IN THE LIMELIGHT: THE RISE OF IMAGE RIGHTS IN WORLD FOOTBALL
The post has been authored by Insaf Ahamad.
Insaf Ahamad is a second-year, B.A. LL.B. student at Gujarat National Law University, Gandhinagar.
INTRODUCTION TO IMAGE RIGHTS
Image Rights are the expression of a personality in the public domain. The provision of Image Rights in law enables the definition, value, extent of commercial exploitation, and protection of Image Rights associated with a person. In recent times, the Image Rights of sports players have evolved as a key factor in the transfer market. For example, personal Image Rights were a roadblock for Argentinian star Paulo Dybala in the last transfer season. With the arrival of Cristiano Ronaldo from Real Madrid and a bad season at Juventus, Dybala’s future in Turin looked grim at the time. The player was reported to be involved in transfer talks with English sides Manchester United (“United”) and Tottenham Hotspurs (“Spurs”).
However, what hampered the prospective move was the player’s agent demanding 13.7 Million € for purchasing the player’s Image Rights from a third-party company. According to reports, Spurs agreed to the transfer on personal terms with the player and even managed a transfer fee with Juventus but were unable to reach mutual agreement on the Image Rights of the player which are owned by third-party company Star Image Limited.
Image Rights issues in the sports regime have not only been limited to sports players. English giants United and Chelsea came to halt on the issue of Image Rights when the appointment of Jose Mourinho as the Manager of United was due. Finally, United paid an undisclosed huge amount to Chelsea for getting their manager.
IMAGE RIGHTS AND ITS LEGAL DIMENSION
In Proactive Sports Management Ltd v. Wayne Rooney [2011] EWCA Civ. 1444], the England and Wales High Court defined ‘Image Rights’ as;
“Image Rights means the right for any commercial or promotional purpose to use the Player’s name, nickname, slogan and signatures developed from time to time, image, likeness, voice, logos, get-ups, initials, team or squad number (as may be allocated to the Player from time to time), reputation, video or film portrayal, biographical information, graphical representation, electronic, animated or computer-generated representation and/or any other representation and/or right of association and/or any other right or quasi-right anywhere in the World of the Player in relation to his name, reputation, image, promotional services, and/or his performances together with the right to apply for registration of any such rights.”
Rights-ownership structure and handling of Image Rights are equally as important as the player’s Image Rights. Mainly there are three ways in which this is done. First, some players register their Image Rights in their names. Six times world footballer Lionel Messi is one of the players who has adopted this method.
Another way to structure ownership is to establish a company to manage the Image Rights of the player. Lastly, some players choose to sell it to a third-party company, such as in the case of Paulo Dybala, who had vested his Image Rights with Star Image Limited. Such companies, established to manage Image Rights, are known as Image Right Companies (“IRC”).
IRC are mainly created by players for commercial purposes as well as to minimize tax liability. In the United Kingdom, while players’ earnings are taxed at a rate of 45%, the IRCs which own the player’s Image Rights are charged a corporation tax – which is currently at the rate of 19%.
Image Rights arrangements gained considerable popularity in the United Kingdom after the landmark ruling by Tax Special Commissioners in Sports Club PLC Others v. CIR. Adjudicated in 2000, the case involved football giants Arsenal FC and star footballers David Platt and Dennis Bergkamp. Arsenal F.C. signed Dutch striker Dennis Bergkamp and English midfielder David Platt from Italian sides ‘Inter Milan’ and ‘Sampdoria’ respectively. Their agreements included a provision that a part of the money will be paid by Arsenal F.C for their Image Rights and was the first in the U.K to contain a similar provision.
The idea was that the player’s remuneration would be divided into two. An amount will be paid to the player directly for his playing services and while a separate amount would be transferred to player’s IRC (mostly located at an offshore tax haven) for their Image Rights – effectively minimizing their tax liability. Inland Revenue, who challenged the above arrangement to the Tax Special Commissioners argued that that the arrangement is a ‘smokescreen’ to evade tax liability by paying the players money offshore. However, the use of their Image Rights by the club and the arrangement was approved by Tax Special Commissioners.
This position, however, stands altered due to the ruling in the recent case of RFC 2012 PLC (in liquidation) (formerly The Rangers Football Club PLC) (Appellant) v. Advocate General for Scotland (Respondent) (Scotland) and vide a 2018 Publication from the HMRC (a non-ministerial department of the UK Government responsible for the collection of taxes) to tackle the issue of tax avoidance aimed at profit fragmentation (diversion of profits attributable to UK based trading activities to ‘offshore’ structures with insufficient substance to justify the allocation of profits in this way). This means closer scrutiny will follow Image Rights agreements and the parties to these agreements will have to provide sufficient commercial justification for payments along with supporting documentation, evidencing the justification for those payments made to third-party companies.
Other European jurisdictions like Spain have also initiated high profile criminal prosecution against players on tax issues arising out of Image Rights. In 2016, Lionel Messi was awarded a 21-month prison sentence by Spanish Supreme Court for tax fraud related to his Image Rights. Messi, along with his father George, was found guilty of concealing earnings from his Image Rights by using tax havens in Uruguay and Belize, although he avoided his sentence by payment of the fine.
Right strategies of handling Image Rights can also come in handy for players at times. For example Gareth Bale, during his transfer to the Spanish side Real Madrid for a record fee of £85.3 million (US$ 105.3 million), assigned 50% of his Image Rights to the club – thus, making his dream transfer possible.
IMAGE RIGHTS IN OTHER JURISDICTIONS
Image Rights have been recognized in the U.S which includes New York, California, among others. These rights have been recognized as the right of publicity which prevents the commercial exploitation of the ‘likeliness’ or ‘identity’ of an athlete. The right of publicity was first recognized in Haelen Laboratories, Inc. v. Topps Chewing Gum, Inc (1953). However, a balance has been struck between Image Rights and freedom of the press.
The first amendment to the U.S constitution limits the right to publicity. The distinction has been done mainly on whether the image is used for informational purposes or commercial purposes. In Kienitz v. Sconnie Nation LLC (2014), the U.S. Court of Appeals for the Seventh Circuit noted that the purpose and character of the use should be the basis in cases where the right of publicity and free speech intersect.
In the U.K., Image Rights have not been formally recognized as a distinct right yet, except for tax purposes. In the U.K., parties have to depend on other laws such as trademark laws or copyright laws or the common law tort of passing off to protect their Image Rights.
In Germany, Article 1 and 2 of the German Constitution protect Image Rights. In 2003, former German Goalkeeper Oliver Khan succeeded in a suit challenging the use of his image in the FIFA computer game without his consent. (Kahn v. Electronic Arts GmbH, unreported, 25 April 2003). In Italy, in a recent decision, Milan Court of First Instance ruled in favor of legendary footballer Diego Maradona in a suit against Dolce & Gabbana over unauthorized use of his name on a jersey.
Guernsey (Channel Islands) has taken a major step in this direction by setting up a registry for Image Rights. Considering the growing importance of Image Rights, it would be interesting to see if other jurisdictions move in the same direction.
IMAGE RIGHTS IN INDIA
Image Rights are still in a nascent stage in India. Indian courts have recognized Image Rights through various significant Judgments. In ICC Development (International) Ltd. v. Arvee Enterprises [2003 (26) PTC 245 Del], Delhi High Court held that;
“The right of publicity has evolved from the right of privacy and can inhere only in an individual or in any indicia of an individual’s personality like his name, personality trait, signature, voice etc. An individual may acquire the right of publicity by virtue of his association with an event, sport, movie, etc. However, that right does not inhere in the event in question, that made the individual famous, nor in the corporation that has brought about the organization of the event. Any effort to take away the right of publicity from the individuals, to the organizer {non-human entity} of the event would be violative of Articles 19 and 21 of the Constitution of India. No persona can be monopolized. The right of Publicity vests in individuals and they alone are entitled to profit from it.”
However, even today, no specific law has been created for the protection of Image Rights. In the last decade, the sports industry has changed from mere competition sports to a major source of revenue generation. By the corporatization of sports and cocooning of franchise based leagues in India like Indian Premier League (“IPL”) and Indian Super League (“ISL”), the recognition and protection of Image Rights as a distinct right and specific laws on Image Rights is of greater importance than ever before.
This blog-piece first appeared on the GNLU Student Research Development Council Blog here, and has been re-published with prior permission.
The author can be reached for comments on his email at tkinsaf@gmail.com
Cite as: Insaf Ahamad, In the Limelight: The Rise of Image Rights in World Football, Extra-Cover: The Sports Law Blog of India (23rd Aug 2020), Accessed at https://www.extra-cover.org/post/in-the-limelight-the-rise-of-image-rights-in-world-football [Date of Access].