📸 Image Rights: What on Earth Are They?

Last week this newsletter reached more people than ever before. In that edition we discussed the impact that tax plays on an athletes’ earning potential.

Before we dive into the nuances of image rights, a warm welcome to every new subscriber that is among us this week.

Most of you have arrived here by virtue of my YouTube channel. The trajectory of my platform on there has gone like this:

• 0-10K subscribers: 328 days

• 10K-20K subscribers: 144 days

• 20K-30K subscribers: 88 days

• 30K-40K subscribers: 21 days

• 40K-50K subscribers: 3 days!

The growth this past weekend has been amazing largely due to a video I released about detailing how footballers get paid. Image rights are a massive part of that equation so today I will give you even more detail here That I didn’t give in my YouTube video!

Depending on where you apply your trade in the world (barring the Middle East of course), your salary will be exposed to some level of tax. Most European nations have a marginal tax rate between 30%-40%.

Where things get interesting however is when Image rights come into the equation. Most of my life I have never really truly known what image rights were. It was just a term that I heard a lot in sporting circles.

For the elite players however, image rights make up a key portion of total annual income. They’re also a way in which one can get very creative from a tax perspective! As you’ll see today, sometimes a little too creative!

Image rights speak to when an athlete is paid for their name, likeness, voice, or signature. 

At the start of their careers, players own 100% of their image rights and all the spoils that come with it! However as time progresses, that control can sometimes start to slip.

Few football clubs handle this more aggressively than Real Madrid.

Florentino Pérez, Real’s president, has long made his stance clear. If you wear the white shirt, you give up half of your image rights. His philosophy is simple. By playing for Real Madrid, your global profile will explode, and that exposure comes at a price. Real Madrid aren’t just paying a salary to you for your footballing ability, they’re investing in your brand. 

And for that investment Florentino expects a return.

Here’s how it works in practice:

If Jude Bellingham were to sign a sponsorship deal with Beats by Dre for €2 million, €1 million would be owed to the club, unless a different split has been privately negotiated.

And for years, players simply accepted it. After all, Real Madrid’s reach is unmatched.

That was the case until a certain Portuguese player came along in 2009.

For the first time, a player negotiated a 60/40 split in his favour, changing the blueprint for elite players landing in Madrid.

Real Madrid’s model is rare among Europe’s elite. In the Premier League, for instance, clubs largely stay out of players’ image rights. Erling Haaland has full control over his brand for example, allowing him to build a sponsorship empire without splitting revenues with Manchester City.

There’s also a smart tax strategy at play with image rights.

In the UK, money from sponsorship deals is typically paid into a player’s company. That income is taxed at 19% corporation tax instead of 45% income tax, a significant difference that can save millions over a career.

In addition, image rights can be “sold” onwards.

In 2015, Cristiano sold his 60% portion of his image rights to Peter Lim’s MINT Media under a six-year agreement. Lim, a Singaporean businessman, played a key role in pushing Ronaldo’s commercial footprint across Asia making him an ever bigger superstar than he was at the time. 

One standout example: Shopee, Southeast Asia’s e-commerce giant, featuring Ronaldo in a campaign that went viral for all the wrong, yet commercially effective, reasons.

Interestingly however, Between 2013 and 2018, dozens of high-profile footballers in Spain, especially players at Real Madrid and Barcelona, got caught up in tax fraud investigations over their image rights.

Many players set up companies in tax havens (like the British Virgin Islands, Panama, and others) and licensed their image rights to those companies.

Spain historically allowed footballers to pay less tax on image rights through a loophole (especially under a 2005-2010 rule nicknamed the "Beckham Law"). After the Beckham Law weakened, more aggressive offshore structures became common.

When Spain’s economy crashed in 2008-2012, public pressure grew, and the Spanish tax authority (Hacienda) started aggressively chasing unpaid taxes, making footballers the perfect high-profile targets.

The list of players involved was pretty significant:

That’s a lot of money reclaimed by the Spanish Govt!

Interesting to note that NONE of these people still operate in Spain anymore!

Funny that.

See you next week.