India: The Cinderella Slip(per)

Last Updated: 23 June 2011
Article by Desh Gaurav Sekhri

Published on, 18/09/2009

In what is fast becoming the controversy of the year, Boxer Vijender Singh's recent decision to break ties with IOS, his Sports Agent/Management firm since 2005 for a period of ten years (until 2015), has sparked a debate over poaching, enforceability of contracts, exploitation, restraint of trade, and most importantly, questions the very foundation over whether or not support should be given to athletes from emerging/individual sports. That Percept has offered to represent Vijender and make him an 'action-sport icon', in a lucrative deal valued at approximately INR 50 million, may in future act as a deterrent for any talent scouts or sports agents looking at raw and young talent in spaces outside of cricket. The fact remains that representing any athlete in a sport outside of cricket is a thankless job, with little external support from endorsers, sponsors, or any other measures of support, even from the federations' side. Essentially, barring a handful of outstanding celebrity athletes such as Lee-Hesh, Sania, Karthikeyan, and now perhaps Saina Nehwal and Abhinav Bindra, the chances of actually recovering any sort of revenue via representation of athletes in emerging sports are slim to none.

Therefore, the fact that Vijender's run at the Olympics was nothing short of a Cinderella story of a young, marketable athlete who won against the odds, and overnight became a bankable commodity in his own right. One could therefore be forgiven for sympathizing with IOS, who in all likelihood was poised to taste its first real success in athlete representation, and would be justified in feeling aggrieved over the fact that the initial five year investment into Vijender will likely come to naught, despite the ten year contract that both parties signed. This however, is the problem with Athlete representation in India: the contracts, if it ever comes down to dispute resolution or enforcement, are more likely than not going to come up short.

Simply put, a ten year contract with no escalation, bonus, exit, sunset, or 'best-efforts'/performance-based clauses, is unlikely to be enforceable in an industry and area of law practice that while nascent in India, is fast growing and evolving, and also can draw from various global precedents. Factor in the grossly disproportionate 60% commission that IOS would receive from any endorsement or sponsorship contracts, and this contract is unlikely to see the light of day when it comes to enforcement. This is exactly why the contract drafting and signing process needs to become far more inclusive, discretionary, individualistic, and above all else, professional, with adequate legal representation emanating from both sides. It doesn't take a rocket scientist to evaluate the leverage and uneven bargaining power that IOS had over Vijender when he first signed the contract, and also the fact that he was unlikely to have possessed, or retained adequate legal representation for him to understand even from a 'reasonable person threshold', what he was signing, and contracting out of, when it came to rights and obligations.

This is exactly why the first step: the Contract, is the most important aspect of representation, and it needs to be futuristic, fair, and drafted in good faith. A ten year contract in all likelihood spans the entire career of an athlete, and the window in which he needs to earn his livelihood, as well as save enough for the future when his unique skills can no longer generate any income for him. A court of law in any jurisdiction will likely find that a contract such as the one Vijender signed would constitute a restraint of trade from the perspective of earning enough to sustain him and any of his dependants. Furthermore, the statement by IOS where it claims that despite the terms of the contract, Vijender is in fact receiving 70% of the revenue from any endorsements is unlikely to carry any weight, since it is a verbal agreement, and not something that Vijender could bank on. The industry norms across sports usually entail 10-25 % commission and any actual expenses incurred on behalf of the athlete, and typically the 'best-efforts' or performance threshold clause which should be individualized yet boiler-plated in these contracts should ensure that when an agent is unable to secure lucrative deals for an athlete, he is free to look for alternative representation, and likewise, when the player is simply not performing, the agent is free to terminate the contract after a certain period of time.

Looking at it from the Vijender's perspective, the opportunities that he will have through IOS simply cannot match what Percept would likely be able to accomplish for him, including but not limited to splashing him across print, online, and television mediums, managing his 'iconic' brand and certainly not counting a potential celluloid future for the young boxer, with movies and television roles quite likely. Percept's intra and inter-industry outreach, scope and scale is huge, and that would be the argument that Vijender's legal team are likely to raise if it ever does reach the litigation stage.

From IOS's perspective, Vijender will likely be the one who got away, and this episode should serve both as a case study and a wake up call for all the stakeholders in Player Agency and Management. Contracts mean something, and they have to be equitable and made in good faith. They also have to be all-inclusive and comprehensive. The clock may have struck midnight on IOS's foray with the Cinderella man, but this should be the last time that either it or any other Sports Management firm needs a fairytale ending to ensure it gets what should rightfully be its due: a return on its investment of time, effort, resources, and hope.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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