In its recent decision in Strategic Management Australia AFL Pty Ltd & Anor v Precision Sports & Entertainment Group Pty Ltd & Ors [2016] VSC 303, the Victorian Supreme Court held that accredited AFL agents were liable to their previous employer for failing to renew Representation Agreements.

Facts
In 2012, Liam Pickering, James Pitcher and Jason Sourasis formed a new sports management business, which they named Strategic Management Australia AFL Pty Ltd (Strategic).
The venture commenced on the basis that Pickering as Managing Director would own 40% of the company and Sourasis would acquire equity by way of capital contributions to fund the start-up and initial operating expenses. Sourasis was not an accredited AFL agent and therefore relied upon Pickering and Pitcher to provide the sports management services.

When the relationship between Pickering and Sourasis deteriorated in 2013 and 2014, Pickering began planning a departure from Strategic that would ultimately lead to the establishment of his own management company (later to be incorporated as Precision Sports & Entertainment Group Pty Ltd (Precision)).
In the remainder of Pickering’s term as Managing Director, Representation Agreements between Strategic and its players began to expire before the end of the term of the players’ sports contract(s). Pickering and Pitcher had also been negotiating and executing club and sponsorship contracts for players during periods where the players’ Representation Agreements with Strategic had expired.

Pickering and Pitcher resigned from Strategic in May 2014 and immediately commenced business operations with Precision. Existing Strategic clients terminated their Representation Agreements and signed up with Precision.

The proceeding
Amongst other things, Strategic claimed that Pickering and Pitcher had:

  • breached their contractual obligations by failing to renew Representation Agreements and failing to secure Strategic’s revenue stream;
  • breached their statutory duties owed to Strategic under the Corporations Act 2001 (Cth); and
  • Pickering and Pitcher had breached their fiduciary duties owed to Strategic.

The decision
The court held that Pickering and Pitcher failed to ensure that Representation Agreements were extended or renewed so far as possible to cover the term of each player’s AFL contract, and were in breach of their contractual obligations. The breach of contract was premised on the inference that Strategic’s clients would have extended or renewed their Representation Agreement if requested by either Pickering or Pitcher. If the Representation Agreements had been renewed or extended, Strategic would have maintained its stream of revenue from the players’ AFL contracts that it had negotiated.

The failure to renew or extend Representation Agreements also placed Pickering and Pitcher in breach of their duty of due care and diligence under section 180(1) the Corporations Act 2001 (Cth).
Pickering and Pitcher negotiated and executed a number of contracts for players prior to their resignation from Strategic. In the proceedings, Strategic claimed that the fees payable under those player contracts were owed to it even though the Representation Agreements had been terminated. It was held that Strategic could only claim fees from each player’s AFL contract for the period of the Representation Agreement. Therefore Strategic’s claim to those fees ceased when its clients terminated (or elected not to renew) their Representation Agreements – when they instead signed up with Precision.

Key points
Damages are yet to be determined in this matter but the substance of the dispute provides useful guidance to members of the sports management industry generally, and more specifically to accredited AFL agents, AFL players and coaches.

This case demonstrates that an employer can seek relief for lost revenue where its accredited AFL agents have failed to discharge their responsibilities. Representation Agreements must be checked to ensure that they remain valid and enforceable during the term of a player or coach’s contract (whether that be a contract with the player or coach’s club or sponsor). However, one cannot recover commission for AFL contracts for any period outside the scope of the Representation Agreement. In other words, if an accredited AFL agent negotiates an AFL contract, they may only receive commission for that contract while there is a valid Representation Agreement in place.

Accredited AFL Agents are bound by the AFLPA Regulations Governing Accredited Agents (specifically, clauses 8.1 and 8.6) and could face penalties where services are rendered and commission fees charged without a valid Representation Agreement in place.

For any queries relating to sports law generally or compliance with sports management regulations, please contact Michael Bishop or Lachlan Chisholm on 9614 7707.

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