How the sports industry uses non-compete clauses (and the alternative available to employers)

On 5 January 2023, the Federal Trade Commission (FTC – America’s consumer protection body) set out its initial proposal[1] for a new rule that would prevent employers in the US from imposing post-employment ‘non-compete’ clauses on their employees (which, in simple terms, aim to prevent employees from working for – and thus benefitting - a direct business rival).

Given the limited pool of top talent in professional sport, competition for and retention of employees (not just players, but coaches and key staff too) can be particularly acute. This article explains how non-compete clauses – and ‘restrictive covenants’ more generally – are used and enforced in sports industry employment contracts. It also considers alternative methods that are or could be used by sports teams to retain their best talent and protect their interests:

• Background
• What are restrictive covenants?
• How common are restrictive covenants in sports contracts?
• Alternatives to restrictive covenants
  • Notice periods and release clauses
  • Confidentiality clauses
  • Garden leave