Legal Framework Governing Esports Sponsorships

Esports sponsorship contracts are commercial contracts and, as such, are governed primarily by state contract law. However, because esports crosses jurisdictions globally and involves professional athletes (players), teams, tournament organizers, and digital platforms, several additional bodies of law are often implicated: labor law (including classification of players as employees vs. independent contractors), intellectual property law (for name, image, and likeness rights), FTC endorsement regulations, and — for contracts involving minors — the law of minors’ contracts.

Player Contracts vs. Team Sponsorship Contracts

A fundamental distinction in esports is between individual player sponsorship agreements and team or organization-level sponsorship agreements. In a team-level deal, the sponsor pays the organization, and the organization (through its player contracts) obligates individual players to perform the required services — wearing branded gear, participating in sponsor activations, streaming with the sponsor’s product visible, etc. In an individual player deal, the sponsor contracts directly with the player for their name, image, and likeness (NIL) rights.

The distinction matters because team-level deals require the organization to have sufficient contractual rights over its players to deliver the promised sponsor benefits. If a player’s contract with the team does not specifically obligate the player to participate in third-party sponsor activations, the team may be unable to fulfill its obligations under the sponsor agreement — creating a breach and potential liability. Any organization entering into a sponsorship agreement should first audit its player contracts to confirm it has the necessary rights.

Key Negotiated Terms in Esports Sponsorship Agreements

Exclusivity and Category Exclusivity

Sponsors typically demand exclusivity within their product category — a peripheral manufacturer does not want the team using a competitor’s headsets on stream. Category definitions should be negotiated carefully. Overly broad exclusivity clauses can prevent the team or player from signing additional deals and should command a premium in the fee structure. Players and teams should also negotiate geographic limitations on exclusivity, particularly for deals that may be global in scope.

NIL Rights and Content Obligations

Name, image, and likeness rights are the core asset being licensed in most esports sponsorships. The agreement should specify:

• Which specific content uses are authorized (social media posts, video, live streams, appearances, print)
• Which platforms are covered (Twitch, YouTube, Instagram, TikTok, X/Twitter)
• Minimum content creation obligations (e.g., one sponsored stream per month, two social media posts per week)
• Approval rights over content before publication
• Duration and territorial scope of the NIL license
• Whether the sponsor acquires any ownership interest in created content or only a license to use it

Streaming and Performance Requirements

Many esports sponsorship agreements include minimum streaming hour requirements, tournament participation minimums, and placement requirements (e.g., the sponsor’s logo must be displayed in the top-right corner of the player’s stream overlay at all times). These provisions should be specific and measurable, with clear remedies — typically a fee reduction or credit against future obligations — for failure to meet them.

FTC Disclosure Requirements in Esports Sponsorships

Esports sponsorships are advertising relationships, and the FTC’s Endorsement Guides, 16 C.F.R. Part 255, apply. Players and teams who receive compensation from sponsors must clearly and conspicuously disclose the relationship in every sponsored post, stream, and video. The disclosure must be made at the beginning of a video or stream — not buried in the description. Failure to disclose is a violation of the FTC Act that can result in enforcement action against both the player/team and the sponsoring brand.

Contracts Involving Minor Players

Esports attracts many professional-level competitors who are under 18. Contracts with minors are generally voidable at the minor’s election under the law of most states — meaning the minor can disaffirm the contract and walk away, even if they have received payment. To protect against disaffirmation, sponsors and organizations should require parental co-signature on all agreements with minor players and, in California, seek court approval under the Coogan Law (California Family Code §§ 6750–6753) for contracts with California-resident minors.

Revision Legal represents esports organizations, teams, players, and sponsors in negotiating and enforcing sponsorship contracts. Contact us at revisionlegal.com/contact or visit our Internet Law practice page.

For about a decade or so, esports gaming and tournaments are “big business.” According to this media outlet, the “… global eSports market is projected to grow from $1.72 billion in 2023 to $6.75 billion by 2030,” with the North American share being about 30%.

There are many variations, but often, esports tournaments involve organized competition between video game players gathered in large convention hall “arenas” or online (or both). There are often both individual and team events. As just one example, a German company runs a business called “Electronic Sports League” (“ESL”). ESL offers tournaments and sponsors gamer leagues for over 50 different games. One of the most popular games is CS:GO — “Counter Strike: Global Offensive.” The game involves teams of five players competing for tactical control of the game map. At the most recent esports event in Cologne, 15,000 games and enthusiasts attended the tournament in the LANXESS Arena. The net effect of the increased demand is to push the advancement of streaming technologies, rising attendance and streaming viewership of tournaments, increased ticket sales, growth of merchandising, the rise of esports influencers, and ever-increasing opportunities for sponsorships.

This article — provided by the Sponsorship Negotiators at Revision Legal — focuses on esports sponsorship contracts. Esports sponsorships are marketing partnerships by a business brand, which are typically a partnership with an event, an esports player, or an esports team. As such, the sponsorship contracts are divided into two categories:

• Business-to-business sponsorships
• Business-to-individual sponsorships

Contracts for the former tend to be longer and more detailed (which is not too surprising given that a B2B sponsorship will likely involve significant sponsorship fees). For either, parties will need experienced sponsorship attorneys to assist with the negotiation, drafting, and execution of the agreements.

There are some similar features of both types of sponsorship agreements. These include contract provisions related to:

• Use of intellectual property rights, including trademarks, copyrights, image rights, broadcast and streaming rights, internet/social media rights, merchandising rights, licensing rights, and more
• Marketing placement and promotion rights and obligations — such as whether the sponsor can cross-market and display the full line of the sponsor’s product (or only those specifically linked to the esports tournament)
• Exclusivity of various rights granted
• Term and renewal rights
• Termination and default provisions
• Hold harmless and indemnification provisions
• Confidentiality and non-compete provisions
• Representations and warranties

With respect to business-to-player/team sponsorship agreements, some additional provisions are often added, reflecting the nature of the sponsorship. For example, typically, there is a “no-cheating” provision in the contract. This is often contained in a long section called “code of conduct requirements.” Other common provisions to be negotiated include:

• Name, image, and likeness rights
• Exclusivity with the sponsor — can the player/team switch sponsors? can a player switch teams?
• Assignability of the sponsorship — can the sponsor sell/assign the contract to another business?
• Buy out provisions
• Service requirements — mandatory attendance at meetings, practices, required streaming hours, how many tournaments must be attended, etc.
• Mandatory drug testing
• Required participation in marketing such as wearing clothing, patches, use of certain equipment, etc.
• Required media appearances

Contact the Sponsorship Contract Negotiation Attorneys at Revision Legal

For more information, contact the experienced Sponsorship Contract Negotiations Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.