Nigel Stirling of Gibson Sheat gives a basic outline of athletes' contracts.

What Is A Contract?

A contract is an agreement to perform something, ie it creates an obligation, often to supply goods or services. In return, the other party signing the contract will also have an obligation, such as to pay money or provide other benefits.

We enter into a number of contracts every day. For example, buying a newspaper from your local dairy is a contract for the supply of the newspaper in return for money.

In the sports context, we have on the one hand the athlete who performs obligations such as training and playing the chosen sport to the best of his or her ability. In return, the athlete receives payment and/or other benefits. The benefits may include scholarships, clothing and gym memberships.

Does A Contract Have To Be In Writing?

No, it doesn't, although there are some contracts, such as land transactions which must be in writing if they are to be enforced. Most everyday transactions, such as purchases from your local dairy, do not need a written contract. But there are very good reasons for sports people to have written athletes' contracts.

Why Should A Contract Be In Writing?

1. It is a clear record of the mutual agreement between the parties.

2. It brings certainty to the relationship and signifies its importance.

3. It is good for risk management. It avoids relying solely on memory as to what was actually agreed.

4. The record of the agreement survives even if those who negotiated it have moved on.

5. It enables consistency in dealing with a number of people, eg one form of contract for a team.

6. It can provide procedures to deal with disputes and breaches of the obligations.

7. Sometimes a written contract is a condition for being selected for a team (such as the Rugby Super 12) or an event (such as the Olympics).

What Should You Look For In A Contract?

From the athlete's point of view, there are four general things that the contract must provide.

1. Understanding. You must be able to understand what the contract says. It should be in plain English. If you don't understand it, then ask questions. Don't sign if you don't know.

2. Fairness. What is fair will often be determined by the sports market. For example, in rugby a fair contract for a high profile player such as Jonah Lomu will be quite different from what is fair for an up and coming Super 12 player.

3. A clear record of your obligations. Be in no doubt whatsoever as to what is expected of you.

4. A clear record of other party's obligations. Make sure that the contract specifies what you expect the other party to do.

Know What You Want

Unless you have thought about what you want, it will be difficult to judge the contract's fairness. What do you aspire to achieve in your sport? What are your personal goals? Is the contract just a stepping stone to something better? It is essential that you know the purpose of the contract. It must be consistent with your long term goals.

Specific Clauses In Contracts

Term
This is the period of time covered by the contract. Athletes should be reluctant to commit themselves long term unless there is very good reason to do so. It is particularly important for younger athletes to have the opportunity to reassess things in 2 or 3 years' time. This is because the more successful an athlete becomes, the more valuable that athlete can be to sports organisations, sponsors and media. These days it is unusual for athletes' contracts to last more than 3 years.

Benefits
Money is desirable, but sometimes other things are more important, such as access to coaches and training facilities, educational opportunities, mentors and the possibility of regional or national representation. These may help you to develop your potential to earn more money later.

Also remember that you cannot be a professional sportsperson forever. What plans have you made for a career and a life outside sport?

Ask whether the sports organisation can deliver what it says it will. You must make your own assessment of this. It is reasonable to ask questions.

Obligations
Can you deliver? You might have to re-prioritise some things in your life so that you can achieve your goals. Devise a personal plan for what you are going to achieve and how. Monitor your progress.

Be organised and keep a diary. Acknowledge the importance of your contractual commitments and don't slip up. It is a matter of personal integrity for you to do what you say you will do.

Default Provisions
These apply if one party fails to deliver. Normally there are remedies like suspending benefits or ending the contract.

Tax
If you are receiving money then there will probably be tax consequences. Find out whether they apply to you. The IRD has a free booklet entitled "Tax and Sportspeople - The Rule Book". Tax issues can be complex. If in doubt, take advice from your Lawlink lawyer.

Dispute
What if a dispute arises between the parties? The contract should set out a process to deal with it.

Renewal - Review
Longer term contracts should allow the value of the benefits to be reviewed. Often the parties meet at least annually to review the previous year and to make appropriate adjustments.

Minors' Contracts Act 1969
Under New Zealand law even if you are under the age of 18 and are not married, you can still enter into a contract. But it has to be fair and reasonable. This statute exists to prevent more experienced people taking advantage of younger people.

Other Clauses
Contracts will often also deal with drug testing, sponsorship and promotions, privacy, confidentiality, good behaviour, compliance with the rules of the game, uniforms, injury and misconduct. They can be lengthy documents and you should take advice before signing.

Who Should You Talk To About Contracts?

You should talk to people you know you can trust, such as your parents or guardians or more experienced athletes. Some athletes' agents do a good job, but be aware that there are some unscrupulous ones. Lawyers can offer professional and independent advice.

Copyright The Lawlink Group Ltd 1999

Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters.


Nigel Stirling is a partner in Gibson Sheat, a Lawlink firm in Lower Hutt and Wellington. He specialises in commercial and sports law and is a director of several companies and sporting organisations.

Web site: Gibson Sheat
Email: nigel.stirling@gibsonsheat.com

July 1999