Player's Contracts Part II - the commercial issues

01 October 2000

Sam Rush

In the second part of his review of the issues involved in the drafting of a tripartite players' contract between the RFU, the clubs and its players, Sam Rush looks at the provisions that will effect the off-field earning potential of the players'.

In the last issue of Running Rugby (August 2000), part one of my 'player contract review' looked at the standard issues of remuneration, contractual benefits, duration and termination of a contract. While these clauses set the parameters of any players and will typically relate to on-field earnings I am taking a look, in part two, at some of the more sophisticated provisions that can influence the potential off-field earnings of a player, namely the commitment to licensing and promotional activities, exclusivity and insurance, media related activities and recognition of the current 'hot topic' of image rights. For the majority of players their off-field earnings are unknown at the start of their contract and accordingly players are keen to allow themselves as much scope as possible to exploit their commercial potential while clubs want to ensure that any ventures do not conflict with either their own commercial operations or most importantly do not prove a distraction to on-field performance.

Commitment to the club's licensing and promotional activities

For clubs this clause will provide a crucial twofold protection in the increasingly competitive commercial environment. In the first instance they can avoid the scenario of an established player negotiating his employment contract while in possession of a clutch of endorsement agreements that conflict with the club's existing sponsors'. They can also ensure that the player's future sponsorship, promotional or advertising commitments are first cleared with, for example, the Chief Executive of the club. Secondly, clubs can ensure that the player both undertakes to endorse any products or services produced by sponsors' and also commits himself to a certain number of personal appearances on behalf of the sponsors'. Each Sponsor will expect clubs to ensure the active support of their players' and balancing a host of third party interests often proves to be a complex process for the club.

Naturally while players recognise that without such generous benefactors their very club's existence would be in danger they will wish to keep such additional club controlled commitments to a minimum. Many players have found in the professional era that although there is free time away from playing and training much of it can be taken up with other rugby-related matters. Further, players will also be keen to ensure that their club is prepared to accommodate certain arrangements, for example, if they should have conflicting boot sponsor's to their clubs or have other long-standing commercial commitments.

Exclusivity and Insurance

A problem that has dogged the early period of the 'open game' has been the conflicting demands of the clubs and the unions. Nevertheless the tripartite players' contract together with the newly devised 'Rob Andrew' plan should ensure that such issues are consigned to the past. However, while players' schedules should be successfully harnessed so that both club and international commitments can be met, any player contract should ensure that there is no confusion about who is paying the player's salary during different parts of the season and who is picking up the bill should the player be injured. Equally players' should be aware of the risks should they choose to play in a testimonial or invitation match which does not come under the auspices of either their club or their union and must make sure that adequate insurance provisions are in place to cover all their commitments.

Media related activities

For well established players the opportunity to supplement salaries and increase profile leads many to engage in media related activities. Clubs, however, cannot afford to let any appearances or articles go unchecked and would be well advised to ensure the necessary protections are in place in any contract. While a clause ought to stipulate that any newspaper article, television interview or radio broadcast can only be undertaken with the express permission of the club, the clubs should also give themselves the flexibility to oblige players' to speak to the media after certain matches and before any important fixtures or in relation to any high profile sponsorship agreement.

Opportunity for players' to exploit their commercial rights

As the sport of rugby has become more commercially aware with clubs recognising that club survival means developing strategies to exploit their income potential, so players have realised that they are the most marketable facets of the game. As discussed above, clubs will be keen to ensure that they have the players' support in endorsing the products and services of any club sponsor but players will not be keen to have all their commercial rights controlled by the clubs, particularly without further remuneration.

Professional rugby has already had its fair share of contractual disputes in relation to players' commercial or image rights, the most high profile being Keith Wood's refusal to play for Ireland until matters were concluded to his satisfaction. Any provisions in an agreement will have to be carefully drafted though it is still normal to see clubs reserving the right to use the players' name, likeness, image and photograph in relation to club related matters. Of course such a grant of rights is without further payment to the player and conflicts have arisen when players' have seen their image endorsing all sorts of products and events without any compensation.

Given that players are now better advised there will have to be a degree of give and take between the parties in order that both are able to maximise their revenue. Certainly players' are unlikely anymore to give away their commercial rights without adequate reason.

The dilemma for the clubs', players' and unions in relation to commercial opportunities is mirrored in much of the potential contractual negotiations. A balance needs to be found between conflicting interests which are often created by the players' desire to maximise a short career and the clubs need to survive financially. Ultimately there is no replacement for a good working relationship but all parties will benefit from the ground rules being properly laid out.

The above is provided as a guide to some of the most important issues which may arise in any contractual negotiation.

First published in Running Rugby Magazine in October 2000.