HomeBusinessUnited Kingdom

The Value of Personal Brand

Click on the Chelsea FC’s website and you will be met with the face of Fernando Torres. His image is already emblazoned on the home page and will no doubt become a regular feature: his move to Stamford Bridge from Liverpool last week smashed the record for a transfer between two British clubs. The Spaniard is set to pocket £175,000 a week from the deal, while Chelsea will be relying on him to help them fill up their trophy cabinet.

On deadline day, it seemed everything was in place for a smooth transfer. Liverpool’s line was that they were happy for him to go, Chelsea were willing to pay a hefty fee and Torres was in line to rack up a substantial pay rise. However, there was another lucrative issue which stood to benefit both the player and the club, providing they get their negotiations correct – image rights. It’s reported that it was this agreement that stalled the contract being finalised until just over an hour before the transfer window shut. It has become such an intrinsic part of sporting contracts that stand-offs can force even the biggest clubs to go to the wire on deadline day to make sure the deal is right.  

Less than a week since Torres signed on the dotted line and the merchandise machine will already be in full swing. You can already log on and buy the number nine shirt with the Spaniards name etched on the back. Posters, mugs and t-shirts displaying his image will be stacking the shelves. Sponsors will be negotiating joint commercial deals featuring player and club. All of these ventures will be governed by the image rights agreement they hammered out.

The price tag of a footballer used to be based solely on their abilities on the pitch but those who become household names know their fame has its own value. They become a brand and image rights are one way to put a price on what that brand is worth. By including them in contracts, the player can ensure that he receives a percentage of the money that other people may make from using his image. They can also retain control over how it is used.
 
The value of an individual’s brand is notoriously difficult to quantify. It is not a mathematical equation which is why it can become a sticking point during negotiations. There is a market rate based on the value of other players of similar stature but this can fluctuate with each transfer. Ultimately, it comes down to the value the club places on the player versus the value the player places on the club. In the case of Torres and Chelsea, a world-class player moving to a world-class club, there was bound to be expectations from both sides.  

This deal is unlikely to be exclusive, allowing the footballer to continue to license his image for use by personal sponsors, such as Pepsi. It’s through these other deals that an individual player’s brand value can go through the roof. Take for example, Wayne Rooney, whose image has made its way into thousands of homes splashed across the front of FIFA 11. He will receive a cut of the games profits from licensing his image rights. The much publicised re-negotiation of his contract with Manchester United stalled partly because they were unable to reach an agreement on that very issue.

For some players, the value of image rights can even start to become the overriding factor in negotiations. David Beckham’s multi-million pound move to LA Galaxy hinged on his potential to draw publicity and raise the club’s profile. The value of his brand was cemented with the sealing of a new shirt sponsorship deal, record uptake of season tickets and the sale of 250,000 replica shirts before he even formally set foot on the pitch. Such an impact goes someway to explaining why negotiating image rights licenses can become something of a staring contest.

There’s no doubt it is big business and it has become standard practice for a separate company to be set up with the player’s image rights assigned to it. Any business done which includes the player and the relevant club will be split, with the player’s royalties paid to the image rights company. Recently this aspect has been thrust into the spotlight with suggestions that it is exploiting a tax loophole. The Premier League is in discussion with HM Revenue & Customs (HMRC) over this issue. The Telegraph newspaper reports they are moving towards an arrangement whereby players would be graded from A to E depending on their profile and how clubs are using their image. The aim is to ensure players with lower profiles aren’t being given unjustifiable image rights payments to top up their wages.

As yet, there is no single codified law governing image rights. Instead, protections have to be found through a variety of other avenues including trademarks, privacy and passing off. Change is on the horizon though. As the number of sports stars and celebrities commercialising their images increases and the public become more aware of the value, the law will be forced to catch up.

Most recent

SportBusiness speaks to Azhan Shafriman Hanif, Sepang International Circuit’s newly-appointed chief executive about his plans to overcome the current economic uncertainties created by the Covid-19 pandemic.

Ben Kensell, chief operating officer at Norwich City, tells Adam Nelson about how the commercial structure he has put in place offers the club a platform to bounce straight back after its relegation from the Premier League.

USTA chief executive Michael Dowse tells SportBusiness how, despite facing multiple unprecedented issues and sharp ratings declines, the organization was able to bring back elite tennis and make a small profit with the US Open. Bob Williams reports

SportBusiness gathered a panel of experts at the All That Matters Online 2020 conference to discuss the challenges being faced in the sports media rights sector.