India: Ceiling The Deal

Last Updated: 19 July 2011
Article by Desh Gaurav Sekhri

Originally published on on 07/08/2009.

In what has been a monumental five years for the sports industry, the inevitability of lateral services evolving, is something that for the most part is intuitive. Sports law as a Practice Area and niche segment of legal services is one such ancillary service that is likely to become a vital cog in the development of the sports industry. Never before was this more apparent than over the last week, when an extremely able David (read: the BCCI), took on Goliath (WADA) at a time when the latter's army had been padded with the support of nearly six hundred signatories, some of them giants in their own right. The basic constitutional rights, invasion of privacy issues, restraint of trade concerns, invasive tort theories and the likes aside, what has really come to the fore over the last week, is how inadequate the legal representation of our sports bodies, leagues, and athletes is, in understanding the byelaws, compliances, regulatory aspects, contractual commitments, global impact and ramifications, and the protection of the players, governing bodies, team owners, and their associated rights and obligations. A case in point is the contrast between how the FIFA (and its lawyers), addressed, perceived, and negotiated the issues, and parlayed that into an arrangement with WADA that kept its high-profile superstars satisfied, and protected the league from any unwarranted and negative publicity for, or public perception of, the athletes concerned, or the league itself. It was a case-study in how best to go about leveraging and balancing one's rights with one's obligations: a perfect and harmonious blend of a clear understanding of the law, with a practical application of problem-solving.

The BCCI unfortunately, has and had no such luxury, and it's really no one's fault. The situation that has escalated to what has become fodder for the paparazzi and an opportunity for erstwhile and aspiring stars from other sports to get their seven and a half minutes of fame while lambasting or supporting the cricketers and their demands, could have been prevented, simply if lawyers with expertise in anti-doping compliances would have advised the Board, and negotiated with the ICC or WADA as to the particular regulation that has launched a million debates. It's too late to cry over spilt milk now, but the warning bells should have gone off for every other sports authority, governing body, team owners, athletes, and all affiliated entities and individuals in the sports arena, on how best to optimize their interests, and protect themselves from similar mishaps in the future.

It may be hard to fathom at this point, but unfortunately, anti-doping regulations are just the tip of the iceberg when it comes to compliances and the legality of the sports industry with regard to any of its stakeholders. Sports law is a multi-jurisdictional niche area of the law that depends as much on knowledge of the industry and its application, as it does on the actual laws that govern each sport or entity/individual that comes under the umbrella of the colloquial term 'sport'. The lifeblood of Sports law is contract-drafting, vetting, and negotiating, and for the most part, these are highly specialized contracts that cannot be boiler-plated or generalized across different sports, or even entities and individuals within the same sport. The cornerstone of sports is unique physical and competitive achievement on the part of the athlete, or a prescient vision on the part of the investors in human capital, infrastructure, or events. In an industry that thrives on individual differences and uniqueness, it is only intuitive that contracts for any of the stakeholders: the athletes, the investors, the owners, the endorsers, the apparel manufacturers, the leagues, the governing bodies/councils, the personnel, and the broadcasters, are tailor-made, and distinct from one another. Performance bonuses, guarantees of fulfilling contractual obligations, restraint of trade, labor law issues, liability issues, compliance with team, league, and global laws and regulations, anti-trust, IPR rights and enforcement, and, relevant to today's hot topic, restrictions on performance-enhancing drug use, are all clauses that are part and parcel of contracts based on which stakeholder is involved.

Beyond contracts, sports law extends to league-specific compliances with regulations, league byelaws, and globally stipulated compliances including but not limited to drug-testing, fair play, liability and indemnity; inter-league negotiations and licensing arrangements; equipment and apparel merchandising and licensing; labor law issues such as collective bargaining and players' associations; infrastructure development (Stadiums and training facilities), and the corresponding facilities management which would also include security and F&B; sports-specific cross-border transactional activity, which is where the multi-jurisdictional and legal advisors who are licensed to practice in various jurisdictions would be relevant; sports-specific mediation, arbitration and other forms of dispute resolution; broadcasting and media rights; and of course, Intellectual Property Rights and their enforcement. As the industry becomes more sophisticated, and economics comes to the fore, anti-trust and competition laws will also become factors.

Simply put, the sports industry has exploded in the last five or so years, and the corresponding support services are lagging behind thus far. This will change, but the industry cannot wait for a gradual evolution. To leverage, protect, and cash in on the first-mover advantage as well as tap the immense potential of this industry, Indian sports need to become savvy with the structuring, developing, and implementing across the board regulations and compliances as per the global benchmarks, or the industry risks isolating itself, and operating as an autarky. An artificial ceiling on its growth will be imposed due more to the inability of the industry to adapt to global stipulations, and this would be an unfortunate barrier to growth if it so happens.

The controversy at present should serve as a wake-up call to each stakeholder in the fastest-growing industry in India at present. Sports law and its need is imminent and non-negotiable. This is no longer about Jerry Maguire and 'having someone at IPL'. This is about the seamless integration into the world's sporting arena, and becoming one of the players to be taken seriously. There is too much at stake, and too much to lose. It's time to become compliant and wake up to the reality that Indian sports are a force to be reckoned with, but a small fish in a very large pond. Once we wake up to that reality, it will be hard to rein in the unfettered growth.

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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