‘Image is Everything’…………….But HMRC may think otherwise

Andre Agassi was once quoted as saying ‘Image is Everything’; even a brand pioneer such as Agassi could not have predicted the business deals that sports stars have struck over recent years. However, particularly in the UK, it has led to greater scrutinisation by the government and Revenue & Customs (HMRC).

However, despite the concerns of misuse regarding the interpretation and justifiability of image rights, it is perhaps worthwhile considering as a benchmark, some of those who can claim to have valid rights to their image.

In 2015 World Footballer of the Year, Christiano Ronaldo sold all his image rights not related to his club for six years to Singaporean tycoon and Valencia owner Peter Lim, through his Mint Media company in return for a lucrative cash settlement.

The deal widened his image, particularly in Asia where the game’s popularity is growing and thriving. According to Forbes at the time, Ronaldo was (and still is) in the top 10 of sports endorsement earners, pulling in $27m as a result of his image trademark. One of the trademarks Ronaldo has is the CR7 brand, symbolic of his initials and shirt number. This branding is one of his big earners as it appears on a clothing line and is also incorporated into a deal with a line of Nike football boots. Similarly, Roger Federer and Rafa Nadal are well renowned for their personalised tennis shoes and apparel, comprising characteristically their distinct brand logos and initials/name. It’s this type of branding that sees them get royalties from Nike whilst promoting the brand and their own image.

Another player that succeeded in registering an approved trademark with the Intellectual Property Office was Ronaldo’s Real Madrid teammate Gareth Bale. His infamous ‘Eleven of Hearts’ goal celebration which he now uses as a logo on clothing, footwear, and head gear brings in over a reported £3 million a year from the ‘love heart’ trademark.

The ‘Godfather’ of registering his name as a trademark is David Beckham, who has done so in almost every territory across the globe – Brand Beckham. Perhaps the greatest catalyst for his move from Real Madrid to the LA Galaxy centred around the former club’s policy of dividing their ‘Galacticos’ endorsements relating to image rights 50:50 between the club and the player. Negotiations broke down between Real Madrid and Beckham as he sought to gain complete control of his commercial income. Real Madrid’s fan base at that time was estimated to be in the region of 0.5 Billion worldwide, with Beckham ‘23’ replica shirts the must have item. Beckham instead took his brand to America where his guaranteed salary of $32.5 million over 5 years was eclipsed by the $217.5 million which was amassed through his intellectual property earnings in a total deal reported to be worth $250 million.

However as reported recently in the press, Footballers in the UK earning millions of pounds for ‘image rights’ could be declared offside by the taxman – unless they have official sponsorship deals. Chancellor Philip Hammond has said that HMRC will issue guidelines for sports personalities over controversial image rights payments.

Currently Football Clubs pay players separately for their playing and for the right to use their image in club material. The payments for image rights are taxed at a lower rate. The tax authorities say they are investigating dozens of players over the tax affairs including image rights abuses.

The Treasury last week said the guidelines would set out the law as it stands, citing a 20-year-old case involving Arsenal FC. The case established that players could receive image rights payments but only under very precise circumstances.

It has recently been suggested that HMRC will make the point that only a small number of sports people truly have image rights. That would mean restricting the arrangements to stars with formal third-party advertising deals/contracts.

An existing agreement between HMRC and clubs expires at the end of the season meaning the guidelines need to be in place in time for the summer transfer window.

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