Young people may dream about becoming professional athletes. They may fantasize about the fame, wealth, and luxurious lifestyle that might accompany success. They may not think as much about how the business decisions they make, such as getting comprehensive contract analysis, could affect them.
What Is a Professional Sports Contract?
In many ways, the contracts professional athletes sign are like contracts used in other aspects of life. Professional athletes are compensated for the services they offer with a payment.
Comprehensive contract analysis typically includes three different contract types for professional athletes.
· Professional service contracts
· Appearance contracts
· Endorsement contracts
Comprehensive contract analysis will usually focus on the compensation aspect of the contract. This determines how much and how the professional athlete gets paid. This is usually one of the few ways professional athletes contracts differ from one another within the same team or working with the same organization.
How Do Professional Athlete Contracts Differ from One Another?
A professional services contract is often called the “boilerplate” or standard contract. Many organizations don’t change this contract from player to player. The only adjustments that are made are compensation and bonuses. Some contracts have a baseline salary for all the players and then an addendum to the contract that covers added salary or bonuses. Comprehensive contract analysis for this portion of the contract may minimize the chance of a player being underpaid or losing their salary when unforeseen events occur.
Endorsement contracts are between a contractor and an athlete. They can be between an athlete and a sponsor. These contracts give the brand or the company the right to use the player's name or image in advertisements. The focus of comprehensive contract analysis is to protect professional athletes from having their image used in a way they do not want and guaranteeing that professional athletes are properly compensated when their image is used. An appearance contract may outline the number of times an athlete will need to appear at an event or public function. Comprehensive contract analysis would focus on the dates, times, and length of appearances. It would identify who is responsible for transportation, accommodations, and expenses. It would also dictate how much the athlete would get paid for their appearance.
The Role of Business Advisory in Comprehensive Contract Analysis
Professional sports is a business where athletes earn money from their teams, advertisers, and sponsors. Teams and companies earn money from the work athletes do. A good contract will meet the needs of both parties. The only way an athlete can receive competent business advisory when signing contracts is to work with professionals who understand the fundamentals of contracts. They should also understand the current market value of their client relative to other players in a similar sport. Professional sports contracts are more than just the upfront price of a player’s salary, which often appears in the front pages of the sports sections. Professional athletes need savvy business advisory performed by hyper diligent individuals, especially during contract negotiations. Things like no-trade provisions, signing bonuses, injury liability, and restrictions on free agency can impact a professional athlete's career and personal life.
Business Advisory: Helping Professional Athletes Make the Most of Their Contracts
As professional sports become more lucrative, athletes are signing big-dollar contracts with teams and sponsors at a young age. Many teams have negotiated hundreds or maybe thousands of contracts with players and can seem like an intimidating force. Our team of financial advisers here at Fusion CPA may even the playing field with offers and negotiation contracts by helping athletes understand the ins and outs of a contract. The wording of contracts can be confusing or have more than one meaning if the language is not clear. Our team of financial advisers is here to help make sure that you understand what’s in a contract before you sign it. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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