Sport and the law are increasingly entwined. As the number of professional sporting events grows, so do the commercial concerns which infiltrate them - and the resulting legal maze requires careful negotiation. Lauren Scott examines the state of play in this dynamic practice area

Football fever has gripped Australia. As host of the 2003 Rugby World Cup, the country has laid out the welcome mat for a steady stream of overseas visitors, joining the flow of local died-in-the-wool Union fans to one of the biggest events on the global sporting calendar.

Over seven weeks, an estimated 2 million people will watch 20 countries play 48 games at 12 venues in 10 different cities - before the final at Stadium Australia in Sydney.

And that's just on-the-ground spectators. Around 3 billion people worldwide are expected to watch the Cup on television - in pubs, clubs and from the comfort of their own homes. Against this background, the International Rugby Board rightly claims the Rugby World Cup as the third most important sporting event behind the Olympics and the World Cup in soccer.

The Rugby World Cup exemplifies the global reach of sport today. From amateur roots, sport has evolved to become - for better or worse - big business. And inevitably, when commercial interests are involved, so is the law. For the first time in the Cup's history, the International Rugby Board (IRB) took the step of appointing an official law firm to handle legal issues associated with the event. Allens Arthur Robinson won the Guernsey, with senior partners Richard Alcock and Jim Dwyer leading the firm's team in providing legal services to Rugby World Cup Limited (RWCL) for the duration of the tournament.

Speaking to Australian Legal Business following the appointment, IRB's senior legal counsel, Darren Bailey, said Allens was selected after a competitive tender process. "Running an international tournament is a very complex business and it is important that we have available to us quality legal advice that understands the territory in which the tournament is being held ... I would expect it would be a feature of future tournaments," he said. He would not disclose the value of the arrangement with Allens.

Allens is restricted from commenting specifically on the legal work it is handling for RWCL. But ALB understands that IP issues - from which no sporting event these days is immune - will be a key focus.
Melbourne-based Allens partner Graeme Johnson, who presented the firm's tender proposal to the IRB alongside Dwyer and Alcock in March, says while there have been no major legal issues since the competition began - apart from a "couple of enquiries" into on-field incidents - the firm is prepared for if they do arise.

"We're on 24-hour, seven-days-a-week call if anything does occur," says Johnson. "There's been the odd pirate merchandise spotted at some matches - often at Telstra Dome." IP piracy is the bane of high-profile sporting events. Looking to make a quick buck from unsuspecting - and often indifferent - fans, 'pirates' seek to flog unofficial merchandise bearing logos, brands or images that infringe valuable intellectual property rights. Such activities eat into commercial arrangements organisers make that are often critical to an event's funding. The RWC, for example, has a Commercial Programme in place granting exclusive rights of association with the Cup to its Commercial Partners - a band of sponsors, licensees and suppliers.

Johnson says clamping down on such practices calls for constant vigilance. "With these sporting events, you find the things that are most prevalent - and it doesn't matter what sport it is - are t-shirts and caps," he says. "We can get down to the key rings and the rulers, but people tend to concentrate on the t-shirts and the caps, because they're normally not a conditioned purchase, they're normally a spur of the moment purchase when you're walking to or from the ground - or from the Grand Prix track or from the MCG or whatever it might be... People get caught up in the emotion of the situation."

The Australian Football League's legal services manager, Andrew Dillon, says IP infringement is always an issue for major sporting bodies. "For an organisation like the AFL, intellectual property is obviously very important, because that's the basis of all our licensing - and also a really major component of our sponsorship arrangements is the ability to have that association through intellectual property," he says. The rise in use of the Internet has exacerbated the problem, but Dillon believes offenders are often ignorant as to the commercial impact of their activities. "A number of times they [infringers] don't have a commercial reason for doing it, but nonetheless it can derogate from the rights we're trying to give to people." Tackling such infringers does not always call for heavy-handed tactics. "It's often just a phone call or a letter saying, 'Are you aware that your use of these logos or your use of this player image is actually a breach of legal rights?' Ninety-nine percent of the time, [the response is] 'sorry'; they apologise profusely or they might ask 'is there any way we can use it?'"

Infringement of IP rights is simply one facet of a prism of legal aspects touching on sport. Sports law is an imperfect term - for there is no one body of law to which it refers. It embraces a range of practices areas, from intellectual property and general commercial, to litigation, tax and technology. While many firms have clients involved in the sports industry in some capacity - whether through direct involvement, or as holders of broadcasting or sponsorship rights - few firms can lay claim to a dedicated sports law practice.

Ian Fullagar heads a specialist sports law team at Lander & Rogers in Melbourne. Formerly at Rigby Cooke, he has practised in the area since the late 80s, prompted by a dual love of sport and the law. "I wrote my first business plan for sports law in my articles year," he says. In 1989, he took a course in Sport, Commerce and Law at Melbourne University as part of a Masters degree. "That got me going. I picked up my first client that year and still act for that client." The client is Sport Industry Australia, formerly the Confederation of Sport Industry.

Fullagar says the commercialisation of sport and the increasing number of professional sporting events has contributed to the demand for advice in the area. "We've got more money in sport from the Federal Government than ever before," he says. "The Sports Commission's budget is higher than it's ever been." Fullagar served on the Australian Sports Commission, the Federal government funded sports agency, for three years prior to the 2000 Olympics.

His work in the area is broad and varied. "On my desk at the moment, I've got specific event contracts," he says," and we do a lot of risk management work. We've written a major risk management resource specifically for sport and recreation bodies, including the Department of Sport and Recreation in NSW." Policy work - one of the lawyers he works with wrote the standard member protection policies for the Australian Sports Commission - and corporate governance issues are also a focus. Fullagar says corporate governance is of growing concern to sporting bodies. "That's impacting on all corporations obviously around Australia, but we don't think they're [sporting bodies] immune ... because they have quite antiquated structures and need those revised to come into line with modern Corporations Laws."

Johnson, who has been advising on sports-related matters for over 20 years, says around 40% of his practice is dedicated to sports industry clients. These days, his focus is primarily on contractual and regulatory issues. "The contractual side is preparing all of the agreements that the sporting organisations enter into and updating them or renewing them or advising on them," he says. "But there's also advising on the regulation of sport and the inter-relationship of sporting bodies with rights holders."

He has observed "two dramatic changes" which he says are transforming the legal spectrum of sport. "The first is that the sporting organisations realise that they're running a commercial enterprise themselves - and they've become far more commercial," he says. "That manifests itself in two main areas. One is the fact that they do have formal agreements with most of their important stakeholders. Most sporting organisations now have formal sponsorship agreements, rights agreements, merchandising agreements - those sorts of things. It also translates itself into protecting their rights. They're more attuned to pirate merchandise, registering trademarks...protecting their own intellectual property. A more commercial approach is taken to that than what was the case 20 years ago."

Technological advances - mainly the Internet - have also had a major impact. "Sport is now transported to every lounge room worldwide," says Johnson, " and that creates a new layer of protection that is required for the particular owner of the sport."

According to Fullagar, another perennial issue driving sports-related advice is insurance and risk management. One of his key clients is Surf Lifesaving Australia - which has seen its insurance premiums skyrocket by more than 150% in the past year. "For the first time in its 96-year history, [Surf Lifesaving is] considering having to impose a levy on members to pay for insurance, so a lot of clubs may not be able to provide patrols," says Fullagar. The crisis in insurance was discussed at a recent summit Fullagar co-ordinated, at which the Insurance Council of Australia and Australian Plaintiff Lawyers Association weighed into the debate. Surf Lifesaving Australia's situation has forced the registered charity to seek to develop a strategy to deal with the issue.

Johnson agrees that insurance is a concern. "I don't think that's a new phenomenon," he says. A related issue that is, he says, is the growing proliferation of State legislation seeking to regulate sporting bodies - in areas including the nature of indemnities and releases they can give to people who attend events. "There's also some major events legislation in Victoria under which an event can be prescribed as a major event. And there's the scalping legislation which came in before the Grand Final this year."

Fullagar says advice on the legal aspects of staging events has almost become an area of practice in itself. "There are whole books on venue law and venue management and the issues that arise out of that - both right up from the construction and financing issues right through to ticketing and ambush marketing - what rights you have to stop people coming into the ground with their Tooheys flag they've been given even where it's a CUB event."

Ambush marketing - diluting rights

Sponsors of major sporting events pay big dollars to get their names in front of the viewing public. So when a rival comes along and steals the limelight - literally - the commercial impact can be devastating.

Ambush marketing occurs where an official sponsor has paid for the right to be associated with an event, and a competing brand literally 'ambushes' the sponsor through its own attempts to connect itself with the event. There are a number of ways this can be done: a blimp sent sailing over the stadium bearing the rival's brand, or non-sponsor merchandise that finds its way into the grandstand, for example. The tactics are many, and have become increasingly sophisticated.

The Sydney 2000 Olympics bore witness to a classic case of ambush marketing. Now-defunct airline Ansett had parted with an estimated A$40-50m for the right to be an official Olympic sponsor. Qantas, however, went ahead with a series of marketing efforts which Ansett alleged linked the airline with the Sydney Games. Among other things, Qantas entered into individual sponsorship deals with high-profile athletes, and created a new slogan - 'The Spirit of Australia' - which Ansett claimed was strikingly similar to the Games' slogan of 'Share the Spirit'. Ansett's Federal Court action against Qantas ultimately settled out of court. 

Allens partner Graeme Johnson says there are effective ways to combat ambush marketing. "We develop strategies for that with all of the sporting bodies for whom we act. You've just got to be constantly vigilant," he says. The emergence of new technology has created new areas of concern - such as virtual advertising. Virtual advertising refers to the use of high-power computers to insert still images into live broadcasts in real time, making them appear as though they are part of the broadcast. "In your TV rights agreements, you have a clause prohibiting the telecaster from virtual advertising without the consent of the owner or promoter of the sport," says Johnson, "so you don't cut off the income stream you've got from your major sponsors and have that being attacked by the telecaster."

SPORTS LAW

- A look at 2004 and beyond
by Simon Rofe - President, Australian & New Zealand Sports Law Association

There is a body of law that addresses the widespread legal issues of the sports and entertainment industry. While this includes sports specific issues, such as the liability of one participant to another, in recent times commercial issues are increasingly coming to the fore. It is impossible to consider the legal issues affecting the industry without, at the same time, being cognisant of the commercial factors governing the activities of the participants.

The sports and entertainment industry in Australia has been significantly affected in the post Sydney Olympic Games era. In this three-year period, sponsorship revenue has been considerably reduced in line with the decrease in advertising expenditure across the domestic economy. Additionally, necessary insurance cover has become more difficult to obtain following the HIH collapse, whilst the insurance premiums have greatly increased. The resultant cost squeeze has greatly limited the activities of sports organisations with attendant reduction in their needs for legal advice.

If this reduction in legal work was not bad enough for the sports lawyer in private practice, his or her position has not been improved by the trend for the larger and more commercially mature sports organisations to employ 'in house' practitioners. Further, the private practicing sports lawyer is faced with the need to keep abreast of the ever-increasing complexity and volume of the law across an ever-expanding range of legal issues.

In other words, sports lawyers are facing exactly the same broad issues and pressures that are and have been faced by lawyers throughout Australia. There is, however, an additional factor that significantly impacts on those with sports law expertise and established reputations and their ability to exploit them - namely, the widespread public appeal of and support for sport in Australia. This factor encourages legal firms to increase their profile and promote themselves to new and existing clients through sponsorship of sports organisations and events. This sponsorship is traditionally paid by the provision of legal advice and services free of charge or at a reduced charge-out rate with or without payment of an actual sponsorship fee.

In light of this situation, I foresee the entrenchment of the current development of tiers of lawyers practising in sports law. There will be the "GP" level where a lawyer will be able to advise and represent athletes and the smaller sports organisations across the full range of issues they have traditionally faced. However, with regard to the larger and more commercially sophisticated organisations, their legal advisers will increasingly need to have specialist skills and expertise. These organisations will require knowledgeable legal and financial advice in the increasingly complex commercial areas taking into account the multi-media convergence and its effect on the future of television rights, taxation, private international law, the globalisation of intellectual property rights and the host of other issues that affect the activities of the corporate sector. This means that only specialised 'boutique' sports law firms will be able to compete with the large legal firms. The days of a general practitioner being able to "dabble" in sports law is gone, even if located within a large firm.
Education in and knowledge of sports issues and the applicable law is essential. It is for this very reason that ANZSLA is as relevant today as it was when founded in 1991.

Sports law practices - the firms

Firms with dedicated sports law practices are few. Most of the major firms draw on their national resources across a range of practice areas to advise clients in the area.

A handful of Melbourne firms run true sports law practices. Ian Fullagar at Lander & Rogers in Melbourne - a founding member of the Australian and New Zealand Sports Law Association - leads a full-time team of one senior associate and one solicitor in advising sports-related clients. Another six or seven lawyers at the firm also provide advice when required. Before joining Lander & Rogers around 18 months ago, Fullagar ran a specialist sports law practice at Rigby Cooke with former colleague Michael Rowe. Rowe is now at Tennis Australia.

Jeff Browne of Browne & Co. has represented the Australian Football League since 1985, and provided advice to the Australian Olympic Committee in the lead up to the Sydney 2000 Olympic Games. Brian Ward at Brian Ward & Partners has provided legal services to the Australian Cricket Board, the Australian Soccer Federation and the International Cricket Council. On the ACB's behalf, he brought the High Court of Lahore from Pakistan to Australia to continue its hearings into corruption and bribery in international cricket.

Middletons has provided advice to athletes and sports teams, as well as insurers in connection with sports-injury related claims. Peter Sinn has represented the Carlton Football Club and some of its players for nearly 30 years, as well as advising jockeys and trainers in the horse racing industry.

In Adelaide, Kelly & Co. has been the Port Adelaide Football Club's chief external legal adviser for over 20 years. Its media, entertainment and sport practice handles contract negotiations and disputes, sports injury claims, sports management issues, and commercial contracts. IP-focused John Kelly is a key adviser in the area, while Garry Winter deals with tax-related matters.

In Sydney, Turnbull Hill's Brian Doyle is well known in the area, while Henry Davis York advised 11 of the 14 clubs involved in the NRL v South Sydney litigation. Scott Murray and Stephen Gorry are two HDY partners who have handled commercial matters for sporting bodies and associations. Coudert Brothers' Jamie Nettleton managed the restructure of the national soccer league for Soccer Australia Limited.

Of the top tier firms, Allens Arthur Robinson has an experienced band of partners and lawyers advising clients involved in the sports industry. Jim Dwyer and Richard Alcock are leading a national team in advising Rugby World Cup Limited. One of the firm's sports lawyers, Jacqui Mengler, is a former Olympic kayaking champion, and the ad hoc clerk of the Court of Arbitration for Sport Oceania Registry
Clayton Utz has a national Sports, Entertainment and Marketing (SEM) Industry Group, and regularly seconds lawyers to clients in the industry. Chris McLeod heads a team of 35, which handles work for clients including Seven Network, the Transport Accident Commission (in relation to sponsorship arrangements) and adidas Australia. The firm advised the Seven Network in relation to its appointment as host broadcaster and Australian free-to-air television rights holder for RWC 2003.

Blake Dawson Waldron has a number of lawyers advising in the area. Ian Williams's clients include the Australian Swimmers Association and Basketball NSW, and he has advised on a sponsorship contract for LG Electronics and the Cronulla Sharks. Robert Todd has represented Australian Swimming's head coach in relation to allegations made against him, and has also advised Australian Baseball on a drug-related issue, while IP special counsel Eugenia Kolivos specialises in sports sponsorship. Grant Rowlands and Aldo Nicotra advise on infrastructure and competition related matters respectively. Mallesons Stephen Jaques was a key adviser on the Sydney 2000 Olympic Games and sole adviser on the Paralympic Games that year. It also advised the Government on the enactment of the Sydney Indicia and Images Protection Act 1996, an anti-ambush marketing law protecting designated Olympic expressions and words from unauthorised commercial use. Other clients include the Australian Sports Commission, the Australian Jockey Club and the Lawn Tennis Association of Australia, with partners Scott Bouvier and Katrina Rathie are the firm's key lawyers in the area. Minter Ellison handles a significant amount of sports-related work out of its Brisbane office, with IP specialist Andrew Greenwood and Margaret Brown the two key partners involved.

Legally AFL

ALB spoke to Andrew Dillon, legal services manager for the Australian Football League (AFL)

What are responsibilities as the AFL's Legal Services Manager?
It's basically being the first point of contact for all legal work. I deal with licensing agreements, sponsorship contracts, interpretation of the AFL Rules and Regulations and co-ordinating our external legal advisers in relation to litigation and other matters.

Do you liaise with the clubs on any level?
We have a lot of different legal relationships with the clubs ... so yes, I'm dealing with the clubs on a daily basis. They might need a guarantee, for example. We've got a relationship with them in relation to their websites - it could be working through issues with those contracts, or sometimes helping them through a legal issue that they've got themselves.

Is there any main focus of your work?
The role initially had a commercial focus, but now it covers all aspects of the AFL. Sponsorship can be a major [focus].

Do you have a set legal budget?
I'd prefer not to answer.

In terms of external legal advisers, who do you use?
We use a firm in Melbourne, Browne & Co. Jeff Browne has been the AFL's legal adviser for close to 20 years and they're a pre-eminent sports law firm. We use them pretty much exclusively - because they give us great service. We're very happy with the work they do for us, and they know our business sometimes better than we do.

They handle any litigation. If we've got a salary cap investigation, they'll do that. But also on a major sponsorship contract, we'll get them involved. They'll do a bit of industrial relations type work and general commercial work as well. They've got a good group of lawyers at different levels. We may have [used other firms] on tiny things like debt recovery, and we liaise with different firms in relation to some litigation.

Competition in sport

Competition and sport go hand in hand - and not just on the field.
Former ACCC chair Allan Fels presented a paper on competition law and sport in Australia at an OECD roundtable while still head of the regulator. He observed that competition issues were raised 'frequently and in a variety of ways when sport is the subject of litigation in Australia' and spoke of the 'numerous attempts' to regulate Australian sports - mainly the football codes - with the aim of levelling the playing field.

Rugby league fans will recall the events surrounding the SuperLeague litigation, which Fels claimed highlighted the 'difficulty' in reconciling competition law and sport. The case centred on a bid by Murdoch's News Limited to establish a 'SuperLeague' to replace the national league competition jointly run by the Australian Rugby League Limited (ARL) and NSW Rugby League. News Limited kicked off an action against the ARL in March 1995 - claiming, among other things, that the ARL's attempts to extract Commitment and Loyalty Agreements from the 20 clubs offered admission to the ARL competition should be set aside under sections 45 and 46 of the Trade Practices Act 1974 - the misuse of market power provisions. A bloody court battle ensued, with Federal Court Justice Burchett finding in the ARL's favour on 23 February 1996 after a 50-day hearing. On the section 46 issue, His Honour held that the League had no substantial degree of market power - and even if it did, it did not take advantage of its power for any of the purposes section 46 proscribed.

The SuperLeague and the ARL ultimately agreed to form a new National Rugby League, a 20-team competition as of 1998.
Fullagar predicts the increasing encroachment of competition law into sport - as has happened in the European Union. "We've had to deal with the ACCC who have conducted investigations into various aspects of sporting organisations' activities probably half a dozen times in the last year," he says. "I think that's the next big thing. Sports [bodies] have to be careful how they put their leagues and their organisations together."

The Court of Arbitration for Sport

Formed in 1984, the Court of Arbitration for Sport (CAS) has evolved to become the peak forum for sporting disputes internationally.

The CAS is administered by the International Council of Arbitration for Sport and is responsible for resolving legal disputes in sport through arbitral awards - which, in principle, have the same effect as a court judgment. The CAS has more than 240 arbitrators on its books, selected for their specialist knowledge of arbitration and sports law.

Any dispute directly or indirectly related to sport - commercial or otherwise - can be submitted to the CAS. For the CAS to have jurisdiction, parties must have either previously agreed, or agree for the purpose of the dispute, to submit to the body's authority.

During the Sydney 2000 Olympics, the CAS heard 32 disputes - 21 relating to athlete selection, and 6 to doping. Ian Fullagar handled more than 20 selection disputes in the lead-up to the Olympics, and says the firm is currently involved in a handful of CAS arbitrations. "There's a whole growing area of jurisprudence around the Court of Arbitration for Sport," he says.