Football and the Law: Image Rights (Part Two)
‘It’s not the salary that’s a problem, it’s just the image rights that needed a little perking.’ – David Beckham
Professional football players are increasingly becoming a brand in their own right as the game becomes a more prominent player in the entertainment field. Real Madrid C.F. forward, Cristiano Ronaldo remarked in 2015 that the assignment of his image rights to a Hong Kong company called Mint Media would ‘take the Cristiano Ronaldo brand to the next level, especially in Asia.’
The value of a player’s image rights can make him highly desirable and lucrative for a football club as shown by a press statement issued by Paris Saint-Germain F.C. (PSG) in which they describe the world’s most expensive player, Neymar Jr, as ‘widely considered to be an icon in world football.’ The aspirational Ligue 1 football club seeks to utilise Neymar JR’s talents and ‘immense popularity around the world’ to elevate the global brand value of PSG which serves the twin aims of diversifying income streams by gaining access to new markets – and attracting the most talented players. This creates the possibility for PSG to ascend new heights and join the ranks of FC Barcelona and Real Madrid who are often cited as the football clubs it was a childhood dream to play in their starting XI.
Read part one of the Football and the Law series here >>
What are image rights?
Image rights relate to the commercial exploitation of an individual’s name, likeness and image as well as characteristics that are inextricably linked to an individual’s personality such as their autograph, signature and nickname.
The more popular the player, the greater the value of their image rights and therefore a focal point of contract negotiations. The player will want to ensure that he receives a fair proportion of the revenue from the exploitation of his image rights, as his image will be used to promote the football club’s products around the world.
How do negotiations over image rights work?
Negotiations over image rights will be a delicate balancing act between the competing commercial interests of the player and his advisors on the one hand – and the football club and its advisors on the other hand. Both will be seeking the most financially advantageous deal but the former will be seeking more money, whilst the latter will be seeking to save money that can be used elsewhere, such as buying new players to strengthen the squad.
Once a figure has been agreed on the value of a player’s image rights, the player’s advisers may arrange for the image rights to be assigned to a company for tax purposes. For instance, Brazil forward, Neymar Jr who formed part of the scintillating three-pronged attack of Barcelona alongside Lionel Messi and Luis Suarez nicknamed ‘MSN’; assigned his image rights to a Brazilian company called IMT Talent in 2012. If a player assigns his image rights to a company, then the football club will enter into a contractual relationship with that company.
By way of example, PSG would have entered into an image rights agreement with IMT Talent following the record-breaking transfer of Neymar Jr for £198 million in the 2016/17 summer transfer window, which eclipses the transfers of his contemporaries such a French midfielder, Paul Pogba, who transferred from Juventus F.C. to Manchester United F.C. for £89 million, surpassing the transfer fee record held by Welsh forward, Gareth Bale, for three years following his £85 million transfer from Tottenham Hotspurs F.C. to Real Madrid.
What’s the assignment of image rights?
It is more tax efficient for both the player and the football club alike for the player’s image rights to be assigned to a company. From the perspective of a player earning over £150,000, they will be paying corporation tax of 20% on the pre-agreed proportion of revenue generated from the exploitation of their image rights rather than income tax of 45% if his club was to pay them directly. Equally, the football club will not have to incur the expense of paying Employer’s National Insurance Contributions at a rate of 13.8% to the image rights company.
In addition to image rights companies, image rights can also be assigned to a management company. A case in point is that of Wayne Rooney who has returned to his boyhood club, Everton F.C., on a free transfer after 11 memorable years at Manchester United. A 17-year-old Wayne Rooney assigned his image rights to his image rights company called Stoneygate Limited (Stoneygate) which in turn entered into an Image Rights Representation Agreement with Proactive Sports Management (Proactive).
This Agreement entitled Proactive to 20% commission of the gross sum payable to Stoneygate from the commercial exploitation of Wayne Rooney’s image rights such as securing sponsorship deals for the talented young footballer who went on to become the leading goal scorer for Manchester United and the England national football team.
Transition from the playing field to the boardroom
Image rights can be highly lucrative, strategic and mutually beneficial for individual players and their clubs. The millennial professional football player is increasingly viewing their career and invariably their legacy through the prism of brand impact.
In recent times, players have the opportunity to use their performance on the football pitch to garner popularity and develop a solid fan base on social media platforms, such as Instagram, which they can use to attract the attention of sponsors and thus monetise their popularity. It will not go unnoticed to prospective sponsors that three-time FIFA Ballon d’Or winner, Cristiano Ronaldo, is the most followed footballer on Instagram with a staggering 108 million followers (3 million more than Beyoncé!).
Ultimately, the football industry is a business and football players are paying greater attention to the business side of their careers whilst they are still in their prime to capitalise on commercial opportunities that arise from their brand profile. Arguably, David Beckham is the epitome of how to exploit one’s image rights to the fullest extent and secure a lifetime endorsement deal with a global sports brand; business savvy Becks inked a lifetime deal with Adidas a decade before he announced his retirement from the game in May 2013.
In the relatively short-lived career of a football player, the albatross of a career-ending injury means that the exploitation of image rights can play a significant role in the player’s earning potential in a field where the average retirement age is 35 years old.
To be continued after half-time…
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Words: Hilda-Georgina Kwafo-Akoto
You can read more about commercial awareness here.