As another blockbuster year of sporting action comes to an end, the past 12 months have also seen plenty of interesting developments from a sports business and legal perspective – including some that are sure to continue to have an impact in 2020.
Hi to CBD
This year it has been impossible to avoid the hype surrounding the use of cannabidiol – commonly referred to as CBD – in sport. Not only have high profile athletes from across sport started working closely with CBD brands, some such as Saracens duo Dominic Day and George Kruis have taken it one step further, and even co-founded their own CBD supplements business. All of this has arisen on the back of the World Anti-Doping Agency (WADA) relaxing its rules, which saw many types of CBD products added as an exception to its prohibited list of substances.
Given the hype, but also due to the strict rules against the use of certain types of ingredients, it is perhaps only a matter of time before we see a high profile breach of WADA's own rules, as there are still relatively few regulations governing the provenance, quality and composition of CBD products on the market.
Have we gone OTT?
2019 saw OTT (Over The Top) services – live streaming to you and me – take centre stage in the battle to secure sporting rights. A number of important legal issues have surfaced – including making sure existing contracts permit the opening up of these new distribution channels and considering who controls any personal data generated from these activities and what can be lawfully done with such personal data in light of strict data protection legislation.
Further, consumer law issues have arisen when many of these services have failed to live up to consumers' expectations. There have been examples from around the world of disappointed fans being unable to properly view major live sporting content for a variety of reasons, leading to a backlash against the major OTT suppliers, and fans relying on consumer law to obtain refunds. In other instances, the demand has simply not been there – as evidenced by the termination of LaLiga's contract with Eleven Sports.
Either way, 2020 is likely to see further competition in the market with a number of OTT providers bidding up the price for premium sports content.
The Right Image?
Over the past 12 months, agents have attracted greater scrutiny from HMRC in their handling of their players' image rights. In short, this is on the back of a number of players (including some you have probably never heard of) setting up complex legal structures involving image rights – often with a view to diverting a portion of their salaries through these companies for tax planning purposes. The arrangements have also been beneficial to players' employers – as not only do many arrangements prevent a player from working with competitors of club sponsors, but also it enables the club to save on NI contributions.
HMRC has recently issued guidance on the issue, which effectively warns interested parties to make sure that the arrangements can be justified – warning that it has already brought in £332m in extra tax by tackling non-compliance in the football industry.
The next 12 months is likely to see further investigations and potentially sanctions against those that HMRC considers have not complied with the rules. Alongside this, we are likely to see stricter rules on intermediary remuneration in football with the imposition of a cap on the amount that agents can charge in a negotiation, and potentially even the end of dual representation where agents effectively act for both club and player in a negotiation.
Matching right – a right to match?
One of the main legal talking points of 2019 was the blockbuster showdown between Liverpool FC and New Balance in the High Court. The case saw the club claim victory over its current kit sponsor as New Balance were unable to show that Liverpool had failed to comply with its obligations under a broadly drafted "matching rights" clause in the contract when it opted to appoint Nike as its new supplier.
These clauses are common in sponsorship agreements and effectively are designed to protect existing partners by giving them a right to match any new offers on the table at the end of the term of the contract. The problem though, as was the case here, is that often the deals on the table are difficult to compare because they are not like-for-like. In this case, the court agreed that New Balance were incapable of matching Nike's "offer on marketing", which included the promise of using "three non-football global superstar athletes and influencers of the calibre of" Serena Williams, LeBron James and Drake.
Going forward, it is likely that similar disputes will crop up as these types of clauses have become increasingly prevalent in sports contracts, and are ripe for challenge.
…GDPR and Brexit. No review of legal issues in 2019 would be complete without considering data protection and Brexit – both of which have undoubtedly had an impact this year, and will continue to do so next year. Sports businesses, like all others, have had to be mindful of strict data protection laws – in particular, when it comes to their marketing activities.
My prediction for 2020 is that athletes may increasingly use their data protection rights as they seek to protect their position. For instance, Gareth Bale used such laws to prevent Real Madrid from publishing his medical records after a recent injury. Other potential avenues exist – particularly in sports where those in power seek to monetise athletes' personal data or use that personal data in ways that may not be in an athlete's interest. As a result, it's important that those involved consider what can and can't be done legally in all data-related activities – particularly when it comes to the growing esports market, which is dominated by minors, who are afforded additional rights under the law.
Parts of this article were first featured in City A.M.