Why is sports law special?
Sports law is unique since it represents a fusion of various legal fields. For example, if an individual’s involvement in sport is regulated by a contract, we apply contract law and/or employment law. If the dispute concerns the right to use an athlete’s image, we turn to intellectual property law.
The specificity of sports lies in the fact that, for professional athletes, besides the legal rules of the jurisdiction they are subject to, the autonomous sports law developed by international sports federations within each sport is of great significance.
What are these specific clauses?
We often read about ‘unusual’ clauses in sports contracts in the media. For instance, morality clauses, also known as moral clauses, public image clauses, or behaviour clauses, are frequently cited as controversial. These clauses establish a basis for contractually penalising an athlete for private life conduct and they tend to vary in content.
Furthermore, contracts with professional athletes often include provisions that predetermine the amount of compensation to be paid by the party that terminates the contract (buy-out clause) or the payment as compensation for transfer (release clause).
The important thing about such clauses is that they are ancillary components of the legal transaction, valid only if agreed upon by the contracting parties, and serve to individualise the content of the contract to their specific circumstances. Although the principle of autonomy of will prevails in contract law, ancillary components of a legal transaction must be legally permissible.
What does our Law say?
Our Sports Act stipulates that the rights, obligations, and responsibilities of professional athletes are regulated by law, the sports rules of the relevant national sports federation, a collective agreement, an employment regulation (when a collective agreement is not concluded with the employer), and an employment contract between the athlete and the sports organisation. A contract between an athlete and a sports organisation that contradicts the provisions of the Sports Act is void.
Furthermore, Article 13 stipulates that the employment contract between a professional athlete and a sports organisation determines the salary and other earnings in accordance with the Labour Law, and that other earnings established in accordance with the Sports Act do not have the character of a salary.
Therefore, the contracts of professional athletes are governed by the Sports Act and the Labour Law. Since this text discusses unusual clauses in the contracts of professional athletes, we will also refer to several provisions of the Law on Obligations.
The principle of autonomy of will is one of the basic principles of contract law, which states that the contracting parties are free, within the limits of mandatory regulations, public order, and good customs, to regulate their relations according to their will. Thus, contract provisions are freely shaped according to the wishes of the contracting parties as long as they do not contradict mandatory legal regulations, public order rules, and good customs.
The principle of autonomy of will has broad application, but here we must consider that its effect is also limited by the provisions of the Sports Act and the Labour Law, a stance that is also found in various decisions of international sports arbitration.
For example, in the decision CAS 2020/A/6798 Galatasaray Sportif Sinai ve Ticari Yatirimlar A.S. vs Igor Tudor dated 10 May 2021, it was described that if poor team results are not specifically agreed upon between the club and the coach as a ‘justified reason’ for terminating the employment contract, such circumstances do not reach the level of seriousness required to justify early termination of the contract with the coach. Furthermore, the decision states that even if such a possibility were agreed upon, poor results should be clearly defined in the employment contract to avoid arbitrary attempts at unilateral termination of the contract.
Similarly, the decision notes the binding nature of Article 337c of the Swiss Code of Obligations (consequences of termination of the contract without justified reason), which does not allow derogation to the detriment of the employee by individual agreement such as an employment contract. According to this interpretation of Swiss law, the employee cannot waive their claim for compensation if the employer terminates the employment contract without justified reason, as long as the compensation agreed upon in the employment contract is lower than the remaining value of that contract.
Examples of unusual clauses in practice
Now that we have resolved the issue of autonomy of will, we come to the more interesting part where we will present unusual clauses in the contracts of professional athletes, often mentioned in the media.
Eddie Lacy & Glen Davis: Weight Clauses
In the 2017 NFL preseason, former Green Bay Packers player Eddie Lacy signed a one-year contract with the Seattle Seahawks. Given Lacy’s history of weight fluctuations, the Seahawks included weight-related bonuses in his contract. The clause stipulated that if Lacy lost a certain number of pounds within a specified period, he could earn up to $385,000 in bonuses.
While weight clauses are not uncommon in the NFL, they are not as frequent in the NBA. However, in 2009, the Boston Celtics signed a contract with Glen Davis, which included a weight-related bonus worth $500,000.
Michael Jordan & Love of the Game Clause
It is common for contracts with professional athletes to include clauses that restrict their activities during their free time. These clauses concern physical activities that could cause injuries and prevent the athlete from performing professionally.
However, Michael Jordan did not have such a clause; instead, his contract with the Chicago Bulls included a clause of opposite content – Jordan could play basketball freely whenever and wherever he wanted.
Chandler Jones & Physical Activity Clause
NFL player Chandler Jones came into focus during an NFL season when he wanted to arrange a fight with his brother, well-known MMA fighter Jon Jones, at a charity event.
Although it was for a charitable cause, Chandler Jones could not fight because such an activity could lead to the termination of his contract with the New England Patriots.
As mentioned in the previous example, such clauses are common in the contracts of professional athletes, prohibiting them from engaging in certain physical activities due to the risk of injury. If Jones had fought his brother and ended up significantly injured, it would have been a considerable financial and competitive blow for his club.
Many sports contracts include clauses stating that the athlete must not engage in risky activities such as boxing, skiing, or skydiving, and some even detail a list of all physical activities the athlete should avoid.
Mario Balotelli & Good Behaviour Clause
Earlier, we mentioned morality clauses. The media discovered a good behaviour clause in Balotelli’s 2014 contract with Liverpool, which allegedly stipulated that the player would receive a bonus at the end of each season if he was not sent off the field on three or more occasions for violent conduct, spitting at an opponent or any other person, or using offensive and/or insulting language and/or gestures.
While performance incentive clauses are common and Balotelli reportedly had a right to a bonus for every goal scored after the first five in the Premier League, rewarding players for a lack of inappropriate behaviour is an unusual clause.
Allegedly, Balotelli had a similar clause with AC Milan when it was reported in the media that the club’s executive director had arranged a clause modelled on the behaviour of individuals serving in the Italian air force, including provisions regulating the player’s behaviour on social media.
A little more about morality clauses
If we reduce the facts to the point that the contracts of professional athletes are employment contracts, we can conclude that stricter rules of conduct apply to athletes than to employees in other sectors, whether at the workplace or outside of it.
It is believed that the first morality clause was made on 11 November 1922 as an addition to Babe Ruth’s contract with the Yankees. The standard language in such a contract usually only stated that the player must maintain their physical fitness in excellent condition and adjust their personal behaviour to the standards of good citizenship and sportsmanship. However, in Babe Ruth’s case, this clause was written in a more specific manner, stating that the player must completely abstain from alcoholic beverages and not stay up after 1 am during the training and game season without the manager’s permission.
In the case of D’Arcy vs Australian Olympic Committee, swimmer D’Arcy signed a membership contract with the Olympic team in 2008, which included a clause that the athlete must not engage in conduct which, if made public, would bring the sport, the athlete, or the Australian Olympic Committee into disrepute or condemnation. After D’Arcy punched another swimmer in a nightclub and caused bodily harm, he was expelled from the Olympic team that same year. D’Arcy appealed to the arbitration court, which dismissed the appeal on the grounds that bringing into disrepute means diminishing the reputation of a person in the eyes of the public. A similar decision was made the same year in the case of Jongewaard vs Australian Olympic Committee. According to these decisions, it can be concluded that an athlete brings themselves or the sport into disrepute when there is an element of public exposure and when the athlete’s conduct causes damage to the reputation of the sport or themselves.
As mentioned at the beginning of the text, morality clauses or behaviour clauses have different contents and can cover various behaviours.
Mbappe & Real Madrid Clause
In 2023, news broke that Mbappe was signing a new contract with PSG until 2026, which included a new clause dubbed the “Real Madrid clause.” This release clause allowed the player the potential to join Real Madrid in the summer of 2024.
This clause came into effect as Mbappe signed with Real Madrid in June 2024.
Mbappe & Messi Clause
According to media reports, Mbappe wanted to have a clause similar to the one Messi had in his contract with Inter Miami. Messi managed to secure a percentage of the revenue generated by Adidas, the main kit sponsor, as well as Apple TV, which holds the primary broadcasting rights. This kind of arrangement was first seen in 1980 when Michael Jordan signed with Nike.
Mbappe & Ballon d’Or Clause
When discussing the new contract Mbappe signed with Real Madrid, it is mentioned that the contract includes a special clause related to performance, specifically winning the Ballon d’Or. If Mbappe wins the Ballon d’Or while playing for the club, he will reportedly receive a €15 million bonus from the club.
This is not the first time Real Madrid has included such clauses in a player’s contract. Former club captain Karim Benzema had a similar clause during his time at the club, with a promised bonus of €1 million.
Contractual Clauses in Formula 1
Contracts in Formula 1 cover a wide range of provisions, including financial terms, sponsorship agreements, and performance-related clauses. There are various types of contracts in F1 that teams use to engage drivers, ranging from standard types to more complex performance-based contracts with goals and bonuses attached.
Regarding performance clauses, F1 contracts can include some specific provisions. For example, a performance clause might relate to the performance of other drivers. If Sergio Perez fails to match the performance of Max Verstappen, this might trigger certain contractual conditions.
Typically, there are options to include a performance clause relative to the percentage of the team’s total points and the percentage relative to the teammate’s points. For instance, in 2023, Red Bull Racing scored a total of 782 points, with Perez himself earning 258 points, which constitutes 33% of the team’s total points.
In this sport, when teams evaluate potential drivers for contract renewals or new contracts, they conduct detailed analyses of their performances in previous seasons, serving as the basis for setting target performances. These clauses are directly linked to the financial compensation of the drivers, and failure to meet target performances compared to, for example, their teammate, could result in contract termination.
Similarly, teams might include more complex point-based clauses directly tied to earnings. These include championship points based on race finish positions, individual performance points, relative performance points, exceptional performance points, and continuity points for drivers maintaining high averages per race, as well as mid-season evaluation points.
