(Editor’s Note: What follows is an excerpt Sports Law: Cases, Documents and Materials, written by Walter T. Champion, Jr., the George Foreman Professor of Sports & Entertainment Law at Texas Souther University.)
The legal glue that holds the employment relationship together between athlete and team is contracts. A valid contract is formed when both parties intend the act of signing to be the last act in the formation of a valid contract. Contracts in sports define the rights and responsibilities of the various participants in the business of professional sports.
Sports contracts are different because the money is typically staggering, the terms are unusual and are often offered on a take-it-or-leave-it basis, the length of time is relatively short, the maintenance of excellent physical condition is emphasized and the participants are being paid as entertainers who are playing a game.
Contract formation in sports is determined by the same principles as in more standard contracts. In evaluating the validity of a contract, there must be an offer and an offeree, consideration, and proper acceptance.
The standard player’s contract (SPK) is the standardized agreement between athlete and team. It is an employment contract that specifies the player’s rights. The SPK states that the player has unique skills and that the team controls the activities of the player. The SPK is used in the major team sports and is usually a part of the collective bargaining agreement. There is little flexibility in its term, and its signing is a prerequisite to compliance.
Specialty clauses are added to an SPK if the payer has the relative bargaining strength to demand them. These clauses include signing bonuses, option clauses, no cut clause, and veracious incentive bonuses. Collateral agreements also modify contracts through their inclusion by way of an incorporation clause; examples are collective bargaining agreements and the league constitution and bylaws.
Terminations, assignments, and remedies are methods to end, change or satisfy potential contract disputes. A club must act within its rights when it terminates a contract; if it does not the termination represents a breach of contract. An assignment of a player’s contract occurs when the athlete is traded to another team. Remedies for a breach of contract include money damages, restitution, or specific performance.
Contract defenses are posited when there is an alleged breach of contract; typical defenses for sports contracts include unclean hands, unconscionability, and mutuality.
Negotiating the contract is usually the prerogative of agents who use their talents to maximize the remunerations for their clients. Although the SPK as a document is inflexible, there are still many ways to flesh out the contract in an attempt to make the best deals for clients.
Contracts for coaches are similar to players contracts, but, at least in the college ranks, there are the added the caveats of no job security, no standardized contracts, no unions, and compensation packages.
Why Sports Contracts Are Different
Sports contracts are different from other contracts. The preeminent contract in sports is the employment contract. Team A hires Ballplayer to play baseball for a period of three years. The contract contains clauses that appear incongruous. For example, when the athlete signs his contract, he might agree to abide by a morality clause or a clause that forbids his participation in certain sports (for example, hand gliding, scuba diving, bungee jumping, or motocross). This strikes the ordinary fan as unconstitutional and a violation of some basic freedoms. When john Rocker signed his employment contract, there was a rather obscure clause that purported to uphold the “best interests of baseball.” Unbeknownst to Rocker, he violated that clause when, in an off-season interview, he disparaged gays, immigrants, New York City, and anyone looked like a punk rocker. That clause allowed the league to punish him for his verbal assault.
These clauses are allowed because every athlete is deemed to be unique. Unlike widgets or a brand new Chevy truck, each contract stipulates that the athlete, no matter how average he may be, possesses unique and irreplaceable skills. Every athlete then must swear that his skills are one of a kind. A reason for this, at least in team sports, is that courts recognize the fact that there is a certain indefinable, nearly mystical chemistry that exists between teammates. You can take element from the equation, no matter how unremarkable, and the entire team is changed. Sports contracts recognize the synergy of athletics.
In sports employment contracts, another unique feature is the concept of “juice.” Juice is the ability to write your own ticket based on unique skills or rampant popularity. The more juice a player pposses2ses, the greater his ability to modify his employment contract by attaching standard modifications (for example, no-cut, no-trade, or attendance clauses) or not-so-standard modifications (for example, Jim Kelly’s contract clauses). A clear example of an athlete with juice was Napolean Lajoie, America’s premier baseball player during the early 1900s.
Reprinted from Champion, Sports Law: Cases, Documents, and Materials, with the permission of Wolters Kluwer Law & Business.
