In the dynamic world of professional sports, athletes are not just performers on the field, court, or track – they are brands with substantial commercial potential. Whether you're in football, rugby, cricket, athletics, or any other professional sport, understanding and effectively managing your image rights is crucial. Here’s a breakdown of what image rights are and how you can leverage them to your advantage.

In June 2021, the US Supreme Court in NCAA v. Alston opened the door for college athletes to financially benefit from their name, image, and likeness rights. This was long overdue - Unless you’ve been living under a rock you will have seen a meteoric rise of of NIL (name, image & likeness) business where College athletes such as Livvy Dunne and Bronny have already signed on to multi-million dollar deals even before their first Pro outing.

Bad news is, thats not going to happen here - the College sport marketplace isn’t valued the same, the size of marketable audience doesn’t warrant it, and to be honest many brands are still catching up on how much of a cheat code it is to work with athletes in regards to consumer engagement.

Image rights are particularly complex under English law. There is no codified or consolidated legislation that protects image rights as such. Instead, sports stars need to rely on a patchwork of laws including intellectual property rights, passing off, privacy laws, defamation and advertising regulations to prevent authorised exploitation of their image.

Defining Image Rights

In the UK, image rights refer to the commercial use of your persona – this includes your face, hairstyle, voice, nickname, signature, and even your jersey number. These rights allow sports clubs and brands to pay you for off-the-field activities like endorsing products or being associated with specific sponsors. Importantly, this is a distinct income stream from your salary and can become a significant financial resource upon retirement.

Real-life instances where the broad definition of image rights has led to legal challenges or controversies include things like a tweet or Instagram post by an athlete wearing a specific brand could be repurposed without athlete approval.

And one that will inevitably crop up more will come in the rise of deepfake technology, where an athlete’s likeness is digitally recreated and used in various contexts, raises new challenges in image rights, particularly around consent and control.

The Scope of Image Rights

Don’t underestimate the value of your image! Whether you're a high-profile star or a rising talent, your image carries weight. If you have a strong presence in your sport or club, sponsors are likely to seek association with you, offering financial rewards for this privilege.

Athletes in clubs will need to be mindful of their contracted agreements with their employing club - In most contracts a portion of the athlete’s rights are given away, often including a clause where the player grants the club a license to use their image for various commercial purposes. This can include promotional materials, advertisements, merchandising, and digital media related to the club.

Brands often have to navigate “the Rule of 5” when activating athletes through club agreements. According to this rule, if an advertiser or a brand wants to use athletes' images without individual endorsement deals, they should include at least five athletes in the promotional material. This grouping dilutes the impression that any single athlete is specifically endorsing the product.

The key purpose of the Rule of 5 is to prevent the misconception that an individual athlete is endorsing a product or service, particularly when they have not agreed to do so. When athletes are featured individually, it's more likely to be interpreted as a personal endorsement.

Structuring Image Rights

Creating an image rights structure is a strategic way to manage these finances. Typically, payments for image rights go directly to a company set up in your name, taxed at a corporate rate, which is often lower than personal income tax rates. This setup not only provides tax efficiency but also keeps these earnings separate until you decide to access them, such as after retirement.

There is a prominent case involving two players signed at Arsenal Football Club. The club employed the players as per usual and paid them a weekly wage for their playing and training duties. The club also made extra payments for the exploitation of the players’ image rights and HMRC took the case claiming the club had not accounted for the normal payroll deductions on those payments over and above the salary. The club successfully argued that the image rights payments were separate to those under the employment contract and so did not have to be subjected to payroll deductions.

Navigating Legal and Tax Implications

With HM Revenue and Customs (HMRC) scrutinizing how clubs compensate players for image rights, it’s essential to ensure compliance. This means setting up appropriate licensing agreements and demonstrating the commercial viability of these arrangements. For non-UK residents, there are options for setting up both domestic and international image rights structures.

Remember, though, that each athlete's situation is unique. Image rights shouldn’t be seen as a tax avoidance scheme but as a legitimate method to capitalize on your brand.

A quite recent case involved Hull City where the club sadly could not produce any evidence of the exploitation of their marquee player’s image rights, for which the club was paying a sizeable fee. HMRC successfully challenged those arrangements arguing there was no commercial justification and therefore, all that existed was an employer employee situation, meaning that all payments made by the club should have had PAYE deductions applied.

Image rights offer a fantastic opportunity to augment your income and secure your financial future post-retirement. However, the key is to approach this with professional guidance. Tailored advice ensures that your arrangements are not only profitable but also compliant with legal and tax regulations.