these people, a courteous personal relationship with each of these people will help you receive feedback on your agent’s actions.
Just like you wouldn’t invest your money in a fraudulent company, don’t put something as valuable as your career in the hands of a dishonest agent.
7a. When is a good time to Register with a sports agent?
Timing is important when you Register with an agent who is seeking to commercialise your talent. While there is an appropriate time to Register with an agent, there is no set formula for when this is. It very much depends on your specific circumstances.
It is important to build a solid platform for your career and you must work with an agent who isn’t looking to commercialise you too soon. If you sign a commercial deal with an agent too early, it is possible that your interests could be compromised as you might not end up in long-term and reputable brand associations. Also, the earlier you Register the larger percentage of your future earnings you might have to share with your agent. Building yourself as a brand is a gradual and considered process and is based in sporting performance and backed up by a variety of other factors. Also, in terms of creation of playing opportunities, agents play a much smaller role at the junior level but start playing a larger role as your career progresses. In the ideal situation, you should work with a sports manager who is willing to groom and nurture you and waits for the appropriate time to commercialise you. Such people are few and far between as most are motivated by immediate profit motives. But if you look hard enough, you will find a mentor, if not a manager, who will take you through the process until you are ready to be commercialised.
7b. I am 16, can I sign a contract with a sports agent?
Under Indian contract law, you cannot sign a contract until you attain the age of majority. You must be at least 18 years of age before you can sign a contract on your own. However, while you are a minor, a contract may be signed on your behalf by your parent or legal guardian, acting in your best interests. The minute you turn 18, all contracts that were signed between your guardian and others must be signed once again directly with you. At this time, you can decide to change contracts as you cannot be forced to continue with existing terms agreed to by your guardian. Once you are 18, you are free to (and must) contract on your own behalf. While this means you have more freedom to choose the path for your professional development, it is also a greater responsibility to make sure you protect your own interests.
8. How do I pay my sports agent?
In most cases, the agent receives a commission for representing you. This is usually calculated as a percentage of the commercial opportunities that are generated by your agent’s activities. In some cases, such as the creation of a playing opportunity at a foreign club, agents might also take a share in your salary, prize money and earnings. With regard to some tasks, you may also choose to pay your agent a monthly professional fee or retainer for regular tasks he or she undertakes on your behalf such as accounting, tax filings, press relations, investment management, travel arrangements and scheduling.
9. What are minimum guarantees? How do these work?
A minimum guarantee is an assured minimum payment made to you by your agent every year. This payment is guaranteed to you regardless of whether your agent secures you commercial opportunities. The agent or manager makes this minimum payment (and takes the associated risk) for the privilege to deal exclusively with the athlete.
Only few athletes at the very highest level command minimum guarantees. Minimum guarantees might not be advisable early in a career as they motivate agents to extract short-term value rather than carefully and thoughtfully lay the platform for building the brand. When looking at a contract’s minimum guarantee clause, it is important to understand clearly what is on offer. For example, a minimum guarantee of Rs. 10 lakhs per year with an agent who keeps 20% commissions could effectively be Rs. 8 lakhs given to the player. So, there is a difference between a minimum guarantee of commercial opportunities and a minimum guarantee of money paid. Depending on the agreement, the minimum guarantee is paid up-front, in regular instalments and in some cases at the end of the period as only the shortfall (if any) is covered.
10. What are the market standards for agent commissions?
Agent commissions will vary depending on the stage of your career at which your association with your agent begins. If you Register with an agent early on in your career that agent is taking a larger risk with you than if you Register once you are already an international athlete. The way in which agents try and absorb the risk is by taking a potentially larger share in your commercial opportunities. While there are no set minimums or maximums, generally agent commissions hover around 10-15% of earnings and can go up to about 30% in some special cases. If you are expected to give up more than 30% to an agent or other third party this is most unusual and there must be a very good reason to do this.
11. What are the standard clauses for contracts with agents? What are the considerations I should keep in mind with these clauses?
Most contracts with agents have some standard clauses. These include the following:
(i) Exclusivity – the agent will want you only to work with him or her or the management company he or she works under. If your contract includes this, you will not be able to associate with another agent during the period of your contract. You must enter into an exclusive relationship only when you are confident that the agent in question is able to provide you all the services you require because you do not want to get stuck in a relationship with someone who cannot produce the results you need.
(ii) Term/Period – this is the length of your contract. Often contracts will be for many years at a time. Other contracts will be for a year or two at a time and will have renewal provisions under which the contract extends for further periods. The agent will try and retain the option to have a longer term association while it is usually in your best interest to have a contract that lasts for a year and may be re-evaluated each year before being extended.
(iii) Minimum guarantee – if present in the contract, this is the amount of money that you are entitled to receive from your agent regardless of whether or how the agent creates commercial opportunities for you. As described in more detail elsewhere, you should understand clearly the structure of the minimum guarantee and your entitlements under the clause.
(iv) Agency commission – this clause suggests the percentage of commercial earnings that is retained by the agent. The clause must clearly state what commercial opportunities the agent is claiming a share in. Does this include salaries, awards, etc. or merely the sponsorship and other commercial opportunities that are sourced by the agent? Are the commissions before deducting taxes or after?
(v) Availability – this clause establishes the number of days that you make available to the agent for ad shoots, commercial appearances and the like. In turn, the agent attempts to sell these days to brands for various sponsor and endorsements opportunities.
(vi) Territory – your rights may be broken up by territory and it must be clear in your contract whether the agent is representing you worldwide, in India or in any other territories.
(vii) Right of first refusal – the agent will often want the right to renew his or her association with you even after the term of the contract is over. The clause the agent will attempt to insert is one called the right of first refusal which aims to give the agent the right to match the best commercial offer that you receive from another person and continue the relationship with you on these revised terms. Please note that the Supreme Court of India has held that it is illegal to have a right of first refusal clause that extends beyond the period of the contract. This means that you are free to negotiate with anyone once your contract period is over without obligations to your previous agent. However, a right of first refusal clause may be inserted within the period of the contract itself, say the last 90 days of the contract or such similar period.
(viii) Break-fee/Transfer-fee – more recently, a number of agents are including break- fees of transfer-fees in the event that you terminate the contract and Register with another agent. Although the legality of these clauses is unclear, it is important that you try and avoid such clauses as you become much less attractive to other agents and you might get stuck with a non-performing agent because of this clause.
12. I have been asked to sign a long-term contract with my agent. What should I do?
If this is the first time you are dealing with the agent, beware of long-term contracts. You must be comfortable with the person before entering into a long-term relationship. Ideally, the first contact with any agent should be a one-year contract although many agents will push for a term of at least three years. If you have no choice other than to sign for three years, do a thorough background check on the agent by speaking with other athletes who are managed by the agent so you are fully aware of the agent’s abilities and practices before signing up for such a long period. Signing up for period beyond 3 years at a time is, as a rule, not advisable unless you already have a long and well-established working relationship with the agent.