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Esport teams and missing paychecks?

Yesterday I happened to be aware of this post at 99Damage. After that, the Team Bluejays will have massive outposts with players and other team members. Although I do not wish to comment on the content of the post, I would like to take this opportunity to take a few legal considerations on various issues relating to the subject of ‘people’.

The situation seems to exemplify various circumstances that go wrong in esports, not only in Germany, but also often internationally, and why it can often be advisable to seek legal assistance as well. In principle, this starts with the Bluejays website. Even if the team is officially registered in Denmark, even if only with a German-speaking site, with membership in the ESBD and other references to Germany, it probably has a clear obligation to keep an imprint. I know that many people see this as “small-scale”, but there is a good reason for the obligation to impress.

However, that is only incidental, the Postal Service refers more to, among other things, the missing payments.

1. Contracts

Even though the Bluejays had contracts and a certain degree of professionalization, it is difficult for me, as a lawyer, consultant and player consultant, to understand how to work as a player and other team member over several months, for in individual persons since 2016, can accept that financial obligations have not been met.

If you really want to live on your work as an esportsman and really put your financial future on it, you should make sure that a contract is individually adapted. Whether the contract is based on cooperation or whether you are being held as an employee, such a contract should contain clauses, what happens in the event of a default, what consequences are late payments, with which counterclaims one calculates or what rights are otherwise to be granted. Yes, creating such a contract is certainly more expensive than using a pattern that also exists with me,and not to adapt it any more. But if my advice had been followed, you would either not be sitting on your money at some point, would not have any problems with government support after default, or at least would have had your rights for the future or a switch to another team (even if it’s things like revenue from your own streaming and the like).

Here, as with startups, which traditionally like to save on things like a lawyer: saving in the beginning, in the end, the lag.

The latter is particularly true when we are dealing – only formally – with a team that is not registered in the Federal Republic of Germany and in which – at least initially – it is questionable whether German law is applicable at all.

Without legal status clauses and the like, it is now at least more cumbersome to check whether, for example, German social security law is applicable, according to which unemployment benefit is owed by the State or, for example, is entitled to insolvency benefit.

2. Insolvency law

Where we are already in insolvency. Assuming that German law applies to a team, things such as insolvency law and social security obligations are not to be had fun.

As a team, you can quickly get into the area of liability as managing director.

While salaries and debts are at least conditionally subject to insolvency, at least if insolvency is filed in good time, this is completely different with social security contributions and taxes. The latter can also lurk years later, after audits or pension audits, on the manager, until then unsuspecting. These claims are often of a personal nature, may not fall into private insolvency opportunities and may even be criminal in nature. So there is more to the threat here than some might suspect.

Compensation in esport in case of player change?

One of the biggest mistakes of German startups and small business owners is that one is released from all liabilities by founding a limited liability company and as managing director. Often, however, the opposite is true and the commitments become even more diverse.

3. Financial planning

Poor financial planning can quickly destroy a small life’s work. Of course, even in esports, a sponsor can always jump off (whereby the annoying question of bad contracts arises here too!), but the primary duty of a managing director or a manager of an organization should always be to keep an eye on the financial situation. and, in case of doubt, also to create reserves.

4. Separation of management and players

The risks and tasks of a team management are so varied that I am convinced that it usually cannot work for one of the players of a team to take over the organization. What is still absolutely normal in the case of a hobby team must already be a no-go as a semi-professional team. As a member of the management, the first thing to realize is that you cannot pursue a career as an esport player at the same time. Both are excluded.

5. Investigate claims

But let’s get back to the subject of bluejays and the lack of compensation for demands from players and other team members.

It’s good to vent your anger and publish certain things on Twitter. Strategically, however, it is often stupid, because it will not improve the relationship between team and player. On the contrary, one will often reduce one’s chances of compensating for the claims, because bad PR can have an extremely negative impact on the further financial situation of a team.

If there are contractual obligations, then the first thing to do is to seek communication with the employer/contractor. If this is not successful – and if we are talking about sums of money that are worth initiating a legal dispute, you should consult a specialist lawyer, invest a little in the advice and have it checked to what extent claims are to be made. enforceable and the possibilities of enforcement. A reputable colleague will always point out risks and communicate costs in advance.

Even though many players or especially team members of younger age often shy away from this step, from my experience it is usually the much better step. For example, I have often been able to reach agreements with contractors or employers that a client could not have negotiated. The range here ranges from threats of lawsuits to settlements and instalment payments. Gentle pressure, partly aided by clues, for example, to the risks from No. 2, often work wonders.

In addition, as a party to the proceedings, one often does not have the necessary “distance” to negotiate or even communicate in a targeted manner and with the necessary professionalism. Professionalism is also helpful when demanding money payments, because:

Of course, having a lawyer costs money, not having a lawyer often costs much more.

If you have more questions, please feel free to contact me.

 

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Fortgeschrittener

Written by Marian Härtel

Marian Härtel specializes in the areas of competition law, copyright law and IT/IP law and specializes in computer games, sports, marketing and streamers/influencers. He supports start-ups in their development, assists them with all legal problems and supports them in business development.

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