Understanding image rights in the sports industry
In the world of professional sports, athletes are more than just players—they are brands. Their name, image, voice, and even signature carry significant commercial value. This is where image rights come into play…
What are image rights?
Image rights refer to an individual’s legal ability to control and commercially benefit from their likeness and personal characteristics. In the sports industry, this includes not only a player’s image but also their name, voice, autograph, and other unique attributes. These rights allow athletes to engage in endorsements, sponsorships, merchandise deals, and promotional activities.
As athletes increasingly promote fashion, lifestyle, and technology brands, effective management of image rights has become essential. It ensures that players can monetise their personal brand effectively while protecting themselves from unauthorised use or misinterpretation.
How are image rights protected in the UK?
In the UK, athletes typically own their image rights and often establish an Image Rights Company (IRC) where they assign their image rights to the company. This company, where the athlete is usually the director and shareholder, serves as a vehicle to manage and monetise their personal brand. Through an IRC, athletes can license their image for commercial use, separate from their employment income.
What are the benefits of an Image Rights Company?
1. Post-career income
A professional athlete’s career is often short-lived. An IRC provides a structure for continued income through licensing and endorsements even after retirement.
2. Tax efficiency
Payments made by clubs for the use of a player’s image are directed to the IRC. If these payments were made directly to the player, they would be subject to personal income tax at 45% and 2% National Insurance. However, profits within the IRC are taxed at the corporate rate, offering significant tax savings.
When considering succession and estate planning, an IRC can be structured to allow for smoother succession planning. Shares in the company can be transferred to family members or held in trust, making it easier to manage the athlete’s legacy and future income streams.
For athletes with international appeal, an IRC can also facilitate cross-border licensing and commercial opportunities.
3. Asset protection
In separating personal and commercial assets through an IRC, an athlete’s wealth is better protected should the company face any legal or financial issues.
Key considerations for clubs
- Separation from employment contracts: Clubs must clearly distinguish image rights payments from salary. Proper documentation and record-keeping are essential.
- HMRC scrutiny: The UK tax authority closely monitors image rights arrangements. Clubs and players must ensure compliance with HMRC guidelines.
- Disclosure obligations: In case of reporting errors, it’s crucial to seek professional advice and disclose issues through the appropriate channels, such as the Digital Disclosure Facility.
How can Price Bailey assist with IRC?
Our Price Bailey experts understand the complexities of image rights in the sports industry. We offer tailored advice on:
- Structuring image rights arrangements
- Setting up and managing IRC
- Ensuring tax compliance and maximising tax efficiency
- Planning for long-term financial sustainability
- Dealing with HMRC enquiries
Whether you’re a player, agent, or club executive, we can help you navigate the financial landscape of image rights with confidence. Speak to our Price Bailey team using the form below to find out more…
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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