21/05/2004 – Sports Law in Brazil
1. Introduction
Despite Brazil’s great tradition of participating in world sports competition and having great teams and great athletes, only recently has this country enacted laws to regulate the Sports business. Currently, there are three mains acts that dictate the rules concerning sports in Brazil: Act 9.615 from March 1998; Act 10.671 and 10.672 from May 2003 and the Brazilian Code of Justice and Sportive Discipline.
Firstly, it is necessary to point out that this study has the intent of clarifying some aspect of contracts related to Sports, under the Brazilian Law. Neither has it the intent of exhausting the subject nor it approaches in depth topic related issues, which should be analyzed in each case by a Brazilian legal professional. We, at Almeida Advogados, will be more than glad to assist you in any further concern and in legal advisory.
2. Sports Law in Brazil
According to the Brazilian legislation, all clubs and Sports association should be incorporated as a regular company, aimed at profits. Therefore, clubs and associations are view as for profit businesses and therefore are subject to regular taxation and registration before the Commercial/Civil Registry authority, and should submit their financial statements yearly.
With regards to dispute settlement, all disputes concerning sports law should be taken to the Administrative Court of Sports Justice and they will issue an administrative decision that can be, furthermore, questioned before a Judicial Court. Athletes work contracts, on the other hand, could be questioned before Labor Courts (Judicial Courts by nature).
Also, it is stated, under the Brazilian law, that all international rules – those elaborated within the various international federations of particular sports – should be applied and that when applicable, the foreign law may also be used – on international sports contract, for instance.
Finally, that are several instruments that may rule the contracting of athletes. In the following section, those contracts will be briefly explained.
3. Contract of Sportive Apprenticeship
Non-professional athletes that are over 14 and under 20 years old may be apprentices and receive some income from it through the celebration of an apprenticeship contract.
The apprenticeship contract may state a maintenance allowance under the form of a scholarship/fellowship, and its value may be freely decided between the parties. Such contract does not imply in a labor relation and therefore does not impose the obligations existing under regular labor law.
Under such contract, the training entity (sports law) will have the right to sign with the athlete his first work contract as a professional or semi-professional and will be entitled to a preference of renewal right by the time the work contract expires.
4. Work contract
The training entity, according to the above, has the right to sign the first work contract with the athlete and this contract shall have the duration of up to 5 (five) years, having also the preference right to sign his second contract, that shall last for up to 2 (two) years.
To make use of the first contract right, the training entity must prove that the athlete has been registered by it as non-professional, for at least two years. When enjoying this right, the entity is entitled to transfer the athlete to another entity, costly or free of costs. For the athletes that work in a sport club without having trained as an apprenticeship by it, they have the right to leave the club whenever they want (and the club has the right to let them go as well) and no fees are due to the club, unless previously contracted – as a termination penalty, for instance.
Under the current legislation, the work contract can be celebrate with athletes that are at least 16 years old and shall be in written, lasting from 3 (three) months to 5 (five) years. The contract shall be registered in the Sports Association/Federation.
4.1 Penalty clause
The Penalty clause is mandatory on a sports work contract and may be freely stated between the parties, up to the amount of a 100 (hundred) times the value of annual salary.
The amount on the penalty shall be automatically reduced based on the years that the contract has taken effects, as the following: (a) 10% reduction after one year; (a) 20% after 2 years; (c) 40% after three years; (d) 80% after four years.
In case of an international transference of the athlete, the amount of the penalty shall be agreed, or else the maximum penalty of a 100 (hundred) times the annual payment shall apply.
5. Use of Image License/Contract
The contract of use of image licensing is a regular property contract, to be signed between the training entity and the professional athlete, which authorizes the temporary usage of the athletes’ image by the training entity (sports club), for promoting the sports club.
The amounts paid as a counter part to the right of use of image do not have salary (compensation) nature and therefore carry no relation to the Brazilian Labor Law. Hence, there are no social security/labor taxes levied on these amounts.
Source: Almeida Advogados