You Simply Can’t Afford to Take Your Eye Off the Ball

You Simply Can’t Afford to Take Your Eye Off the Ball

Football, without doubt the world’s most popular sport and considered by many to be ‘the beautiful game’, is certainly no stranger to the challenges of IP. Increasingly, topics such as patents, trademarks and copyright all feature prominently in any starting eleven, forming a solid defence that offers protection for and against an array of relevant parties both on and off the field. This may involve the players themselves, coaches or managers, club owners, broadcasters and other media, sponsors, kit suppliers and fan bases that now exert extraordinary global reach.

Real Madrid, widely regarded as the world’s most famous and successful club, dominates on and off the field, sitting impressively at the top of two distinctly different global league tables; the Football Money League with annual revenues in excess of €750m, and the Trade mark League with an impressive portfolio of 713 trade marks. Interestingly, Manchester United, the English Premier League’s top performer (off-field that is) slipped behind to 3rd place in the Money League with revenues of £590m and even further behind to 5th place in the Trademark League with a “paltry” portfolio of 682 trade marks.

Changed days indeed from 1970 when as reigning European Cup holders, Manchester United became the very first English side to register a trade mark, albeit they were beaten to the punch by both of Glasgow’s giants – Rangers and Celtic. Fast forward to the 1990’s and the formation of the English Premier League, setting the tone for the commercialisation of football into the new millennium. Symptomatic of football’s dramatic transformation from working-class roots, this provided a breeding ground for a new phenomenon – the issue of image rights. No longer are players paid simply for what they contribute on the park but also for their commercial potential. Global brands are desperate to secure the opportunity to leverage a player’s image rights to help market their products. A player’s image may refer to his name, likeness, picture, autograph, even his shirt number among a variety of other factors, all valuable tools for businesses seeking to enhance their brand and its valuation.

A prime example is this summer’s European transfer market which witnessed the long, drawn-out transfer saga relating to Paulo Dybala, who seemed destined for the Juventus exit door until tackled from behind by the stumbling block that is intellectual property. Juventus had splashed cash the previous summer on global superstar Cristiano Ronaldo, which unfortunately consigned Dybala to the bench. Unsurprisingly, Ronaldo commands his own extensive IP portfolio teeming with trade marks and he is truly in a league of his own concerning endorsements. Dubbed by Forbes as ‘a one-man economy’, Ronaldo’s sponsors raked in just shy of $500 million for the 2017-18 season, predominantly leveraging his image through social media.

Despite finding himself out of favour in Turin, Dybala rose to the top of several European clubs’ wish lists including sleeping giants Manchester United, who initially appeared happy to meet the price tag quoted. However, the issue of the player’s image rights surfaced and soon torpedoed any possibility of a move, the deal collapsing once Dybala’s agent insisted on a payment of £13.7 million to purchase the player’s image rights from a third-party. The club baulked at the additional fee, particularly incensed as the issue had only arisen in the middle of negotiations. Tottenham Hotspur sensed an opportunity to hijack the deal but as deadline day fast approached the negotiation minefield of image rights once again scuppered the transfer as the window slammed shut.

Dybala isn’t the first player, nor will he be the last to have his career path dictated by image rights. The aforementioned Ronaldo saw his potentially world-record breaking transfer to Real Madrid in 2009 stumble over image rights before eventually getting the deal over the line.  Ronaldo’s arrival marshalled Real to a period of success not seen since the early 60’s, winning 4 UEFA Champions League titles in 5 years. However, having enjoyed such success on the park, 2018 saw Ronaldo charged with image right fraud. Spanish tax authorities found the 5-time world player of the year guilty of not declaring his income relating to image rights over a four-year period and he was ordered to pay a £17 million fine to avoid serving a 2-year prison sentence. Ronaldo’s long-time rival and Dybala’s Argentina teammate, Lionel Messi, was also charged with the same crime and he to managed to succeed in avoiding jail time.

So, regardless of your status or role it is imperative that you do not underestimate the importance of image rights or for that matter any other element of IP since this can lead to potentially both breath-taking returns or disastrous consequences. Clearly, this is not unique specifically to football or indeed the world of sport but is applicable to all business sectors. When defining business strategies and tactics to grow, you must take consideration and valuation of all matters IP related, otherwise you could easily find yourself in grave danger of scoring an unfortunate yet decisive own goal!

 

Author: David Holburn, IP Valuation Analyst

Email: David@metispartners.com

Tel: +44 (0)141 353 3011

 

 

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