Executive Summary
This research examines the operations of sports organizations and the associated legal challenges they face. Sport is currently undergoing a shift to market relations. The rising commercialization and professionalization of sports, on the one hand, and the shortage of budgetary money, on the other, suggest that sports should benefit independently from the resources at its disposal and learn to utilize current market mechanisms to acquire capital. This approach will liberate professional sports from the variables and hazards linked with budget financing systems.
In pursuit of new funding sources for their operations, sports clubs may be interested in the stock market’s ability to mobilize temporary free cash, which could result in the introduction of an instrument with unique investment characteristics in the near future. This is due to the unique characteristics of sporting activities, as professional sports are a high-risk enterprise. However, it should be noted that agencies can only entice professional investors if they have learned to adequately manage the risks inherent in their activities. Sports agents assist athletes in securing contracts to play for professional organizations.
Sports agency firms negotiate contracts for services and assistance on behalf of their clients, or players. Agents are compensated with a certain proportion of game endorsements and contracts. After analyzing the facts on this issue, we can conclude that sports agencies must be carefully controlled to function effectively. Sports lawyers and other professionals should be brought in to help develop the company and propel athletes toward success.
Background
Athletes must focus all their energy and attention on the training process and the daily preparation for key starts and tournaments. Athletes at the highest levels spend most of their time in training camps and overseas tours. A significant amount of time is spent analyzing competitors’ performances and tactical plans, as well as developing a long-term training plan that employs innovative approaches and preparation methods for forthcoming contests and championships. Constant work and focus on enhancing athletes’ performance can leave them unable to handle personal matters and their own affairs, including legal, financial, and domestic concerns.
Sports agents can operate as individual entrepreneurs (individuals) or collective entrepreneurs – agencies (legal entities) in organizational and legal terms (Singh et al., 2019). Both formats are widely used in sports and have advantages and downsides. Some agents are also players, like Jordan, whom I interviewed. He combines these two activities because the agent’s job falls in the off-season when the man is involved in basketball. When he is negotiating for players, he is out of the season. He trains during that time but has a more relaxed schedule than he does during the season.
When professionally and sensibly managed, sports agencies achieve remarkable success. Wasserman Media Group, for example, is a sports management firm that rates among the finest in the world. The corporation has a diverse workforce and annual revenues of approximately $1.35 billion. Last year, the firm made it onto the Forbes list by steadily adding smaller retailers, such as those in the football and hockey industries (Krissoff, 2019).
Several sports agents have joined the firm. Excel Sports Management, for example, is the world’s leading agency representing professional sports, providing personalized care and attention to its customers. To reach the top of the client brand, the firm has represented NBA, MLB, and PGA talent (Pizzo et al., 2022). Through efficient issue resolution and strategic management, the agency expands its client base. The firm is ranked first in the world among basketball agents.
Boras Corporation is also a sports agency. Cooperation with it is on the list of the greatest sports agencies, which resulted in improved client performance. The agency has inked $1 billion in contracts. It oversees all aspects of professional athletes’ jobs. Newsweek named it the most powerful sports agency in the world. Boras received a record-breaking $150,000 deal from the agency. ICM Stellar Sports is one of the leading football companies, offering a range of consultancy services.
Since its inception in 1994, the firm has guided the careers of hundreds of football players (Krissoff, 2019). The sports agency manages all domestic and foreign markets. The agency consistently employs management tactics to address the players’ professional concerns. For commercial clients, the agency handles all commercial and image rights. The agency focuses on Rubin and cricket. Octagon Division is a sports agency that manages all sports and entertainment materials (Krissoff, 2019). All events may be managed by the sports and marketing departments, which are also responsible for separating players and personalities. The firm operates in over 22 different countries.
Risk Management
Risk is any negative event that threatens an enterprise’s operations. Risks include not only abstract situations or market vectors but also the actions or managerial decisions of employees, which may result in the company incurring a loss or losing benefits in the future. The financial result of a professional club is influenced directly or indirectly by the team’s sports performance (Faccia et al., 2020). However, the outcome of an individual match or an entire tournament depends on many factors that the club management can only control to a limited extent. In addition, the risk does not exist in and of itself; it often triggers a chain reaction that can ultimately lead to the club’s bankruptcy.
Another substantial risk concerns changes in the player’s physical and psychological condition. Since most sports are contact sports and require the athlete to perform at the utmost level of ability, clubs can lose a player to serious injury, death, or disciplinary penalties, including doping (Gammelsæter, 2021). The situation is all the more difficult if the departed player is the team captain, its formal or informal leader both on and off the field. In addition to the sporting difficulties, this could lead to a significant decrease in the athlete’s market value and a substantial reduction in the club’s assets. Insurance, which will cover the losses, can help in this case.
An equally important type of risk in professional sports is the player’s low skill level. The situation is especially challenging for young athletes, whose skill level can only be accurately assessed by videos produced by agents working in the market for young athletes. This problem can be addressed by a more careful selection of a sports agency. Another important risk factor is the player’s adaptation to a new club, team, and coaching staff. This is because when a team gathers representatives from different countries and styles of play, a certain atmosphere develops, and their leaders emerge.
There is a risk that an expensive athlete may struggle to adapt to a new team, a new style of play, and a different national mentality. Big clubs spend tens of millions of euros to buy new players, which accounts for approximately 20% of their annual revenues. Such risks do not exist in any other type of business (Gammelsæter, 2021). Even venture capital funds have a smaller share of the total investment portfolio per project than soccer clubs have for the purchase of athletes.
The risk connected with the reduced popularity of athletic events comes next. The popularity of sports, and the team in particular, accounts for a substantial portion of the agency’s revenue. Popularity declines due to a loss of interest in national and European championships, as well as competition from other sports, which can negatively affect the club’s income. Millionaire clubs improve their athletes’ living standards, negotiate multimillion-dollar contracts with them, and sign the most brilliant young players (Yeh et al., 2019). As a result, many tournaments have little or no sports interest because of an obvious frontrunner and a surefire underdog. This challenge can be overcome by actively observing developments in population preferences.
Health and Safety
Athletes have always needed to be safeguarded to prepare and compete in a safe environment, but the debate has shifted to the forefront in recent years. Athletes can perform at their peak when they are safe and secure. For example, following the 2015 IFS, the IOC Athletes’ Commission policy was outlined during the 2017 forum. This event also saw the launch of the IOC Athlete Protection Toolkit, which aims to provide organizations with comprehensive tools to develop policies that assist and protect their athletes. To further support athletes, the IOC session in 2018 adopted a Declaration of Athletes’ Rights and Responsibilities on behalf of the Olympic Movement (Hulme et al., 2019). The Declaration’s primary purpose is to continue assisting, regardless of sport, age, gender, or origin. It establishes the general rights and obligations of athletes.
The organization organizing the competition, the chief sports judge, and the deputy chief sports judge for safety are responsible for assuring the safety of all participants in the competition area and the security of the competition venue. The location of teams, participants, observers, supporters, and sports judges must be considered based on where the tournament is held. The event organizers will ensure the presence of a medical officer and the availability of operative medical support for competitors (Hulme et al., 2019).
All players, referees, and team representatives should be aware of the location of the medical officer. Before the event, verify each participant’s medical clearance. An application for participation in sports events, marked “Admitted” opposite each athlete’s surname, validated by the doctor’s signature and seal, serves as the foundation for an athlete’s admission to sports contests based on medical reports.
The application for participation in sports competitions must be signed by the doctor and certified with the seal of the medical organization holding a license to perform medical activities that provide work (services) in physical therapy and sports medicine. The agency must necessarily inform competition participants about the safety measures and rules. Develop instructions for the riskiest phases of relay races, cross-country sections, skiing, and tourist distances, and ensure all participants are familiar with their roles and responsibilities well in advance (Hulme et al., 2019). The chief referee must undertake a comprehensive assessment of the competition locations, routes, the technical condition of sporting equipment and tools, and a declaration of conformity with safety criteria before the competition commences.
The floors or running tracks of the sporting facilities must be free of protrusions and potholes. Track and field, relay, and ski racing pathways must be established in areas free from fallen trees, rocks, and other hazardous obstacles and debris. Competition judges and team representatives (heads) are required to ensure that all competitors strictly adhere to safety procedures. A referee may leave the tournament site only in an emergency, after the last team, and on the head referee’s instructions (Yeh et al., 2019). In an emergency, such as an accident involving a competitor, a sports referee must assist the wounded and notify the emergency services, including the start, the head referee, and a medical officer. Internal event security must be carried out at all levels of competition.
Contracts
A sports agency contract is a formal agreement between a professional player or club and a sports agency or agent that outlines obligations, services, and other parameters. A sports agency contract attorney is necessary because professional players, like everyone else, get paid for their labor. The nature of professional athlete contracts is discussed in this section.
Agents have special obligations to principals due to the fiduciary nature of the relationship, including loyalty, good faith, candor, full disclosure, refraining from self-serving transactions, strict honesty, exercising reasonable care, and possessing all necessary skills to further the principal’s interests. Agents who fail to uphold their fiduciary duties may be held financially accountable for all damages sustained by the principal as a result of their failure. Sports agents play a crucial role in acquiring and negotiating contracts for professional players (Weiler et al., 2019). Attorneys who work with athletes are often schooled in contract law and must understand how much their clients are now worth compared to other athletes in the same sport.
It is worth emphasizing that it is optional to engage an attorney or agent to negotiate contracts on behalf of athletes. Some athletes prefer to work with someone other than an agent for various reasons, including the need to pay commissions or other expenses associated with representation. Athletes’ contracts fall under personal services contracts due to their unique talents, skills, and abilities. Sports contracts are formed in the same way as any other employment arrangement. Specific criteria must be present for a contract to be enforceable and legally binding (Weiler et al., 2019). First, there must be a competent agreement between the parties, based on mutual agreement and supported by considerations, in the manner provided by law.
In sports contracts, express contracts are the standard. Any agreement between the parties, whether oral or written, is deemed explicit. When it is unclear what the parties’ intentions were and there is room for more than one fair interpretation, a contract is deemed ambiguous. The disclosure of prima facie facts helps clarify unclear language. The courts have also ruled that an unclear contract is interpreted against the drafter (Weiler et al., 2019). Put another way, the party that did not write the contract will be given the benefit of the doubt. However, not all sports agencies have a sports lawyer. For example, in an interview with Lamar’s expert, he states that his company has lawyers, but they are not sports lawyers.
Intellectual Property
The primary goal of intellectual property rights is to encourage even more invention and creativity by establishing conditions in which inventors and creators are adequately compensated for their efforts, and consequently, can support themselves and safeguard the goodwill represented in their brands. Different types of intellectual property are protected by various rights, including inventions (patents), brands (trademarks), industrial designs (design patents), creative works such as sports programs and other sports-related creative activities, and certain sports broadcasts (copyright and related rights).
Intellectual property rights enable owners to protect their creations from unauthorized duplication or use. This means that owners of this sort of property can charge a fee for its usage. The promise of monetary compensation drives individuals and businesses to generate technologies, creative works, and branded products, all of which benefit us all.
Most intellectual property rights are valid for only a short time and are issued only if specific requirements are met. Other laws permit the use of certain forms of IP without prior authorization from the copyright holder under specific, restricted circumstances. These methods help balance the interests of inventors and artists with those of the general public, allowing everyone to benefit from the use of intellectual property rights (Weiler et al., 2019).
As a result, rights promote innovation and creativity across all disciplines, including sports. The greater the level of innovation and creativity in sports, the bigger the prospects for continual development in sports performance. The more fun sports become, the better the equipment, the more commercial incentives, the more employment opportunities, and the unrivaled spectator experience.
Human Resources
Human resources (HR) refer to the attributes and properties that characterize a person’s capacity to undertake a specific type of activity. Furthermore, this term may be applied to a single organization, area, or state. HR can be viewed from various perspectives. As a result, an individual’s potential is of significant importance. Since the human component underpins the operation of every organization, there is a clear necessity to govern this process. HR management seeks to maximize economic advantage by utilizing labor effectively (Weiler et al., 2019). This procedure relies on the ability to organize a team both quantitatively and qualitatively, as well as the capacity to employ psychological tactics.
Each manager should be aware that human management is a more complex process than managing the technology component of production. This is due to the greater likelihood of conflict scenarios arising from work and personal difficulties. HR experts are the unseen talent that keeps all levels of the business running smoothly in today’s billion-dollar sports industry, which the pandemic and the social justice movement have disrupted. It is up to bright, forward-thinking, and experienced HR professionals to identify and keep the finest employees to propel the industry ahead and fulfill the needs of this new norm.
According to market trends, capable HR directors in sports must go beyond yesterday’s HR basics. They must also recruit, analyze, and choose individuals capable of making data-driven and CSR-driven business choices. Another role is to codify, implement, and hire workers who share the organization’s ideology and values, advancing it and maintaining its competitiveness. Managers must also maintain a pleasant and safe work environment, culture, and morale, and settle any conflicts between employees and the organization.
Facility Operations
A sports facility manager manages and maintains all sports facilities, regardless of size. They may be in charge of a modest facility, such as a park or a community gymnasium. Or they may be in charge of massive stadiums that gather tens of thousands of people each week. The essence of such management is to guarantee that the entire facility is kept in good working order. Tasks might range from cutting the lawn to assisting with concession stand maintenance during large events.
Every person who chooses to work in this industry is detail-oriented, organized, and committed to their work. It’s one thing to keep the neighborhood gym clean or to mow soccer grounds. Managing a large sporting complex is an entirely different story. There are several reasons why sports facilities require meticulous administration to prosper and maintain a positive image for both teams and spectators. First impressions matter, and this applies to both people and facilities. When people visit a facility, they want to feel “overwhelmed.”
A high-quality manager ensures that garbage is picked up, windows are clean and bright, and everything for clients, teams, and other employees is in working order. Stadiums, gyms, fields, and other sporting fields that are left to their own devices without adequate care and administration end up costing everyone time and money (Weiler et al., 2019). Dedicated managers deal with little issues so that they do not accumulate and produce major issues later on. From ticket sales to the checkout queue, a well-managed facility optimizes all aspects of operations. This efficiency leads to higher income throughout the year. No catastrophe can put the team out of business if they have a facility and effective operations in place.
The system of technical operation for sports facilities comprises a set of works carried out in accordance with regulatory requirements to ensure the technical condition, maintenance, and inspection. It also includes maintaining serviceability and readiness for current repairs, adjustments, and preparation for seasonal operation of individual elements, as well as the building as a whole (Weiler et al., 2019). The technical operation system must guarantee that the sports facilities operate normally for their planned use.
Technical maintenance of sports facilities must include work to monitor the technical condition, maintain operability or serviceability, adjust and adjust, prepare the building or facility as a whole and its elements and systems for seasonal operation, and ensure sanitary and hygienic requirements for the premises and surrounding area. Controlling the technical condition of sporting facilities should be done through systematic, scheduled, and unplanned inspections using advanced technical diagnostic equipment.
There are two kinds of inspections: general and partial. Comprehensive inspections should assess the overall technical well-being of the building or location, including its systems and various external improvements; partial examinations should evaluate the mechanical condition of individual premises elements and aspects of external improvements. Following earthquakes, debris flows, heavy rains, hurricane winds, and heavy snowfall, unscheduled inspections should be performed. They can cause damage to specific building parts and structures, as well as following accidents in the heat, water, and electricity supply systems, and the identification of foundation deformation.
General inspections should be performed twice a year, in the spring and fall. The initial spring inspection should verify the building and facility’s readiness for operation in the summer and spring, identifying the scope of tasks required for preparing for winter and fall. It also needs to specify the power source scope of repairs to be performed on the structures and equipment included in the current maintenance plan for the inspection year.
References
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