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HMRC internal manual

Capital Gains Manual

Intellectual Property Rights: image rights: Sports Club

“Image rights” and the Sports Club case

It is often asserted by sportspersons, celebrity entertainers and their agents that they have assigned their “image rights” to a company for the purpose of exploitation in the media and for promotional purposes.  The individual may agree to perform services in connection with the licensing of their “image rights”.  For instance, a football club may license the “image rights” from a player’s service company for commercial purposes - e.g. the club may enter into an agreement with a sponsor to enable the sponsor to use the player’s image.

The support for this argument usually quoted is the Sports Club case.  This was a decision of the Special Commissioners published in anonymous form as Sports Club plc and others v CIR (SpC253, [2000] STC (SCD) 443).   The case did not progress beyond the Special Commissioners.

Sports Club concerned the actions of an English football club in respect of two star players, anonymised as Jocelyn and Evelyn, both of whom had high profiles as existing international players who joined Sports Club on transfer from clubs outside the UK.     Both had pre-existing arrangements with the clubs outside the UK to exploit their images which had been assigned to a company.  When taking up their employment with Sports Club, both agreed to arrangements under which Sports Club would make payments (in addition to amounts payable under their contracts of employment) to the companies that were licensed to exploit their “image rights”.

In the preamble to their decision, the Special Commissioners explicitly recognised that there was no property in a person’s image and that it was therefore misleading to describe the arrangements in Sports Club as “image rights agreements” (paragraph 8) –

*“During the hearing, and in the documents, the promotional agreements were sometimes referred to as “image rights agreements”.   As it was agreed that in England there is no property in a person’s image we do not find the expression “image rights agreement” as being sufficiently descriptive of the contents of the agreements in issue in this appeal.   As the agreements concerned promotion, publicity, marketing and advertising we refer to them as promotional agreements except where the context requires a reference to image rights.” *

In their decision (paragraph 78) the Special Commissioners reiterated this point and held that they found in favour of Evelyn and Jocelyn because the promotional agreements created a series of contractual obligations -

*“We have already mentioned that we do not consider that the name “image right agreements” adequately describes the promotional agreements at issue in this appeal.   We wish to adopt the definition of the respondent’s counsel that image rights were the ability to make money out of contracting with companies to do things for them and were an opportunity to make money out of the fact that one was very well known.  We also adopt his suggestion that what in practice Sports Club was getting from the promotional agreements was a series of contractual obligations both positive and negative; positive in the sense that the player would, if called upon to do so, do certain things like endorsing products or going to photoshoots and negative in the sense that he could not undertake such activities for others.  Again we accept the suggestion of the respondent’s counsel that the promotional agreements were for the personal endorsement of products and the like.”   *

In some quarters the Sports Club decision has been loosely and erroneously interpreted to justify the legal basis for the existence of “image rights” and their assignment to an “image rights” company for capital gains purposes. 

The comments of the Special Commissioners set out above show that this interpretation is wrong.  Any reliance on this decision to suggest that “image rights” exist as a legal concept in the UK and can be assigned is misplaced.  It is clear, firstly, that the Special Commissioners recognised there was no such thing as an “image right” in UK law and, secondly, that instead of recognising some kind of quasi-IPR, the Special Commissioners were concerned with the commercial reality reflected in promotional agreements which provided Sports Club with a series of contractual obligations for promotional services.

The main point of this decision is that simply describing a document as an “image rights agreement” does not sufficiently describe the legal position.  Instead, it is necessary to identify precisely what sort of asset or rights are involved.  In Sports Club this was simply the contractual right to require the players to carry out (or refrain from carrying out) promotional activities, but it is possible that in some cases genuine IPRs or goodwill will be involved.  Sports Club justifies asking agents to be specific about this, as it is quite clear that the Special Commissioners were not prepared to tolerate the unjustifiable vagueness inherent in the term “image rights”.