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Top Tips For Indian Athletes Working With Sports Agents

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Wednesday, 16 August 2023

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?

In simple legal terms, an agent is a person employed or engaged 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 therefore is a person or organisation (such as a sports management company) 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 to enable you to focus on your professional career as an athlete. 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 get exposure for your performances. The reason for appointing an agent is 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, experience, and expertise to create and manage the right business opportunities for you.

Often, sports agents also perform the role of sports managers. This means that they are not only negotiating contracts and finding the best deals for you but might also handle other aspects of your professional and personal life. For instance, a proactive sports agent might coordinate with coaches, trainers and others monitoring your progress and performances and give you feedback from these various sources. The agent will assist you with planning your career and your schedule, finding the right balance between competition, practice, professional obligations and rest, and getting you access to various services such as coaches, trainers, psychologists, massage therapists and others who contribute to your growth and success.

The role of a sports agent can vary from sport to sport and may be regulated. For instance, under the FIFA Football Agent Regulations, the scope of football agent services is limited to negotiating contracts, player registrations and transfers within specified commercial parameters. An individual, a company or another organisation such as an academy or a club can function as a sports agent.

2. How Do I Go About Choosing My Agent?

It is important for you and your agent to know, like and respect each other. It is going to be one of your key professional relationships as your career grows.

As you become successful or show 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. Some agents have a degree or diploma in sports management. While this is not a necessary criterion, it can be helpful. A few international sports federations have implemented licensing systems for sports agents. Basketball and football are examples of such sports. If your sport has similar licensing requirements, you should verify whether your agent holds a valid license to represent you.  

It is important to remember that as much as a good sports agent can advance your career, a dishonest or unethical one can limit your professional growth and negatively impact your reputation. You should ensure that this person’s interests, ethics, and approaches are aligned with yours, and that the agent understands that your career as a sportsperson takes precedence over commercial opportunities. After all, a sportsperson is judged primarily based on on-field performances which result in off-field recognition in the form of endorsements and awards. This means that they must always have your holistic interest in mind and should not have conflicts of interest. For example, if your agent is receiving a commission from you and also from your club or sponsor for a contract that they have negotiated on your behalf, then there could be a conflict of interest. Conflicts of interest can lead to mixed motives and if they exist, your agent could compromise your interests to further his/her own.

Agents represent you to the outside world and it is important they consistently 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 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 other players you know before making your choice.

Another question worth considering is whether you want to be represented by an individual agent or a sports management agency. Compile a list of essential qualities and abilities that you believe an agent should have, which align with your needs, values and career goals. If you are an established athlete and looking for someone who is committed to you, you may prefer an individual agent. However, if you are looking to plug into an established professional and commercial network, then an agency might be the way to go.  

Once you have made your choice, sign a written legal agreement 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 contract in place 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 an agent – 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 – and more – 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. 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 end up associating 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.

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 and make sure you don’t make decisions that could come back to hurt you in the future.

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 or entity, 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 negotiate to attempt to have the contract reflect the positions you want. A failure to negotiate means that you are likely to leave a lot on the table and lose out value and freedom – whether financial or other – that you might have otherwise been offered were you just willing to ask. An athlete who is aware of their 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, persona, logo, nickname, brand, signature, signature pose, photos, paintings, caricatures, or other images that represent you, without your permission. Anyone seeking to use these rights for commercial purposes needs a license or permission from you and should compensate you for such use unless you decide otherwise. Commercial use does not include journalistic use but does include use in advertising, launches, catalogues, etc. Your commercial rights also cannot be used in a manner that diminishes how you are perceived by the public and society.

The agent you choose to appoint will play an important role in protecting and monetizing your commercial rights. It is important for the agent to be aware of legal and technological developments pertaining to your commercial rights. For instance, Non-Fungible Tokens and other digital collectibles allow you to monetize your name, image, and likeness in new ways[1]. At the same time, the usage and monetization of NFTs and the like is often possible in perpetuity and therefore your agent must ensure that the commercial terms for monetization of your image rights take such issues into consideration. Further, it is important for you to develop a digital persona that may be attractive to brands and sponsors, and the agent can play a crucial role in ensuring that you have an active social media profile that reflects your interests and values in a positive manner.

Moreover, in the current environment you also have a few rights with regard to the commercialisation of the “tools of your trade”, i.e., the opportunity to display logos on your equipment, external protective gear and shoes. There are specific equipment regulations and commercial guidelines 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. This can vary by event and by sport. 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 – in cash or kind – 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 to 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 or say 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. It is always prudent to indicate to your agent beforehand the kinds of brands, products and services that you would prefer to be associated with or to stay away from. This is particularly important in the context of surrogate advertising of products related to tobacco, alcohol, betting/gambling, etc. 

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? 

It 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 hands-off attitude to their commercial arrangements. While this might work fine in some cases, it won’t in many others. Many leading 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 themselves. If you feel like you do not have a similar relationship built on trust with a single individual or agency, you can consider appointing different agents to negotiate contracts on your behalf and to manage your money. This separation of responsibilities can help you keep a closer watch on any potentially dishonest activity.

Before signing up with an agent, it is a good idea to talk to other players about the agent’s reputation and behaviour. Over a career, an agent will develop an track record – as much relating to ethics and values as of commercial performance – and it is important that 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.

Your agent has a legal duty to not perform any action or enter into any transaction on your behalf without your consent. Your contract with the agent must make it clear that any attempt made by them to do so will lead to termination of the contract and other legal repercussions.

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 and reputation in the hands of a dishonest agent.

7. When Is A Good Time To Sign With A Sports Agent?

Timing is important when you sign with an agent who is seeking to commercialise your talent. While there is an appropriate time to sign 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, depending on the sport you play, the earlier you sign with an agent the larger the 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 nurture you and waits for the appropriate time to commercialise you. Such people are few and far between as most are motivated by immediate or short term 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.

8. 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. As soon as you turn 18, all contracts that were signed between your guardian and others are no longer valid. At this time, you can decide whether to sign new 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.

9. 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. Ordinarily, you will be expected to pay your agent a commission fee which is a pre-decided percentage of your earnings from commercial opportunities which the agent generates for you.  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 or manages on your behalf such as accounting, tax filings, press relations, investment management, legal services, travel arrangements and scheduling.

The mode and manner of payments to the agent will depend on the terms of your contract with the agent. It could also differ from transaction to transaction. In some cases, your contract could specify that you will receive the entire sum and will then pay the agent a fee. In other cases, your contract with the club, sponsor, etc. might contain terms that the club or sponsor will directly make the payments to you and the agent. You should especially acquaint yourself with contracts under which the agent receives the entire sum from the club, sponsor, etc. and will pay it forward to you after deducting their own commission or fee – here you need to ensure the amounts are accounted accurately.

10. 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 by the agent.

11. 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, and may be impacted by the type of sport, your age, your career progression, and performances. 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. This number may vary depending on the sport you play. For instance, under the FIFA Football Agent Regulations, commissions are capped from 3-10% depending on the kind of transaction and the player’s annual remuneration[2]. If you are expected to give up more than 30% to an agent or other third party this is most unusual and there needs to be a very good reason to do this.

12. 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:

  • 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.
  • 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. You should especially look out for an automatic extension clause in the contract. Even if you are happy with your agent and trust them implicitly, it is prudent to conduct a review on a yearly basis. This way, you can evaluate whether the agent has met your expectations, and if the agent has, you can renew or sign a new contract with the agent.
  • 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 clearly understand the structure of the minimum guarantee and your entitlements under the clause.
  • 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? What will be the mode of payment of the commission? Who will bear the expenses incurred by the agent in the course of performing the services? These are some of the questions you should ask before signing the contract.
  • 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 market these days to brands for various sponsor and endorsements opportunities.
  • 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.
  • Rights of Extension/Renewal – 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 or first offer which provides the agent the right to accept or reject an offer that you make for extension of services or to make the initial offer to extend the services, respectively. Another right that the agent may seek is 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 (or similar clauses) 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/first offer or right to match clause may be inserted within the period of the contract itself, say the last 90 days of the contract.
  • Intellectual Property Rights - you should always try to retain as much autonomy and ownership over your intellectual property rights as you can. Your agent should not be allowed to use your name, image, etc. for any of his own commercial or personal dealings, nor should he be able to license it to a third-party without your written permission, or to own any of your intellectual property rights. You should especially be careful with intellectual property clauses when your agent is also providing you with social media management and brand positioning services.
  • Services and Obligations - a standard athlete representation contract must allow for both parties to confirm what kind of services the agent is going to provide. The stipulated services should be clearly laid out and defined. For instance, instead of using wide and basic terms like ‘cricket negotiation services,’ the contract must clearly state that an agent is appointed throughout the duration of the contract, to negotiate and renegotiate playing agreements on behalf of the player. Also, your contract with the agent must make it clear that you expect them to report everything that they do on your behalf.

13. 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 a period beyond three years at a time is, as a rule, not advisable unless you already have a long and well-established working relationship with the agent. 

14. I Am Not Happy With My Agent. Can I Terminate Our Contract?

Most representation agreements are for a fixed duration and tend to be exclusive, i.e., you can have only one agent at a time. This means that if you want to change agents you will need to wait for your contract to expire or terminate it before it does. Whether or not an agreement contains a “termination for convenience/without default” clause, the law states that you can terminate your agency contract at any time of your choosing[3]. You may end up facing some financial implications in case of such termination, but you cannot be forced to continue in a personal services contract like an agency agreement. Most contracts will also contain provisions to terminate for breach or default  and these can be particularly helpful if you find fraud or misrepresentation by the agent. Do not continue a relationship which has become toxic and speak to a lawyer to help you exercise your right to end the relationship.

15. Do I Need to Continue to Pay Agency Commissions after the Agency Contract has Ended

In most cases, agents are entitled to commissions for deals signed during the contract after the expiry or termination of the agency contract as well. However, whether commissions are payable on further renewal of deals, deals finalised post termination or expiry etc. depend entirely on the agency contract terms that you negotiate and agree to. These are important clauses you must pay attention to at the time of signing with an agent as they can make you less attractive to a future agent, lock you in with a particular agent, or require you to share your commercial success with multiple agents in the future.

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