Sports law and restraints of trade

The starting point in law is that such provisions are void and unenforceable restraints of trade, as they infringe on an individual’s right to carry on their trade freely and are therefore contrary to public policy. However, case law has established that such provisions can be enforceable if they adhere to certain key principles. Restraints of trade provisions therefore walk a fine line between the freedom of individuals to trade and the principle that you should be free to choose the terms on which you contract. 

In order for a restraint of trade clause to be enforceable, it must:

• protect a legitimate business interest
• be no wider than is necessary to protect that interest
• not be contrary to the public interest

Ultimately whether a restraint of trade clause is enforceable will be for the court to decide, but careful drafting to ensure restraints of trade provisions comply with these key principles can increase the likelihood that such a provision will be upheld. The courts will not force individuals to perform services against their will but may be willing to uphold such restraints of trade clauses if they are freely negotiated and comply with the three key principles outlined above. It is therefore usual for such clauses to be limited by geographical area and subject to a time limit. 

A famous example of a sports contract being found to be an unreasonable restraint of trade comes from the case of Proactive Sports Management Ltd v Rooney [2011] EWCA Civ 1444, which involved a contract for the use of Wayne Rooney’s image.

Rooney had entered into an agreement which granted sole and exclusive rights over his image for an eight-year term. The parties had a disagreement and Rooney successfully argued that the agreement was an unreasonable restraint of trade. In finding in Rooney’s favour, the Court of Appeal considered:

• it was immaterial that the image rights were not Rooney’s primary trade. A restriction on the use of his image was capable of being an unreasonable restraint of trade;
• the real effect of the contract was to sterilise trading activity; and 
• there was an inequality of bargaining power, as Rooney had not been independently advised

In the more recent example of CJ Motorsport Consulting Ltd v Bird [2019] EWHC 2330 (QB), it was determined that a contract for the management of a motor racing driver for an 18-year term, and which placed no material obligations on the management company in relation to the driver’s career, was an unreasonable restraint of trade. 

The key lessons that can be learnt from these examples are that reasonableness is essential. A restraint must not interfere with someone’s trade - whether or not it is their primary occupation - to such an extent that it effectively sterilises their ability to work. These agreements are more likely to be enforced where all parties have received legal advice and fully understand the scope of their obligations. It is therefore crucial to clearly identify the interest you seek to protect and to ensure that any restraint of trade clause goes no further than is reasonably necessary to protect that interest.