Research: Trends & Conclusions

With the benefit of over 18 years of research and tens of thousands of votes from clients and private practitioners, as well as hundreds of hours of interviews with legal professionals worldwide, Who’s Who Legal takes a closer look at developing trends in the sports and entertainment legal markets.

The sports industry is more commercially lucrative than ever, with sponsorship deals, advertising, image rights and broadcasting deals all reinforcing the status of many sports as “high-value” businesses, ripe for investment from wealthy individuals and franchise owners. Football has been one of the clearest subjects of this trend. Last year’s £5.5 billion deal for domestic and overseas TV rights between the Premier League and various companies inflated the football transfer market to ridiculous levels, a pertinent example being the £27 million transfer fee paid by Manchester United for the services of 18-year-old Luke Shaw. The high commercial value of many sports, combined with increased regulation from governing bodies, has presented the opportunity for legal professionals to develop specialised practices in the field, and practitioners are certain that “the numbers of sports practices and lawyers will only increase over the coming years.” There is fierce competition among leading lawyers in the entertainment industry, with many reporting their “busiest year in some time” due to technological advances and contractual disputes in the film finance and music sectors. It is worth noting that lawyers in the sport and entertainment industries still tend to focus on one discipline rather than both, often at boutiques, although this is expected to change both as legal markets grow and the opportunities for sector crossover and profit maximisation increase.

SPORTS

Sports law has grown incredibly in recent years and the sector’s commercialisation has prompted many major firms to seriously consider ways in which their core practices can be utilised to build a successful sport practice. While the increasing prominence of multimillion-pound commercial agreements between teams, players, sponsors and broadcasters presents a wide range of opportunities for complex legal work, the high value attached to professional sports combined with the monetary consequences of success or failure means that governing bodies have become stricter in their construction and enforcement of applicable rules. As such, disciplinary work continues to constitute a “sizeable proportion” of work for sports specialists.

Lawyers have acted in a range of doping and disciplinary proceedings over the past year, a current issue being the complex relationships between sporting governing bodies and the Court of Arbitration for Sport (CAS). The “Suarez bite” case is demonstrative of this trend, where the major point of contention was CAS’s interpretation of a four-month ban “from all football-related activity” levied upon Luis Suarez by the FIFA disciplinary committee. Given that sports such as football and rugby are governed by separate rules depending on the competition, the question of exactly who to challenge in appeals to CAS for cases of exclusion from a competition is another prevalent issue facing practitioners and tribunals.  While some have stated that more universal regulation for individual sports are “a consideration for the years ahead”, the current regulatory environment is encouraging for lawyers in terms of the advisory and representative work available and reinforces the view that “leading specialists tend to limit their expertise to certain sports rather than spread it across multiple areas.”

The commercial side of sports law is an established practice and specialists agree that the negotiations and disputes pertaining to commercial agreements will become an “even more prominent” part of the legal market in the next five years. The growing interaction between IP and sport provides a strong source of work for lawyers, who advise athletes on effectively extracting revenue from their image rights as well as ensuring protection of those rights. This year’s World Cup in Brazil highlighted the potential for major disputes when athletes’ individual commercial deals conflict with exclusive endorsement deals between competitors and sporting governing bodies; for example, Neymar wearing Beats headphones, which breached FIFA’s exclusive rights deal with Sony for the tournament. The complexity of sponsorship deals and potentially affected third parties has resulted in a real demand for the services of experienced lawyers, and firms with a strong IP capability will look to take advantage of the trend.

Firms also attach great importance to the representation of major governing bodies and sporting brands due to the associated reputational benefits, to the extent that “some firms will offer considerably reduced fee structures to secure a place on the panel of a global name such as Nike or FIFA.” This practice is also effective, as even the biggest sporting organisations and brands consider fee flexibility to be a highly persuasive factor in which firms to instruct and retain.

The broadcasting of live sporting events is a valuable commodity, and as such many sports lawyers have focused their practices on the negotiation of lucrative media rights deals between governing bodies, rights holders and the broadcasters themselves. The huge amounts of money involved (in the UK alone the Premier League TV rights from 2013 to 2016 were sold to BT Sport and BSkyB for £3 billion) are attractive, not only to firms with an established presence in the field, but to major corporate firms. As one active practitioner stated, “We won the right to work on the negotiations for the last cycle of rights, but come the next tender process we expect things to be even more competitive than they are now.” This speaks to sports law’s increasingly international nature; given the widespread appeal of competitions such as the English Premier League and Indian Premier League in cricket, there is a clear opportunity for cross-border firms to advise on and negotiate commercial agreements efficiently across a range of international locations. The Asian market is of particular interest, the possibility of “huge revenue streams” being such that specialists and boutiques are looking to build and strengthen partnerships in key jurisdictions such as Malaysia and Japan.

Integrity is an evolving area, with governing bodies across a number of sports now looking to follow the example set in sports such as horse-racing authorities by introducing in-depth strategies to combat match fixing and doping. Cases such as that of Salman Butt and Mohammad Asif in 2011 highlighted the prominence of spot-fixing among major athletes; however, as one integrity expert stated, “Football and rugby have only recently woken up to the widespread use of such tactics.” The Europol investigation of 2013 played an important role in alerting European sporting authorities to the threat posed by Asian betting syndicates. With lawyers and barristers, in particular, also very active in regard to doping investigations and CAS hearings over the last year, this is clearly an area of opportunity for sports practices. There are plenty of opportunities on the advisory side, many clubs and governing bodies having “shown great enthusiasm for the implementation of internal procedures and awareness programmes to address corruption in sport”. While integrity is not yet an essential component of many sport practices, several contributors to our research have stated it is “a definite target for diversification, given the importance of maintaining the credibility and commercial viability of major sports”.

The legal market is currently dominated by a relatively small number of firms in comparison to other practice areas, and the UK and US markets are much more competitive than other jurisdictions. One London-based practitioner noted that “there are still a limited number of firms with expertise in sport”, and as a result several boutique firms, such as Onside Law in the UK, have seized the opportunity to form niche practices in the field, often focusing on the contractual and disciplinary aspects of certain sports. The commercial nature of the sector does represent a major opportunity for bigger firms with expertise in areas such as commercial litigation and IP, with the possibility of “more lateral hires of specialists by full-service firms as they look to move into a rapidly growing market”. While boutiques can offer a high degree of specialisation and fee flexibility, equally full-service firms will attract global brands and clubs due to the close collaboration between their sports teams and specialists in other practice areas.

Many teams and sporting organisations have established or expanded their own in-house legal teams, and as a result there has been a reduction in the amount of regulatory and non-contentious work available, with clubs now looking to handle more disciplinary matters internally. This presents a challenge to lawyers, as there will be greater competition for the major project and litigation work that organisations put to tender. Contributors to the research also see this as an opportunity to diversify into areas of great potential. As one partner at a leading boutique noted, “The next big initiative for us is to broaden our representation of talented individuals, given the market opportunities available and reduction in day-to-day work for major organisations.”

At the UK bar, there is no doubt that sport is a growth area. A great deal of work comes from the representation of athletes and clubs in proceedings pertaining to doping, disciplinary measures and contractual disputes before the CAS. Leading sports barristers are mostly recognised for their expertise in one particular sport, with rugby, horse-racing, boxing and football being particularly active. The market is still small for those who focus wholly on sport, one practitioner stating that “there are a handful of barristers who would consider themselves sports lawyers first and foremost”. While there is currently a “notable absence of juniors” in the sector, this is likely to change; our list “will inevitably grow” given the large sums of money and subsequent disputes involved in professional sports.

GAMBLING

Gambling law is closely linked to the sports and entertainment industries while being distinct from both in terms of the legal expertise required. Online gaming and betting is hugely popular across numerous jurisdictions, and advances in technology have given betting companies access to a wider range of customers. The prominent role played by online gambling in the sector’s growth has also given e-commerce lawyers the opportunity for related work, with one expert stating that this “merging of sectors is already beginning to redefine the structure of successful gambling practices”. There is very little consistency from country to country in terms of gambling regulation, and the subsequent demand from multinational clients for specialist advice on local laws means that international work and interaction between specialist firms is strong.

In the UK, the Gambling (Licensing and Advertising) Act 2014 received royal assent on 14 May 2014. Many major brands such as William Hill and Ladbrokes base their businesses in Gibraltar, which offers attractive tax breaks compared with the UK, and currently an online gambling operator does not require a licence from the British Gambling Commission if it has no essential equipment in the country. Under the reforms, the regulation of “remote” operators in the UK is dictated by the location where bets are placed rather than the company’s location, and companies therefore require a licence in order to market their services to British consumers. Lawyers expect to see a surge in advisory work relating to the new act, due to the number of remote operators around the world which will be affected by the changes. The act has major tax implications for companies outside the UK, and as a result lawyers are “looking forward to the inevitable increase in cross-border work”. Contributors agreed that the prominence of online betting will necessitate further regulation in other jurisdictions to monitor the aggressive marketing of gambling companies, which will subsequently raise the bar for lawyers looking to build a practice in the discipline.

There are “very few” full-service firms with real gambling expertise, and subsequently boutique firms have continued to thrive in the field, with many maintaining referral agreements with global firms for their clients’ gambling requirements. The growing e-commerce and IT aspects of the area, combined with the prospect of more M&A activity among rival companies, do however offer an opportunity for multinational firms to explore work in gambling law, prompting one UK-based expert to suggest that “gambling could be on the cusp of moving away from the relatively settled, boutique-dominated legal marketplace we see at the moment.”

ENTERTAINMENT

While the entertainment industry has not experienced the level of growth seen in the sports market over the past two years, there is still advisory work available. Despite a “marked reduction in the number of good deals available”, film finance remains an active area for established, particularly in the US. The fierce competition among lenders, prompted by the increasing prevalence of non-bank financiers including wealthy individuals and private equity firms, is reflected in a strong demand for specialist advice on the negotiation of credit facilities for feature films. The legal market for film in each jurisdiction is also influenced by tax incentives for international co-productions. In South Africa, for example, there is “no doubt that recent uptick in the market has been due to the government’s introduction of new tax rebates for filmmakers”. The onset of new distribution models for films and television series involving online services such as Netflix, LoveFilm and Blinkbox also presents an opportunity for diversification and the chance for IT lawyers to build a niche or transition into the entertainment industry. In television, the eagerness of networks to monetise the intellectual property rights in new shows, most notably reality TV, has led to a steady stream of advisory work relating to trademark registration and copyright protection.

In the music legal market, lawyers must adapt to an “industry in transition, which is changing from a delivery to an access-based system”. Digital downloads, music streaming and online subscription services continue to grow in popularity, and record labels have moved to capitalise on this through exclusivity deals with various providers for the use of their products. Many artists feel that they are inadequately remunerated for the use of their copyright in online play and subscription services, and the law in many jurisdictions has yet to catch up with the pace of technology. This has led to greater complexity in negotiations between artists and record companies, due to uncertainty over whether the licensing of music to digital services relates the artist ownership rights or the distribution part of the contract. The result is a highly competitive market for specialist firms, with potentially lucrative work in controversial contract negotiations and high-value disputes arising from the interpretation of payment clauses in recording and distribution agreements.

Many leading firms in the entertainment field are smaller boutiques, with a smaller proportion of firms able to boast a truly international entertainment practice when compared to other sectors. Due to the value placed on long-standing relationships and experience by clients, it is also an area which is notoriously difficult in which to become established. The emphasis placed on reputation and industry experience also makes it difficult for younger lawyers to break into the sector, although the growing IT aspect of the sector may provide an avenue for progression in the future. Several contributors spoke of a returning appetite for strategic hires in areas such as film finance and distribution, as well as some movement away from private practice altogether as entertainment clients look to build in-house teams. As is the case in numerous practice areas, clients are now much more cost-conscious and “would rather consult outside counsel on complex negotiations and disputes rather than unremarkable licensing and regulatory work”.

Our research has established that the legal markets for sport and entertainment continue to operate relatively independently of one another, and there is little appetite among firms to build a practice encompassing both areas. In each sector there has been a notable growth in the number and size of in-house legal teams, and subsequently the work available to outside counsel tends to be more complex in nature. Technological developments and the reliance on TV and online media in each industry mean that there is a healthy demand for legal advice, which will only continue to grow in correlation with high levels of investment by brands and corporate entities, particularly in sport. The monetisation of IP rights features heavily in both sports and entertainment law, and this may facilitate greater overlap between the industries’ respective legal markets in years to come.

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Nominees have been selected based upon comprehensive, independent survey work with both general counsel and private practice lawyers worldwide. Only specialists who have met independent international research criteria are listed.

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