International Sports Image Rights Tax Optimization
It is crucial that image rights arrangements are set up properly and within the provisions of the tax and other relevant 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, when setting up arrangements for the commercial use of their image/NIL, they have 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.
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 use 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.
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 along with knowledge of the Sports Industry and the factors attributable to the development of a sports person into a sports celebrity.
Image Rights/NIL Investments Evaluation
Our team of experts undertakes the evaluation of different types of investments in Image Rights/NIL of athletes. Our NIL investment evaluation services include:
- Evaluation of alternative ways of investment in the sports image rights of athletes (i.e. direct or indirect shareholding, revenue participation rights, etc.) and preparation of a report with suggestions, tailored to the investors’ objectives and risk appetite.
- Identification and evaluation of risks connected with the investment in existing or prospective image rights arrangements. Presentation of various mitigating actions to the identified risks. Risks evaluated include Ownership and Exclusivity of Rights, Financial and Tax Risks, Legal Risks and Athlete-specific Risks.
Athletic Brand Commercialization Consulting
With the athlete in mind, our team offers a number of services which help athletes identify their unique characteristics and value and build an authentic brand which can be leveraged commercially. These services include:
- Analysis of the commercial potential of athletes in terms of their image/NIL and preparation of a report with recommendations as to suitable industries/brands to be approached for potential sponsorships, endorsements, merchandizing deals, ambassadorships, etc.
- Preparation of a Personal Branding, Promotion and Commercialization Strategy for athletes which includes the component analysis referred to above, and builds on its outcomes to recommend an appropriate brand building/strengthening strategy along with suggestions in connection with the strategy implementation. The suggested implementation includes a marketing and promotion plan for building a solid fan-base, reaching out to the desired fan-base as well as suggestions as to the industries and brands which are in sync with and can benefit from the athlete’s individual characteristics.
- Analysis of athlete-specific reputation risks and preparation of Reputation Management Plans for athletes.
Image Rights/NIL 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 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 establish internal policies which will dictate the framework within which the use of their players’ image rights/NIL will be conducted. These internal policies need to 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/NIL use agreement in place.
Seminars & Educational Programs on Sports Image Rights/NIL Issues
There is a lot of confusion surrounding sports image rights/NIL as well as a lot of misinformation going around, on what constitutes tax compliant 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, NIL advisors, and other interested sports executives, marketeers and sports stakeholders.
We also undertake, on an ad hoc basis, the design, preparation and delivery of bespoke image rights/NIL seminars which cater to the specific needs of particular audiences, such as sports agents, or sports club officials and employees and so forth.