How much would you value the image right of a world-class rugby player? What happens when you get it wrong? Robert Sharp explains the importance of image right valuation.

Recent press reports that Saracens Rugby Club over-valued their 30% stake in the Image Rights Company of Maro Itoje by over £800,000. This highlights the importance of taking valuations seriously and getting them right. The allegedly high valuation contributed to the £5.36 million fine and 70 points deduction that Saracens received from Premiership Rugby. This is a serious blow to the club and their playing squad, who now face an uncertain future and a demoralising season playing in the Championship.

The valuation was carried out at the request of Saracens by PwC who valued the 30% shareholding at £1.6 million. Assuming that there was no minority interest discount, this would value the whole Image Rights company at around £5.3 million, which is a lot of money for a rugby player. But there is no doubt that Itoje is a great talent and is reported to be England’s highest paid player (on a club salary of £750,000 to £1 million, with endorsement income potential in excess of that).

Image Rights valuations are normally based on the Net Present Value of future endorsement income plus any other exploitation of the players image and trade marks (which really should be registered in the UK and other rugby playing countries with the Image Rights registered in Guernsey). In Itoje’s case, would a valuation based on this methodology exceed £5 million? Much would depend on how conservative the revenue forecast is i.e. would the calculation be based on actual signed contracts or an estimate of potential income over the course of Itoje’s playing career, which could possibly go on for a further 10 years? If the latter approach is taken then, conceivably, the Image Rights are worth more than £5 million; they certainly would be for players at the top of their profession in other sports such as Andy Murray in Tennis or Rory McIlroy in Golf.