Are sports image rights assets? A legal, economic and tax perspective

Abstract

Although a general right of protection for a celebrity image or personality has not been recognised by the English Courts, it appears that commercially, the sports industry deals with image rights as an intangible asset. This was illustrated in the recent case of Proactive Sports Management Limited v Rooney & Ors where the Court of Appeal upheld a previous ruling by the High Court that an image rights agreement entered into by Wayne Rooney with an image rights company was unenforceable as it was in restraint of trade. 1 The decision Sports Club Plc v Inspector of Taxes also indicates that the process of assigning an image right to a company can be seen as a valuable asset at least for tax purposes, provided that arrangements are commercially genuine. 2 Legal scholars in the UK have begun to explore how the field of law will and should respond to the growing commercialisation of image rights. Some suggest that the emerging significance of the commercial and tax value of image rights will have a transformative effect on the law. 3 Others argue that existing legal concepts such as the law of passing off and trademark protection in the UK can accommodate whatever the value of image rights. 4 This paper highlights the factors to consider in entering into sports agreements including the tax treatment applied to image rights and the recent update and commentary of the Inland Revenue (HRMC) to their capital gains tax manual on the taxation of image rights. 5 The commentary of HRMC on image rights is yet another indication that, although traditional common law remedies will evolve further in the light of the growing commercialisation of image rights, a formal legislative or jurisprudential recognition of personality rights remains unlikely in the near future in the UK.