India: Flooring The Competition: Sports Law II

Last Updated: 24 June 2011
Article by Desh Gaurav Sekhri

Published on, 20/08/2009

The business side of Indian sports industry is dominated by federations, larger than life governing bodies, and for the most part, disgruntled/under-valued or pampered/spoilt sportspersons (based on the sport, and who one asks). Increasingly, however, there is a surge in the interest and activity levels of corporations with either a respected inside leader with a genuine and long term passion for sports (i.e. Hero Honda and Apollo Tires), or a razor-sharp core brain trust that realizes that sports are an opportunity for positive publicity and exposure, and as the industry gets more sophisticated, a literal bang for the metaphorical buck (Airtel, Aircel, UB Group, and GMR to name a few). While the two categories of corporates in sports may seem like peas from two separate pods, the fact remains that the inherent business acumen that each possess dictates that the investments made in sports are sound, and do reap benefits even if some of them are not quantifiable, with only an economic theory-proven social benefit and Pareto optimality utility quotient attached to them.

The fact remains that industry sophistication will change the nature of sports in India, and even if the change is not triggered by Indian stakeholders, it will be instilled in this industry by foreign investors, or by exposure to how the global sports industry functions. Globally, the sports industry is no different from any other financially viable and sustainable industry, and is dispassionate, methodical, and discretely quantifiable on an hourly, monthly, or yearly basis, in terms of fractional currencies, and tangible/intangible benefits. In contrast, the Indian sports scenario, barring a few players, revolves around personal relationships, goodwill, and an overall impression of 'hail fellow well met' mentality. While one hopes that the overall geniality of interactions between parties doesn't completely disappear, the reality of the situation is that sports will never attain financial viability if this mentality continues unaltered, and we as Indians realize that there needs to be some degree of professionalism in our approach to sports as it metamorphoses. What is somewhat disturbing is that while our approach may remain unaltered, foreign strategic investors are more than likely to bring in their expertise, industry-knowledge and keen sense of business over relationships, and run roughshod over their Indian counterparts. In no way is this negative: a case in point being the IPL. The two winning teams have Australian captains, management, and above all, the Oz mentality. They are well-managed, sophisticated in their marketing and recruiting, and swift in the dispassionate axing of their Indian teammates. Sport is a business, and the sooner we as Indians understand that, the more conducive it will be to a level playing field. Synonymous with the business of sports are of course the sports-specific legal services and their place in the entire set-up.

There is a reason why the decision-makers in the IPL have steadfastly refused to depend extensively on Indian counsel for their Sports-law related matters. Besides the domestic supply constraints both qualitatively and quantitatively, there is an obvious advantage that accrues to contracts that stem from jurisdictions where sports-dispute resolution or contract enforcement is expeditious, knowledgeable, and free from the constraints we find in India. But from a long term perspective overall, and from a short term perspective for the IPL franchisees, I-league team owners, sponsors, endorsers, equipment manufacturers, sports management companies, and of course the players themselves, the solution has to be grounded in Indian soil. It simply isn't cost-effective or logistically feasible to consistently deal with British or Australian law firms for the most minor matters, and the fact remains that there will be numerous contracts and transactions that revolve around Indian laws and courts, so the easy outsourcing mechanisms are simply not a long-term solution. Multi-jurisdictional legal teams will be necessary, and these can be built over time, as the need for this hyper-specialized Practice Area becomes imminent. Thankfully, the level of sophistication at present is such that this Practice Area can grow at a sustainable level over the next few years, and build slowly. Sports law is not about the bottom-line, and it's not just about the cases that Sports lawyers win for their clients (although that is certainly one of the key facets).

It is a Sports lawyer's job to draft/vet a contract that takes into account each and every aspect of the individual sport and transaction, with a complete understanding of what rights and benefits are possible to obtain, and what the associated obligations and potential liabilities would be. How many of these would be enforceable is another key component, as would be the recourse available in case of any breach. The tangential collateral benefit that may accrue by simply rewording a paragraph is the expertise that is required for each contract, and this sets the base for the negotiations that then take place. To cut a long story short, a Sports law team protects and maximizes the interests and benefits of its client, ensures it is compliant with all regulations and by-laws, ensures that the contracts, if it ever comes to that, are enforceable, and above all, that the contract is futuristic in its drafting, taking into account modifications in the sports landscape. The benefits that accrue can't be quantified in mere rupees and paisas, and in fact may not even be apparent until a certain clause, obligation or benefit is triggered. For example, an anti-doping clause, or the right to test beyond WADA's stipulations, if inserted into an agreement by a wholesome product manufacturer such as a cereal or nutritious beverage, could serve both as a deterrent/inhibitor, as well as protect the manufacturer if the athlete/celebrity does not behave in a manner befitting the brand ambassador of the said product. This clause may never be invoked, but its scope is limitless.

Ironically, contracts are just one aspect of Sports law: a single piece (although the critical one) in an intricate puzzle, that is maze-like and at times convoluted. Expertise comes from experience and mostly from exposure, which is good news for the young industry, as the Practice Area evolves.

The fact remains that the Professional leagues, the federations, and the international entities are all well-represented by international counsel. It's time for the domestic team-owners, sponsors, sports management companies, and apparel manufacturers to name a few, to protect themselves, if not today, then some time soon. A few have, and many will. In an industry that thrives on global influences, the floors for basic collateral support services need to be raised above sea level, before the competition wipes them with the Indian stakeholders. Rome wasn't built in a day, but Pompeii was overrun in record time. We need the basic infrastructure to help leverage us into a position of parity and strength, or it all would have gone to naught. The cost-benefit analysis dictates that the move from an inert position has a 'quick brown fox jumping over the lazy dogs' element to it, and we as Indians are anything but quick with very few exceptions. The Great White Sharks are looming (as Laxman and Kaif would attest), as is the Lochness Monster with a Freddie and KP-backed first salvo. Throw in Bigfoot with the North American Bite, and we may not know what hit us before it's too late. Penny-wise, Pound-foolish, and we may be faced with a disaster of Euro proportions.

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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