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International Sports Image Rights Tax Structuring

It is crucial that image rights structures are set up properly and within the provisions of the tax laws of the countries in which the sports professionals are tax residents, otherwise the athletes may face tax fraud issues.  It is of utmost importance that image rights arrangements have substance, the setup makes commercial sense and they are run by competent people who actually manage and promote the sports professional’s image commercially.

Jurisdictional differences in both the legal and tax treatment of image rights make it a complex matter.  Sports professionals are usually mobile between teams and countries all over the world, therefore, the tax structuring of their image rights has to take into consideration a comprehensive set of different rules and regulations, in order to be tax compliant globally.  The days of incorporating image rights companies in tax havens are over and such set-ups are blacklisted by most jurisdictions.

Our expert team with its multijurisdictional experience and exposure can assist and offer guidance on a number of tax issues in connection with International Sports Image Rights arrangements including the following:

  • Review of the Sports Celebrity Image Rights commercialization activities and creation of a tax infrastructure which supports and sustains the intended commercial /business operation. Advice as to the best course of action for tax optimization.
  • Guidance on implementation of international sports image rights structures.
  • Review of existing sports image rights structures in terms of tax compliance and advice on adapting these structures so that full tax compliance is achieved.
  • Periodic review of Sports Image Rights structures to ascertain continuing tax compliance and efficiency as well as the business/commercial sustainability of the structure.
  • Expert witness services in connection with Sports Image Rights Tax cases.
  • Advice to Sports Celebrities, Sports Clubs and Sports Agents on any tax issues arising from Sports Image Rights arrangements.

Legal Protection of the Sports Celebrity Brand

Image rights are the expression of a personality in the public domain.  The provision of image rights in law enables the definition, valuation, commercial exploitation and protection of image rights associated with a person.

The right of publicity is the right of an individual to control the commercial use of his or her name, image, likeness, or other unequivocal aspects of one’s identity.  It is generally considered a property right as opposed to a personal right and as such, the validity of the right of publicity can survive the death of an individual, giving rise to valuable so-called ‘post mortem’ rights.

In common law jurisdictions, publicity rights fall into the realm of the tort of passing off.  US jurisprudence has substantially extended the right through the notion of natural rights and the idea that every individual should have a right to control how his or her persona is commercialized by third parties with the intent of making a profit.

The Sports Celebrity Brand and its resulting image rights are intangible assets with commercial value and as such they should be legally protected to ensure that any potential revenue arising from such rights is enjoyed by their lawful owner.  With our vast expertise in the legal protection and commercialization of image rights, we can offer advice and guidance on a number of issues including the following:

  • Legal review of International Sports Image Rights structures in terms of legal protection of the Sports Celebrity Image.
  • Advice on the legal protection of the Sports Celebrity’s Image Rights.
  • Registration of Image Rights.
  • Legal review of the Sports Celebrity’s image commercialization contracts.
  • Legal advice on sports image rights licensing negotiations and drafting of sports image rights licensing agreements.
  • Expert witness services in legal cases involving Sports Image Rights.

Valuation of the Sports Celebrity Image

The economic worth of a sports celebrity’s image is the basis of any commercialization activities connected with such image.  The higher the value of the sports celebrity image, the higher the revenue associated with the particular image.

Attaching a monetary value to the Sports Celebrity image is not an easy task and it requires expert skill in evaluating intangibles and knowledge of the Sports Industry and the factors attributable to the development of a sports person into a sports celebrity.

With our many years of experience in business valuations and our knowledge of and expertise in the Sports industry, we have created the APC Brand Evaluator ®, a bespoke methodology which evaluates and measures the monetary value of the Sports Celebrity image.  As a result, our sports celebrity image valuation methodology, fulfils the specific needs of this exclusive niche, the valuation of the sports celebrity image, and includes the following services:

  • Ascertaining whether a particular sports professional has an image with commercial value using a bespoke valuation tool.
  • Advise on the components of the value of the Sports celebrity brand, as a tool for further enhancement/development of the brand and maximization of relevant profits.
  • Valuation of the Sports Celebrity Image via use of the APC Brand Evaluator ®.
  • Review of Sports Celebrity image valuations performed by third parties to assess their validity and reasonableness.
  • Expert witness services for disputed legal cases concerning the value attached to image rights.

Image Rights Policies and Procedures for Sports Clubs and Sports Organizations

It is becoming increasingly more important, from a tax point of view, to justify image rights structures and arrangements before the relevant tax authorities of a number of countries.

In view of the prevailing tax climate, it is highly recommended that sports clubs should establish internal policies which will dictate the framework within which the exploitation of their players’ image rights will be conducted, particularly to avoid any tax problems.  These internal policies should be standardized to provide a common set of principles applied to all players, as well as provide guidance on the minimum documentation required to be kept for each player with whom the club has an image rights exploitation agreement in place.

Our team of experts, advises and assists sports clubs and sports organizations on establishing image rights policies and procedures, which will help them maintain control of the situation, as well as have a basis on which to discuss any issues raised by any tax authorities.  Our relevant services include:

  • Advising sports clubs, sports organizations and sport governing bodies on the formulation and implementation of a strategic framework and policies, concerning the handling and utilization of image rights of their players, members, etc.
  • Assisting sports clubs in creating internal procedures and systems for the documentation and justification of image rights contracts with their players.
  • Guiding sports clubs in adopting methodologies for preliminary assessments as to whether a particular player’s image has a commercial value or not.
  • Annual review of the internal image rights documentation system of sports clubs to ensure adherence to the club’s internal policies and compliance with tax and other applicable external legislation.

Seminars on International Sports Image Rights Issues

There is a lot of confusion surrounding sports image rights as well as a lot of misinformation going around, on what constitutes tax compliant structures and arrangements.  Through our seminars on image rights, we aim to shed some light and provide clarity on the prevailing controversies in this area.

Our seminar topics address a variety of relevant issues and their aim is to educate and provide concrete information on the subject matter to sports celebrities and professionals, sports agents, sports lawyers and tax advisors, and other interested sports executives, marketeers and stakeholders.

We also undertake, on an ad hoc basis, the design, preparation and delivery of bespoke image rights seminars which cater to the specific needs of particular audiences, such as sports agents, or sports club officials and employees and so forth.

Our standard seminars cover the following topics:

  • The International Sports Image Rights structures comprehensive seminar addresses the building of the sports brand, tax structuring, legal protection, commercialization and valuation of the sports celebrity image as well as the do’s and don’ts of image rights arrangements on the basis of past cases.
  • Sports Celebrity Image Rights Valuation: The main factors influencing the value of a sports professional’s brand and the most appropriate methodology for deriving such value.
  • Sports Clubs’ Image Rights Policy formulation.
  • The Image Rights Justification File: Contents and Frequency of Updating