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Sport is big business – what are some key risk areas?

07 October 2020

#Dispute Resolution & Litigation

Published by:

Tom Goodwin

Sport is big business – what are some key risk areas?

Sport is big business. It is no longer something we sit down to watch on a Sunday afternoon or something we enrol our children in, to compete on Saturday mornings. Whether we engage in sport by participating or by spectating, there would be few Australians who are not involved in the industry to some degree.

Research has shown that the last few years has seen significant growth in the sports industry. A recent report titled “Exploring the size and growth of potential of the Sport Industry in Australia” released in March 2020[1] found that:

  • in 2016-2017, the Australian sports industry:
    • contributed $14.4 billion to Australia’s GDP
    • generated $32.2 billion in sales
    • supported 128,000 full-time jobs.
  • between 2012/13 and 2016/17, the sports industry grew by 17 per cent.

In addition, the Australian Government’s 2018 report titled “Sport 2030”, which is Australia’s first national sports plan details the four strategic priorities for the sports industry:

  • build a more active Australia
  • achieve sporting excellence
  • safeguard the integrity of sport
  • strengthen Australia’s sports industry.

All of this means that as the sports business grows, sport is becoming more commercial. With increased commerciality comes increased risk.

There is no ‘sports law’ as such. The diversity of the ‘sports industry’ means that many general legal issues arise (albeit the application of those issues may be sports specific).

In this article, we outline some of the key legal issues in the business and discuss why it is important for sporting organisations and professional athletes to be aware of their obligations and seek legal advice where necessary.

Contractual issues

Professional sport is a commercial exercise. Contracts are necessarily everywhere and will include employment or professional services contracts, endorsement or appearance contracts, contracts governing the hire or use of grounds or stadiums, sponsorship agreements, loan contracts, management contracts, etc. The list could go on.

Knowledge of contractual rights and principles is essential in minimising risk (both to athletes and sporting organisations).

Athletes and sporting organisations should be aware of the following key legal issues that may arise in sporting contracts:

  • whether the athlete is an employee or an independent contractor
  • contracting with minors (this is particularly relevant in the growing area of esports)
  • restraints of trade – if, for example, a player leaves a team, can he or she compete in the same sport for a different team and if so, where?
  • disciplinary action – what behaviour constitutes a breach of the behaviour standards set in the contract or rules governing the sport (particularly relevant in light of increasing use of social media platforms, etc.)
  • eligibility or selection requirements
  • rights of termination
  • sponsorship and endorsement issues.

Intellectual property

Intellectual property laws protect the rights flowing from inventions and creations. Protection of those rights is important to encourage innovation and creativity in an industry where advancements in technology are vital and assist both spectators (for example by assisting in faster and more accurate referee decisions) and participants (in terms of training, analysing performance and the performance itself).

Think things such as instant replays, live streaming, goal-line technology in football, electronic timing devices in swimming and cycling, advancement in clothing and shoe technology (remember Eliud Kipchoge running the first-ever sub two-hour marathon in Nike Vaporfly and the introduction of swimming tech suits in the 2008 Olympics). 

Understanding and protecting intellectual property rights is extremely important for enhancing the business of sport for both competitors and spectators.

Some of the most common intellectual property issues that will arise are:

  • broadcasting rights – who has rights to broadcast events? Are those rights exclusive? What is the value of those rights? What mediums will the event be broadcast on?
  • trade marks and branding issues – trade marks (logos, etc.) and branding are incredibly important marketing tools, particularly in sports. Australians are passionate about our sporting teams and sporting heroes so appropriate use and protection of trade marks and branding is vital
  • patent and design protection – the designers of the technology including those referred to earlier need to be able to protect their ideas and designs, otherwise, creativity and innovation will be stifled.

Preparation and implementation of appropriate policies

Development of appropriate policies is important in managing an organisation’s risk. Clear and appropriate policies that guide behaviour and are followed from the top down, is essential in minimising the risk an organisation faces.

Common policies for sporting organisations should (depending on the type and size of the organisation), include:

  • codes of conduct for coaches and athletes
  • accreditation of coaches
  • safeguarding children
  • bullying, harassment, discrimination
  • anti-doping
  • gender diversity and inclusion (on the topic of inclusion and diversity, recently eight of the peak Australian sporting bodies – AFL, Hockey Australia, Netball Australia, Rugby Australia, Tennis Australia, Touch Football Australia, UniSport Australia and Water Polo – committed to the development of policies that support inclusion of trans and gender diverse people in these sports. For more, check out Pride in Sport Australia)
  • risk management
  • complaints and investigation guidelines
  • privacy
  • member protection.

Dispute resolution

Like all commercial arrangements, disputes will commonly arise within the sport, both on and off the field.

Depending on the type of dispute, resolution may differ to other commercial arrangements due to the availability of both internal and external tribunals (whether an internal or external tribunal, such as the recently minted National Sports Tribunal, is tasked with resolving disputes will depend on the relevant Constitution of the sporting organisation involved, or agreement between the disputing parties).

The benefits of using tribunals in dispute resolution include:

  • reduced costs (sometimes, no cost depending on the type of dispute)
  • expedited hearings
  • they can offer a range of dispute resolution services, which can be either binding or non-binding – such as a case appraisal
  • tribunal members are often experts in a particular field.

Tribunal proceedings differ to court proceedings (and differ depending on the circumstances and the relevant tribunal). Some key issues to be aware of include:

  • the application of principles of natural justice
  • what is the standard of proof
  • whether a decision can be appealed and if so, where to?

Authors: Sarah Bryden & Tom Goodwin

[1] https://www.health.gov.au/resources/publications/sports-industry-economic-analysis#:~:text=The%20analysis%20found%20that%20in,full%2Dtime%20jobs%20(1.4%25

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Tom Goodwin

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