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Introduction to eSports Law: Why Competitive Video Gaming Teams, Players, & Other Stakeholders Need Lawyers

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Introduction to eSports Law: Why Competitive Video Gaming Teams, Players, & Other Stakeholders Need Lawyers

This exciting program introduces uninitiated attorneys to the wild world of esports, its tremendous growth in recent years, and the legal opportunities in this space. In this course, we will provide an overview of the esports industry and relevant esports stakeholders in order to set the foundation for applicable legal concepts. We will then examine a variety of legal practice areas and their applicability to esports, including: intellectual property, contract structure, entertainment, employment, unions and associations, and immigration.

Presenters

AJ Jameel
Associate Attorney
ESG Law

Transcript

Eric Cervone: All right, everyone. Thank you for tuning into Quimbee CLE. This is your host, Eric Cervone. Today I'm honored to be joined by AJ Jameel. AJ is an associate esports attorney at ESG Law, where he represents many of the premier esports teams in the industry. AJ primarily works on team and player contracts, sponsorship deals, league and tournament agreements, intellectual property issues, and developing the legal strategy needed to navigate the landscape of esports and entertainment. AJ, thank you so much for joining me.

AJ Jameel: Yeah. Yeah. Great to be here, Eric.

Eric Cervone: AJ, before we get into the general topic of esports, I want to ask you a little bit about your background, because you've been in this world for a long time before you went to law school. You worked at Blizzard, which is one of the biggest game developers of all time. Tell me about that experience and then how you went from that to law.

AJ Jameel: Yeah. I'll kind of give you the breakdown there. Basically I worked for Blizzard Entertainment for about seven years, from 2009 to 2016. I was working as a senior game master there. Pretty much what was involved is, I was working at a video game company. It was really cool. It was awesome. I had a really good time doing it and I had finished my undergrad while I was working there. I took a couple years off. I was really comfortable in the job, but at a certain point, skills started to plateau. I wanted to do something more in life, more professionally. I'd always had the idea of going to law school, but before I kind of took that plunge, I told myself that if I was going to do that, if I was going to do law school, that I was going to practice in an area that I cared about, that I was passionate about.

In around 2016, esports was starting to really pick up. I kind of had my eye on that and I was like, "You know what, I kind of see this industry, the trajectory of it going in a way that's going to be really popular. I feel that it's kind of underrepresented legally." I kind of went in with the mindset of knowing, "Hey, I want to do esports law." Day one law school, that's kind of the mindset that I had. Is I remember very distinctly telling my career advisors and everything, like, "I want to do esports law." Then kind of looking at me like I was crazy.

Eric Cervone: Right. That's what I was waiting to hear. Right.

AJ Jameel: Yeah. But I kind of stuck with it. I got really involved with one of the nonprofits in the esports industry, the Esports Bar Association. I got really involved with them as a student, and that had a lot of the big players that were in the industry. They kept their eye on. I followed them on Twitter, followed them on LinkedIn and everything, and they were really involved with this nonprofit. I got very involved with that and I basically kind of stepped up and did a lot of the duties that just weren't being done there since it was a new organization and just kind of rocked that out. Eventually that led to me getting hired at my current job, ESG Law where I work at today.

Eric Cervone: That's awesome. That's such cool advice to any law students listening or anyone wanting to make a change, is just get involved in whatever you're interested in and get your foot in the door some way. That's awesome. Of course, a video game company has really cool employee titles like game master. I love that.

AJ Jameel: Yeah. It's great.

Eric Cervone: Let's get into it. Let's start from the very basics, what esports is. Because I'm a little too old. I just missed ... In my prime gaming days, nobody wanted to pay me to play games except my little brother actually tricked into making him think that you had to put a dollar into the Xbox, like an arcade game to play.

AJ Jameel: That's funny. That's classic arcade stuff.

Eric Cervone: I'm something of an esports player myself, but I think that's a little different than what you work on now. Tell me what-

AJ Jameel: Just a little bit.

Eric Cervone: ... is esports.

AJ Jameel: Yeah. It's a good starting question to kind of lay the foundation for everything that we're going to get into. Basically, esports is the general term that encompasses the world of high level video game competitions. Plenty of people out there either play games or know people that play games, and that's just kind of the baseline. Everyone's a gamer and everyone will play games, but esports is the highest level of competition where the best of the best compete in a variety of different tournaments in games. You have people in the NBA in the NFL that are competing at the very highest level, that's kind of where esports is. Is the top .001% of players that are competing in tournaments for a variety of different games.

Just like there's basketball, football, soccer, and all that, there are different video games for each esport and each of the different games will typically have a roster of players and teams will hire these players to compete in all these different tournaments. The skill that is required for it is very complex. There's a lot of mechanics that can go into it based on you being able to make the movements and hit the keys at the times that you need to, but also having a very high level of game IQ and being able to be aware of what's going on in whatever the game environment is. Being able to make calculations and make decisions in split seconds. They're also all very team based. For the most part, many of them are team based.

You have to be able to work in groups and work with other people and being able to sync well with your teammates. Kind of in a nutshell that's kind of what esports is. There's obviously a lot of different versions of it. You've got your first person shooter games, which is like your Call of Duty and your Fortnite. You've got games such as League of Legends and Dota, which are called MOBA games, which is also a very, very big genre as well.

Eric Cervone: What's the path? You compared this to other leagues, the NFL, the NBA, and in those leagues, there's a path. You go to high school, you go to college, there's international leagues if people want to try to break into the top league. What's the path for someone to be in this top .001%.

AJ Jameel: Yeah. There are pipelines that are in the works where certain organizations and businesses are trying to help streamline that to make it something more at the scholastic level where you can be a player at schools at a high school or middle school and then you can get a scholarship to go play at a college and then getting picked up professionally. That's kind of in the works, but that's really not there yet. For the most part, what will typically happen is, a lot of players who are just really good at the game will get either involved in either tournaments or they'll get involved on Twitch. Twitch is a live streaming platform that's owned by Amazon where anybody can just make an account and then stream their gameplay to the world. What will happen is, when people are really good at the game, they'll typically amass a social media following across YouTube and Twitter and Twitch, like I mentioned, and people will kind of come to watch them because they're the best and they're the ones that are explaining like, "Hey, here's how to do this, this, this and this."

Then orgs will look to sign players kind of based on that. Or orgs will even look at the leaderboards and they'll look at the in game statistics because all of that is recorded by the video game publisher, and they'll make decisions based on kind of who's the best, who's playing well, who is thinking well with others, and they'll hire people that way. There's really no set path right now. It might change in the future, but there's a variety of different ways. At the end of the day, so long as you're a good player and you're amassing kind of a social media following and you're able to showcase what you're doing in winning tournaments, there's a good chance you can end up in a professional esports team.

Eric Cervone: It's funny how much the analogy to other professional sports really holds. That you do have people scouting the best players and they call them up to make it to the top league. Really there's a lot of parallels there.

AJ Jameel: Yeah, absolutely. There is a lot of things that work well for traditional sports in terms of that path, but video game games being kind of ... I mean they're different. A professional video game player and a professional sports athlete, a lot of the times the professional video game player, they'll get mocked or whatever. ESPN would have Instagram posts and Twitter posts and stuff on their other social media that talked about it. One of my favorite things to do is look at the comments to see kind of people's reaction to it. It's really funny, but at the end of the day, it's a medium that people enjoy watching. It gets viewers, it gets eyeballs, it's entertaining. That's kind of what matters in terms of popularity these days. One of the points that I like to make here is, we're not consuming media, our generation isn't consuming media in the same way that our kids' generation is, the generation below us.

It's no longer listening to baseball on the radio, or watching football on TV. A lot of this younger generation is on their iPads, on their phones, watching stuff, watching stuff that it's hard for us to wrap our mind around. I've got a niece and a nephew who are playing Fortnite and Roblox and all this stuff and I can see what they're doing and watching them consume this stuff, and it's just so different than how I did that in my childhood, at least. Keeping an eye on that and being able to watch where the market and industry is going and what's popular to these demographics is critical into the esports ecosystem.

Eric Cervone: I'm still not comfortable talking about the younger generation.

AJ Jameel: I'm with you.

Eric Cervone: I don't feel like I'm old enough, but I am. When I do see the way that they consume things, it's completely different than what we did when we were kids. Let's talk about kind of the primary stakeholders in esports. We talked about it a little bit, but can you go into some depth about who are all the players here, including the players?

AJ Jameel: Yeah. That's a really good question. The first thing is, I work for ESG Law and ESG represents primarily esports teams. We work with a lot of different talent agencies that represent players, and we also work with a lot of different brands that will represent sponsors. We'll also work with video game publishers who create the game. You've got kind of four kind of big stakeholders there. You've got the teams who are hiring the players. You've got the players themselves who are the ones that are performing, competing at the highest level, doing the work, all that. You've got the video game publishers who are creating the game. That introduces a couple interesting elements that we'll talk about a little bit later. Then you have the sponsors who are funneling a lot of the money into esports and helping get monetized to become a lucrative business.

We'll do a ton of different sponsorship deals where a brand is paying some amount of money to use the team for some kind of promotional thing. Typically, similar to how a professional sports team will get sponsored. There's a couple of other stakeholders that are involved in terms of, you've got YouTube and Twitch that are the streaming platforms that'll buy the media rights. You've got the fans who will either donate or buy merch or tickets or whatever. You've got some of these side stakeholders, but for the most, these four ones are probably the most important to focus on and also some of the most important for the world of esports law.

Eric Cervone: Can we talk about how those different stakeholders interact with each other? What are those relationships like?

AJ Jameel: Yeah. The team hires the players, the sponsors will pay money to the teams and sometimes to the players to get marketing done. The video game publisher is kind of in the background that owns the intellectual property that is being used in the competitive play of the game, but also for a lot of the sponsorship promotional material that's being put out there. The interesting thing is, in traditional sports, no one owns the concept of basketball. Nobody owns the concept of football. The NFL can't stop you from making a different football league. You have the ability to do that. You do not have the ability to do that in the world of esports because a video game publisher such as Riot Games, which makes League of Legends, they control that IP. They can do whatever they want with it.

You could not make your own League of Legends world series or anything like that on your own without their permission. This actually comes into play a bit with some of the stuff that's been going on with Nintendo. Nintendo tends to be a little bit of a litigious organization and they're very protective of their IP. They're kind of like the Disney of the video game world. But there's a video game called Super Smash Brothers Melee, which is a very, very popular game. A pretty old game at this point, almost 20 or actually, I think-

Eric Cervone: Don't say that.

AJ Jameel: Or 20 years old. It just has a legacy-

Eric Cervone: That's one of the ones I grew up with.

AJ Jameel: Yeah, that's a good one. But that one is one that has absolutely withstood the test of time. But because Nintendo, the intellectual property owner, has so much control over that, they're able to block grassroot tournaments that can come up. Which has happened before. There was a whole campaign. It was called FreeMelee campaign, where the community was so offended because Nintendo had blocked, I think it was a DreamHack competition from allowing their Super Smash Brothers Melee tournament. The community just was up in arms for it, and eventually Nintendo allowed them to move forward with having the tournament and everything was all fine and great. But it that's an example, a real world example, of how much control the publisher can exercise over this world that's not seen in the same way for traditional sports. Whenever I'm making that comparison of stakeholders, you've got this fourth player here, the video game publisher, that is just introduces this new layer of complexity that's unseen in traditional sports.

Eric Cervone: Yeah. I want to talk about sponsorship deals. You brought it up a little bit. I'm curious, again, does that analogy with other sports hold where players, they collect their salary from the team, but then on top of that, can they get sponsorships on their own externally? Do the top players collect exponentially more than the lower players? Are there a few superstars? Let's talk about that whole world.

AJ Jameel: Yeah. That's a fantastic question. That's a lot of good stuff that I want to get to. I'll start at the most basic level. Basically, the way it works is, all these teams will collect data on basically how many eyeballs they're getting for their content. We've got the world of esports where they fill a group of League of Legends players or Fortnite players or Call of Duty players, and they'll have these teams compete on the professional stage. But what they'll also do is they'll have influencers who don't necessarily compete on these stages, but they're just popular influencers who will stream on Twitch, they'll stream on YouTube, they'll even do stuff on TikTok and Twitter, and they'll just make content. They'll just make fun content, funny content.

They'll collaborate with other influencers. It's this additional element where teams are acquiring professional esports teams. But alongside that, they're also acquiring influencers as well to just add to their portfolio. They're basically, the model is, a team aggregating the rights of all these different content creators, putting them together and then selling that bundle to an advertiser. I kind of put this similar to, at the end of the day, how Netflix or Hulu or Pandora does any of this stuff. It's essentially the same for esports. Now there's-

Eric Cervone: They get these influencers ... The idea is kind of a celebrity boxing match, I'm thinking. Where it's, you get this big name in here that's not a professional in the sport, but they bring a lot of attention to the sport, bring a lot of money, and then hopefully that interest trickles down to the actual professional players.

AJ Jameel: Yeah. Well, it's interesting because it's almost actually the reverse of that. One of the primary reasons a video game developer will invest in esports is for promotion for their actual game. At the end of the day, these video game companies, and this is changing a little bit, some of these companies are making arms to do particularly esports, but at end of the day, a video game company, their product is to make a good video game, that's fun to play, that sells to the public, however, that may be. They're not really professional sports franchises. They're not the NFL or anything like that. Again, it's starting to change where they're starting to outsource to either different companies to control this or they're making their own arm for it. But because their motive is a little bit different, they're using the esports teams and the esports leagues and franchises to result in popularity for their main game.

For influencers, it's kind of the same way. Is you see somebody that's playing these games and you watch them and it's fun. You want to join them. You want to get in on that action. You want to play it. That's kind of the idea there. I wouldn't say the goal is for influencers to kind of rub off on the esports sides, to draw eyeballs there. I think that they're just kind of their own two kind of separate products. At the end of the day, if anything, it's probably trying to promote the actual video game itself. But if a team is talking to a sponsor and they want to do more of a competitive thing, they want to be an elite prestige, Nexus kind of thing, maybe they'll go with the esports team. But if they want something a little bit more casual, something a little bit more accessible to the everyday person, you might have something like a Red Bull or Monster Energy drink.

That's something a little bit more suited for the influencer side. Kind of just two different sides there.

Eric Cervone: Got you. Sorry to interrupt. You were talking about the bundling.

AJ Jameel: No. Please interrupt when you need. Yeah, the bundling. Okay. a team will bundle these rights and they'll sell these rights to an advertiser, to a sponsor and the sponsor can kind of pick and choose what they want. Do they want a little bit of esports, a little bit of influencer? Do they want one particular esports franchise or they're trying to appeal to the Fortnite community or something. Maybe they'll do that. Depending on what their budgets are, they'll make a deal there. But what is essentially happening is it is a team deal with the sponsor. The assets that are being sold by the team is participation for the team.

This is one of the core things that ESG Law does, one of the core things that I do kind of day to day. Is working on these sponsorship agreements and negotiating with these brands for whatever we have in these agreements. Essentially, there are certain ways that we have to navigate it because there are some outdated talent agency laws and compliance laws that are just out there that esports doesn't really fit into because it's so new. There's a lot of navigation that we have to do to make sure that we're mitigating legal risk, but we're also able to operate the business how we need to operate it. Typically in those situations, the sponsor is giving a stack of money to the team, and the team uses that money for its operations, which includes paying the players that are involved in those contents.

In some situations you'll have, and this is starting to become a little bit more popular as gaming is bigger and a lot of these influencers or players are building their brands and they're becoming bigger, whenever we're doing a player contract where it's a agreement that the player is signing to compete for a team for however long and they get whatever benefits, whatever compensation package, and they have to do whatever the services are, a lot of these players are negotiating for particular sponsorship categories that they can go to market themselves. What'll typically happen in a typical talent agreement for when a team is hiring a player or influencer, is there'll be certain sponsorship categories that are reserved that the team is actively going into market for. That could be energy drinks, computer peripherals, whatever it might be. Those are the things that the team is drilling down on. That's what their sales team is good at.

That's what they specialize in, negotiating with those categories or with those brands that are in that category. Occasionally a player will be like, "Well, I actually want to go to market on bottled water." Or something. Or frozen food snacks. Then there's some negotiating that'll be done there where the team will be like, "Okay. We won't use you for those categories, but you can hire your own agency and kind of do your own thing and work with brands kind of on the side to do your own one off deals. But as a team, we've got these master categories that we need in order to operate our business and to not have any conflicts with any competing sponsors." Because if you have two sponsors in the same category that are competing against each other, that's not good. You don't want G FUEL and Red Bull to be on the same jersey. That's not going to make either of them happy. But that's kind of the thing that we navigate there.

Eric Cervone: When players are signing these contracts, is it a multi-year deal? How long do these contracts last? Again, can you compare this to an athlete contract? Are you now officially an employee of that team and you're getting full health benefits and all of that?

AJ Jameel: Yeah. It depends on the league when it comes to esports. Then when it comes to influencers, there's no overarching league there. You'll have things like League of Legends and Overwatch where those companies have invested a lot into their esports franchise programs and they have a lot of things fleshed out as to how they want things to be done. In those leagues in particular, they're required to be employees because that's just a mandate that came from the publisher. "Hey, if you want to be part of this league, here are the minimum salaries." I think back when the Overwatch league first started, it was announced that everybody that was going to be playing and competing there was going to be at a base salary. I think it was $50,000.

A lot of them got paid. Majority of them got paid way more than that, but they did a thing where they were establishing base salary, which hasn't happened in esports at all, and they were required to be paid benefits and all that. You'll see that there, where they're required to be treated as an employee. But you have an age old debate, employee or independent contractor? Depending on where some of these people are located, they'll either be an employee or an IC. It depends on just a lot of the different elements that are in place. If you've got just an influencer that's kind of doing these stuff on the side, it's not their primary thing, they might be classified as an independent contractor. But if you have somebody who's working very deeply with an organization to creatively come up with content and they're going to be business partners and whatever, they might be classified as a employee.

Then in terms of contract length, you have the League of Legends and the Call of Duty's and the Overwatch's that will have a set period of time where I think usually it's one to two years or something. Usually for a season, something like that. For the leagues that are a little bit less structured, you can kind of do whatever you want. There's a video game developer, Valve, that does games such as Dota 2, and they're very kind of, "Do whatever you want." They're kind of notorious for doing that. It depends. Again, the video game publisher comes in again where it's like, they've got a set list of things that they want. But if you have a publisher that's not as Valve or connected, or it's not even for a league, it could be treated very differently. But overall, and I used to see stories of five year contracts, six year, seven year contracts, whatever, in esports, I don't see those at all. It's usually one to two years. Occasionally maybe we'll see a three year or something, but for the most part, you're probably not looking to get any more than two years.

Eric Cervone: Okay. The sport then that it really reminds me of is mixed martial arts I think probably because it's a younger sport, so everything's not as standardized as it is in the NFL or the NBA. So it's more individualized and you don't have these full teams of people that stay together for years and years. That's interesting. Do players, are they working with agents? Are there officially licensed esport agents or who is it that's helping players navigate all these things?

AJ Jameel: Yeah. It's a fantastic question. A lot of them are working with agents. Every now and then you'll have someone who's, it's a very low stakes deal and they don't either know enough or they don't care enough to get an agent. But most of the time we're working with agencies, a licensed talent agencies that are representing these players. That'll happen in the esports side of things, that'll happen in the influencer side of things. They're definitely represented. We spent a lot of our days negotiating with talent agents on a lot of this stuff. Again, we're team side, so we represent the business. Whenever we're negotiating with them, one of the things that will commonly be asked is, what's your approach?

How are you going into these negotiations? Being team side, my perspective's a little bit different, but at the end of the day, our job, my job is to make sure that the team can operate its business and can do the things that it needs to do to make money. Because right now esports, it's definitely on a trajectory that's booming. It's getting a lot of attention, a lot of VC money, but we're still fleshing out what the model looks like in the long term. There's a big sustainability issue here that we're really, really in the infant stages of that we're trying to figure out. A lot of what I get to do working on these contracts is defining how that's going to be. I've got to make sure that a team has the room it needs to navigate in the ways that it needs to without overwhelming them with risk or anything like that.

I'm like, "Okay, first and foremost, we need certain intellectual property rights to make sure that this deal works. We need it for a certain period of time and we need to be able to do with it whatever we need to do with it, to create content, anything like that." But what we'll often get negotiated is the sections of the content that deal with the intellectual property or the players content, how their image and likeness is used. Because most of the revenue that we talked about earlier is coming from sponsors. If a team is using a player in a sponsorship deal, and that ends, the player was signed for two years and now the player is off doing its own thing, maybe they're not with a team anymore, maybe they're doing a solo thing, they don't want to be seen as affiliated with certain sponsors because that's going to interrupt them from going to somebody else.

If they're represented by Dr Pepper or Sprite or something, whatever, they're going to have issues going to Coca-Cola, whatever the soda companies are. That will get heavily negotiated. Where we're trying to do, we're trying to see where the rights land and for how long. When I was kind of first starting out in esports law, I was talking with a lot of students and they would ask me, "Okay, what classes should I take?" I'm taking intellectual property. I'm taking trademark, all the tech savvy classes. Or the interesting eCommerce and all the internet stuff. One of the things that I kind of told them is like, "I think actually basic property foundations is one of the things to have really good mastery over. Considering the concept of the bundle of sticks, how that bundle is divided and where these sticks are landing, during what periods of time, I think is crazy important.

A lot more important than I thought going into esports law. But because the intellectual property sections of these contracts are so heavily negotiated and it's so surgical with what rights are going where, at what times, based on what conditions, having a mastery of that concept has been crazy helpful for me. That's actually something that I would recommend to any attorney that's really kind drilling down on these kind of contracts. It's, you're going to have your material terms, industry terms, commercial terms, whatever, and your business people, your clients are going to help you figure that out and you're going to work with each other there. But where a client does need a lot of support and help, I think, is understanding the real legal nuance of intellectual property and what the implications are.

Because like we said earlier, this media is been consumed in a lot of different ways. It's tablets, iPhones, Twitch, YouTube, TikTok, Twitter, all this stuff at this point. Being able to really understand what your client is looking for, what they're making money off of. Because sometimes they're ... I don't think anyone's really making money off of Facebook anymore. If somebody wants to keep their Facebook stuff or whatever, we don't need that. We don't need to spend time negotiating that. But Twitter is very popular, Twitch is very popular, so those are the points that we would need to spend a lot more time on.

Eric Cervone: Yeah. It makes sense that IP is so important, because like you said, this is all based on IP. It's the IP, especially of the publishers. We haven't talked much about the relationship between teams and the game publishers because they're really the 800 pound gorillas. They control the whole property. The leagues can't happen without the publisher. What's that relationship look like?

AJ Jameel: Yeah. To kind of set the stage here, typically the league will be run by the publisher. The league is usually synonymous with the publisher. Occasionally they're not. Sometimes you'll have your little DreamHacks and other events that are just a third party thing. But for the most part, the publisher will run it. What we will work on ... These usually come in waves based on when a league is starting. We'll have different team participation agreements where a team is outlining the entire arrangement of its involvement in the league with not only the publisher, but with all the other teams. They'll work on things like revenue share, who gets to use which rights, where, at what time, and those pieces are really heavily negotiated.

Those are the monster documents that have a lot of, a lot of little things in it because there's a lot of stakeholders. There's a lot of people that are trying to navigate this industry that's very new that no one really knows how it's going to play. We've got to build in some flexibility because if we find out that no one's watching it on Twitch or whatever, we got to move somewhere else. There's just so much that we need to be able to move around with and be flexible with because no one knows what's going to happen. At the end of the day, we're all taking a gamble here. Depending on where esports will be 10, 20 years right now, and how that looks like, is going to be new. I think it will still be around in some capacity, but I'm sure it'll different in a couple material ways. But to kind of circle back, is, one, we'll have the team participation agreements. That happens whenever a publisher is like, "We're going to make this league for this video game and we want everyone to be involved."

I think this is actually a couple years ago, but there was a game called Apex Legends that kind of came out overnight and no one really knew it was coming out. They just kind of announced it one day. What happened is, because of that, everybody's like, "Wait, we want to make a league around this. We want to start getting players ready for it. We want to sign players, whatever." Overnight, this whole new market kind of came in. This whole new esport just erupted and everyone wanted to flood and kind of make that a thing. What ended up happening is, we have to make player contracts for that, we've got to do the league building contracts that we'll do.

All of that has to kind of get approved and blessed by the video game publisher. There's a lot of meaningful negotiation that'll go on in those environments when it comes to starting a league. But we'll do a lot of licensing deals and stuff for, it's called in game skins. Where you can buy something in a video game for your character to wear that will have a logo on it or it'll make your character wear a funny hat or something. What will happen in the context of teams is they'll be like, "Hey, this will be the Team Liquid skin." Or something like that. It'll have the Team Liquid logo on it and you'll get to be able to show that you're a Team Liquid fan to everybody that's playing the game.

We'll do agreements like that as well. Then there's revenue share pieces that'll come in with whenever you're introducing that, so we'll do some kind of revenue share agreements. Then occasionally different promotional and marketing agreements. Because if it is a very new game that they want to draw a lot of attention to, the video game publisher will be like, "Hey, we want to use you guys to like advertisers. Have all your guys play it, whatever it might be, And we'll pay you money to get these superstars playing at the highest level." Yeah.

Eric Cervone: That's cool. We talked a little bit about agents. Can you tell me about the Talent Agency Act and what's going on around that?

AJ Jameel: Yeah. The Talent Agency Act, it causes us a lot of headache.

Eric Cervone: I'm sorry.

AJ Jameel: Yeah. It's a very old piece of California law. It actually came up in the context of, we call it the Tfue case. Where basically a really big Fortnite streamer was signed to a team called Faze Clan. ESG Law doesn't represent Faze Clan or anything. It's just all information that I'm kind of getting from the world out there. But basically one of the claims in the lawsuit that Tfue was making against Faze Clan was violations of the Talent Agency Act. Where basically the way that Faze Clan was allegedly using Tfue was procuring him sponsorship deals on Tfue's behalf and essentially creating that agency relationship. Where Faze Clan was going to market with sponsors for Tfue. If you're going to do that, you need to be a licensed talent agency. If you're not, then you're in trouble. A couple other issues there. Where if you are doing that, where if you are going to market for a particular player and you are representing that player, you will probably create an agency relationship with that player in the legal sense where you're acting as their agent.

You owe them fiduciary responsibilities. If you are not acting in their best interests, then you're in trouble. You're in breach of those duties. When that's the case, a team who is trying to make money for themselves, for their shareholders, for whoever their stakeholders may be, can't balance those two things. They can't balance them trying to represent themselves as an organization, making their own money, but also representing a player. They're essentially going into market for their business and simultaneously the players at the same time. That's a violation of the Talent Agency Act. Which is why whenever we're constructing sponsorship deals, we're very clear as to what the nature of the agreement is.

It's not a specific agreement for any particular player. It's not conditioned on a specific player. We're very clear about with our sponsors and our players. Like, "Look, this is a team deal. This is not going to be something where you're going to get a particular player." You might get them, but if we make a roster change or something, like we've made a roster change and now that player is somewhere else, and it's like, you can have a logo on a jersey, you can have a logo on the social media of the team itself, but using a particular player in a commercial where he's dressed in normal street clothes not affiliated with the team at all, that's the player's own thing. That's not something where it's a team affiliated agreement.

It's separate. Then in those situations where it is a street clothes person advertising for some sponsor, that's typically negotiated by their agent. Really what the Talent Agency Act comes down to is, it's trying to protect talent from conflicts of interest, unlicensed agencies. Just the fact that it is a outdated piece of legislation that doesn't account for all these different evolving things in the world ... It was originally made to protect actors in Hollywood in the early '90s or something, early '80s, something like that, and it just doesn't fit anymore. Especially with the way that these business models are evolving. It's one of those pieces that it's on the forefront of our mind for basically everything that we do.

Like I was saying, it did result in a real lawsuit. That lawsuit ended up settling, but one of the interesting pieces with that is, earlier, I said, it was the California Talent Agency Act. It is, but the jurisdictional reach of that act is very, very sticky. I think in that set of facts, there was only two or three months where Tfue was in California. I think they were based in New York and Florida primarily. But just because they were there for a few months in the grand scheme of things, that was enough for the California department of labor to kind of get their hands on it. Whenever we're talking to clients that are not California based, that's kind of one of the things they act like, why do I have to care about this non California thing if they're not in California?

It's like, "Hey, the jurisdictional reach, it's very, very broad. Because of that, because it actually was ruled that they can establish jurisdiction even if you're touching California in any little way, we've got to be mindful of it." That's another piece that I would suggest to attorneys that are looking to practice in the area, is brush up on the California Talent Agency Act because it's one of the hot items for esports law right now that a lot of these litigators and agencies and stuff are looking at.

Eric Cervone: Is there a lifespan for top players careers? Because again, I'm thinking of this in this sponsorship context, that again, in other sports, Michael Jordan will sign a 10 year deal. That's a bad example because I think he has a lifetime deal with Nike. But some players, they'll sign for a certain length of time because you know that these players careers are only going to last five years, maybe 10 years at best. I guess esports is so young, maybe we don't even just have data on how long players can be at the top. But do you know?

AJ Jameel: Yeah. Great question. There's kind of two pieces here. One is, what is the length of a player career, if they're competing at the highest level in esports? That typically tends to be pretty short. It is honestly fascinating to me how young some of these kids are for competing in these really high level tournaments. 15, 16 year old kids are winning 3 million at Fortnite tournaments. It's because I'll joke with my boss and I'm like, "Hey, we got to get back into these games and try to win some of these tournaments." But then they get to be 17, 18 and they're still relevant, but the next 15 year old kid is a superstar that has come to replace them. General-

Eric Cervone: Do you have an explanation for that? Is it just because the younger kids are able to develop on whatever the latest system is, so that's why it's so young?

AJ Jameel: I was thinking about that in particular before this conversation. I think there's a lot of reasons for it. I think as you kind of grow up, you got to manage a life too. It becomes a little bit more ... There's newer elements as to, once you hit the age of 18, you got to now pay for other things and figure out your life. I think there is a little bit of a transition there whenever you're starting to grow up where you've got to kind of focus on the big picture.

Eric Cervone: If I'm making 3 million, that's what I'm sticking with.

AJ Jameel: Yeah. That's kind of a piece to it too. Honestly, I'm using the 15 to 17, 18 year old kids as an example. But we rep a lot of people that are from 20 to 26. That's pretty common as well. Usually this isn't the rule, but we'll see plenty of exceptions, but usually around 26 plus, we're not seeing a ton of content creators that are competing in esports. Sometimes you will, but definitely it's trending younger. I think you can establish a little bit more of a routine when you're a kid. You know exactly what you're doing to play these games and competing in these games and to just get really good.

I think there's probably a piece where they're just able to learn this stuff a little bit more proficiently because them growing up on an iPad is very different than us growing up without cell phones. I think there is a little bit more natural proficiency there in being able to navigate this stuff and do this. There's also an accessibility thing too. Because to use the Super Smash Brothers Melee example from earlier, 20 years ago, if I wanted to play competitively, there was no internet gaming. There was no online gaming. I had to go take my controller to a friend's house, play there. Even then, I'm playing with my four friends. If I wanted to compete at a higher level than that, I might be able to go to a local tournament and I might be able to find people that are geographically near me who are good.

Then maybe I can be the best of the best of that area. Then if I wanted to go from there, now we're talking, I've got to travel, whatever. Now, there's so much more functionality to compete online and to play against the best of the best right from where you're sitting. Being able to do that at an early age and just having all those resources, having YouTube content and Twitch content to tell you like, "Hey, if you're struggling with this one thing ..." You can just pull up a video and just figure out how to do it. That didn't exist back in our time. I think that just from a resource perspective, they have tools that we didn't have that makes them and allows them to be better at these kind of games.

Eric Cervone: When I was in high school and they started with the Halo LAN parties where you can connect the Xboxes together, I thought there's no way technology's ever going to get better than this. We could have four Xboxes-

AJ Jameel: Yeah. I remember that.

Eric Cervone: ... all together. Yeah, you're right, that it's just a completely different world. Are there any kind of players' unions? Is there any way for players to get together and form any kind of associations to have a little bit more bargaining power?

AJ Jameel: Yeah. That's another really good question. Something we think about a lot too. Right now there are not any player games. Now, the League of Legends league did an interesting thing where they hired somebody to represent to kind of act as the attorney of the play layers. Where they'd fly out all the players and they gave them a presentation of three different attorneys and they'd be like, "Hey, pick one of these attorneys to represent your interests." Or you can pick none of them and just figure it on your own. But like, "Hey, we want you guys to be represented. We want you guys to have some kind of bargaining power here." Or whatever. This was all kind of mandated by Riot Games, where it was like, "Hey we're just going to make you have one. We're just going to force you to have one."

From my understanding too, Riot Games even paid for it too. You have an interesting concept there where there's no unions and there wasn't at that time and they're currently isn't, but certain video game publishers wanted to allow players to have representation, to have good quality of whatever quality of life in these arrangements. They kind of forced one on them. Now, there are probably a couple behind the scenes reasons as to why they wanted them to have representation like that. Because when there's a union that exists, there's all these different exceptions that can come into play that you're allowed to do as a league where you couldn't do it if there is a union.

I think salary caps is an example of that. You can't do that unless there's a union. We haven't quite gotten to the point where players have made a decision to rally everybody together and to create a union. Probably because I think the quality of life for them is good enough. It's not at the point where they need to get up in arms and rally together to do that. I think when that day comes, it'll be because something is going on behind the scenes that is enraging everybody enough to the point where they're going to want to spark action. But keeping an ecosystem like this or making efforts and trying to keep things good, paying them well, giving them benefits and working with them and hearing their concerns and all that, creates this environment where they feel fine.

There's no urgency. If there was to be a union, it would really need to be the players that really sparks that. A lot of players now, there are more resources to represent them, a lot of good attorneys out there that are helping them. But there's still a subsection of these players that ... They're kind of young. Their focus is, they want to play the game. They want to get paid to play the game. They want to do that. Messing around with attorneys and legal fees and all that stuff, and top of that having to be the forerunners for it and starting that from scratch, that's not something that they're super interested in doing. Until they're wanting to do that, I don't think there'll be a union. The ecosystem is a little bit weird. You do have situations where these publishers are trying to force it on them, but we're not really quite there yet in terms of an official by the books union.

Eric Cervone: Yeah. That again, there's an analogy there with MMA that a bunch of fighters a few years ago tried to form a union. There's no current fighters union, but I think it's a similar scenario. Not even that they get paid very well, especially at the lower levels, professional fighters barely get paid anything, but I think so many of them are just happy to get paid at all to do this thing that wasn't really a sport 20 years ago. It takes that critical mass of people to be able to get together and organize. Again, it's not like the NFL where you have 50 players in a locker room altogether all the time who can talk about this? With fighters, they're all spread out all the time. With these players, I mean, they're in teams, but I assume that they're geographically spread out. They're not always with their team all the time, so I'm sure that plays a role too.

AJ Jameel: Yeah. It kind of just depends on the league. Some of the more professional ones, Overwatch, Call of Duty, League of Legends, there was an idea to franchise it around certain cities for at least Overwatch and Call of Duty. I don't know if that's still the plan. I actually don't think that that's the plan anymore. Maybe it is. I think they're kind of flushing things out. COVID kind of just really put a wrench into all that. But, yeah, usually they'll be spread out. Sometimes they're all in LA or whatever city that they might be in, usually it's LA, but a lot of these teams are able to coordinate and do these things just completely remotely.

Eric Cervone: Yeah. That's crazy. New world we're in. Like you said, most of these players are underage. I'm sure there's a lot of employment issues around that are unique. Let's talk about that.

AJ Jameel: Yeah. We'll get asked every now and then to talk about kind of what it takes to hire somebody who's a minor. In those situations, at its core, it's a state by state analysis and every situation is going to be different. I spend a lot of time looking at the different state compliance laws for how you can hire a minor. Like, is it during the school year? Is it the summer? Is it a school night? Is it after 10:00 PM? You've got so many little nuanced pieces here where you got to account for if you're trying to contract with a minor. Generally speaking, whenever you're trying to contract with a minor, the state that the minor is in will control.

If your organization is based in California or Florida or Texas or something, and you're trying to hire somebody in Minnesota or Washington or whatever, you might be having to deal with entire body of law that you are completely unfamiliar with, because typically the state wants to have protection over its minors. They don't want any other organization from outside being able to control them. Now you have to work with an interplay of two different sets of law that are coming in. Generally speaking, it's usually an issue. It's usually not super safe to do that, occasionally to contract with minors. Occasionally you can try to go to a court and have the minor's disability of minority be removed. You try to get fancy and do something like that so they can legally enter into a contract, an enforceable contract.

But typically California has the nicest set of child hiring laws. Usually from the development of Hollywood and being able to have child actors and stuff in that state is kind of what it's piggybacking off of. But like we said earlier, a lot of these kids are getting a lot of the buzz. They're some of the best players. If an organization wants to hire them, then they've got to navigate all these different rule sets. Just one other thing that I'll add there is, typically the professional leagues will require that you be 18 to play in the league. That kind of like blocks it out right there, but it does come up in the capacity of influencers where you're streaming on Twitch and all that. There's definitely that component. It does come up and it's just tricky to navigate.

Eric Cervone: Right. of course, this is an international phenomenon now. You have people all over the world. I'm sure there's immigration issues that play into this as well.

AJ Jameel: Yeah. Part of our practice, we have a dedicated immigration council who just works on these visas for different teams, for different influencers all the time. There is a P-1A visa, which is for athletes. It's for professional athletes. Whenever we're submitting application to the US immigration office for players, we're basically using that same exact criteria where it's like, you're an internationally recognized athlete that is competing at the highest level in some sport. We get those approved all the time for esports players. In the eyes of the US immigration office, esports is equivalent to professional sports in that way.

Eric Cervone: Okay. Talk to me about the few future of esports. I mean, what do you expect your practice and just the industry in general is going to look like in the next decade or two? I mean, I'm sure things are changing so fast everywhere, I think it's hard to make any kind prediction. But that's why it's fun to get you on record so that I can go back later and say how wrong you were.

AJ Jameel: Yeah, definitely. It's interesting. In pre COVID, a ton of different, big plans for esports. With COVID happening the 2019, it changed some stuff up for good and for bad. I talked a little bit about franchising leagues around different cities. That was an idea that was with the Overwatch league and the Call of Duty league. I think that's a little bit in the air right now, but that was the idea. It was we were going to take what works in traditional sports, organizing the fandom around geography. That's where a lot of people get their traditional sports fandom. The idea was to have teams in Houston, Seattle, New York, all that, and actually having the players living there. They could do events and stuff there and they could be part of the community.

That was the idea. That didn't happen. COVID kind of put a wrench in that, but esports is uniquely situated in that it can exist in a quarantine world. Where a lot of different organizations were able to just move their tournaments online and still be able to produce the same substantive content for the most part. There's some my shoulder content that wasn't able to be done because you're not in the stadium anymore, but for the most part, these tournaments were able to still exist. Which was at a much quicker timetable than traditional sports. Then what we also saw too was, a lot of different traditional sports were being forced to kind of get a piece of esports too because they couldn't showcase their content. I think you have NASCAR that was doing a thing there where they were having people play the NASCAR game, and we've done some stuff with the NHL too. In that sense, it kind of pushed a lot of professional sports team franchises to invest a little bit more into esports so it can exist in that.

Eric Cervone: That's-

AJ Jameel: In terms of ... I'm sorry.

Eric Cervone: It's funny to think about someone playing NBA 2K eventually making more money than an actual NBA player.

AJ Jameel: Yeah. It is crazy, but I'm sure we're going to start seeing that for some sports. At least for some esports. It's an interesting thing too, where a lot of people who play traditional sport games for the video game version of it, they're typically a fan of the main sport too. Usually they'll kind of watch the main sport to get their fill of that kind of content. When it comes to NBA 2K, the video game, versus the actual NBA, probably the NBA will still kind of be up there. But I'm sure a League of Legends player or Call of Duty player will be competing with a lot of these big esport athletes. In terms of kind of where we're going off in the future, we're still figuring out the sustainability model for what esports looks like.

Tons of big numbers out here and tons of engagement in fans who are invested in it and that want to see more of it. I think that's going to continue because as the space becomes more inclusive and you have people who are getting older who have played video games growing up who are now passing these fandoms down to their kids, I think you're going to start to see a little bit more of that generational component that helps propel esports to the future and helps them keep the popularity up. But in terms of what the model is going to look like, I think we're still going to see a lot of esports teams and stuff compete. I think the games that are chosen to be focused on will be a lot more concise.

I think you are going to have a few of these really top popular esports. I think a lot of these smaller ones, I don't think that's where the investment's going to be. I think those ones are going to kind of start going a little bit further down, at least, in terms of production value. I'm sure there will still be plenty of tournaments out there because it's just so easy to do them and so many people competing at the highest level, but I think most of the investment will be at the tier one content. I think there will also be more of a push for influencer related services and stuff like that. You'll have your player who's like required to compete on the team and go to practice and everything, but they'll also be required to stream a number of hours.

They're also required to make a certain side content. Which for the most part, they already are to some extent. But I think we'll see a lot more of it where there's going to be more of a push to make it more than just an esports team that competes in Call of Duty, but more of a lifestyle brand. There's an organization called 100 Thieves that's been really good of doing that, where they've got their content creators not only focusing on the game, but doing a lot of other side stuff too, that doesn't help them become a better player, but it helps them become a better personality.

Eric Cervone: Right. One more question. One of my favorite things to talk about is cheating in sports. I don't know why I'm just fascinated by it. Is that an issue with esports or do you have a steroids issue or is there some sort of cheating that you guys have to work out to really prevent the kind of ...

AJ Jameel: Yeah. It's always an issue. Cheating just regularly in all games, that's a thing. People will download the programs to make their character point their gun at your head, shoot you and kill you instantly, super frustrating. It's very common just at the base level of gaming, but usually in the highest levels of play, the publisher has a lot more control over it. They usually don't play on the retail versions that you and I would play on. They're playing on specific versions of the game that are locked down. They're much more difficult to actually cheat with. But that's at the top level of esports. It's still a problem with some of the mid-tier tournaments. Where if you're doing something where everyone is playing on their home computers and everyone's all across the world, so you've got latency issues to deal with., You've got people who might be communicating when they're not supposed to be communicating, getting help or whatever it might be, that is still an issue.

There's a couple things that have been done to kind of deal with it. One of the most common things too, is everyone's got to record their matches. Sometimes players will be required to be on stream while they're doing it so you can see if there's any kind of funny business going on. But also these video game publishers will have a lot of anti cheat software and stuff like that that helps prevent it. To put a bow on that, at the highest level, you usually don't see it, but in the mid-tier esports stuff for more casual tournaments and the lower level stuff, it's still an issue.

Eric Cervone:
Got you. I actually lied. One more question. for-

AJ Jameel: Yeah, please. Go ahead-

Eric Cervone: ... anyone who wants to be an esport lawyer, anyone who's just starting out, do you have any advice or any pitfalls to avoid?

AJ Jameel: Yeah. I think the first thing you want to focus on is, what out of the four stakeholders that we talked about, kind of which one are you going to focus in on? Because if you represent one, then it kind of blocks you out from all the others. Then I would suggest first understanding the business and the economics of the business. Because right now, when I talk to a lot of law students who are interested in getting into it, very, very hungry, very excited, there is a narrative that they have in their heads where they want to protect the players and they want to make sure no one gets taken advantage of and they want to do all these things for FIRE rights like that. That's almost always what I see whenever I'm talking to these people who are younger in their career. That's fine and great that we have advocates who are willing to do that.

But there's a critical piece that I think is missed, is understanding the big picture, macro level economics of how this stuff works. Because you don't understand that and if you don't know how these esports players are making their money, if you don't know that it's coming from sponsorship dollars and you think it's through merch or ticket sales or something like that, then you're wrong. You're going to be protecting the wrong thing for your client. Having a good level of mastery over that is, I think, super important for how you're trying to navigate it. I would definitely spend time on learning the economics and the models that esports uses. I also suggest getting on Twitter too, because the entire esports industry kind of lives there.

There's a ton of things that you can keep your eye on to keep up with all that information. Then for me, I got involved in the nonprofit side, the Esports Bar Association. That's something that has been a really good resource to get involved and connect with people who are in the esports industry and to help kind of give a base for people's careers. One of the things that is constantly in need for the Esports Bar Association is, we're always looking for referrals to attorneys that are barred in different locations all across the world and all sorts of different practices because a ton of different things can come up. Getting involved with that is a good way to show that you're interested and you're involved to connect with other people and then you may even get a referral or two out of it.

Eric Cervone: Awesome. AJ, you have to explain the sword behind you. We had to make sure we got that in shot so you tell everyone what that's about.

AJ Jameel: Yeah. Thank you for reminding me. The sword, that's my five year anniversary present for working at Blizzard Entertainment. They give you a sword. You can kind of see it in the background, but I've got a beer sign back there too, which is my two year gift. It's up there next to my law degree and my law licenses. But if I had made it to 10 years, I would've gotten a shield to kind of complete the set. But no, I like having the sword kind of there with that stuff, because it kind of shows kind of my background where I come from. Where's like, Hey, we've got law, but we've also got the nerdy esport side too. I think it fits in really well.

Eric Cervone: They're both nerdy. Don't worry.

AJ Jameel: Yeah. Who am I kidding?

Eric Cervone: Yeah. AJ Jameel, thank you so much. If people want to find you and keep up with your work, where can they find you? Are you on Twitter yourself?

AJ Jameel: Yeah. I'm on Twitter. My handle is AJ_ESG.

Eric Cervone: Awesome. Great. AJ, thank you again. I really appreciate it.

AJ Jameel: Yeah. Anytime. Thanks so much, Eric.

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