Sports Image Rights: Policies and Procedures for Sports Persons, Clubs and Organisations

By Athena Constantinou, Sports Image Rights Experts, Nicosia, Cyprus

It is becoming increasingly important, from a tax point of view, to justify sports image rights arrangements before the tax authorities of many countries around the world, not least in the United Kingdom and the United States.

Before all else, it is advisable to undertake preliminary assessments as to whether a player’s image has a commercial value or not, and, if so, how best to exploit it commercially. For this purpose, an expert valuation is a sine qua non!

In such cases, it is advisable for sports persons, clubs and organisations to establish internal policies and procedures, which will dictate a framework within which the image rights of players will be conducted.

These policies and procedures need to provide a common set of operating principles which will apply to all players, including the basic contractual documentation to be maintained in respect of each of them with whom the sports clubs and organisations have image rights user agreements.

In particular, such documentation needs to maximise, for each sports player, club and organisation, the financial benefits of the sports image rights, and also to minimise, through appropriate corporate and independent management arrangements, the tax consequences of their commercial exploitation.

All these arrangements also need to be reviewed, from time to time, at least, on an annual basis, to ensure that, from a legal and fiscal point of view, they remain fit for purpose and reflect the current legal and tax positions.

There is much to be gained from the exploitation of sports image rights, but, at the same time, there is also much to be lost, if the contractual and fiscal arrangements are not set up and organised accordingly.

This is well illustrated by the Brazilian footballer Geovanni Gomez UK tax case: Hull City AFC (Tigers) Limited v HMRC [2019] TC7074.

For further information and advice, log onto ‘www.sportsimagerightsexpert.com’