As a professional rugby player, a kit sponsorship agreement gives you a valuable income stream on top of your other earnings.
While it is easy to see any deal as simply a headline monetary amount, it is important to understand how sponsorship agreements work, the opportunities they provide, and how they can fit into your wider financial plan.
Kit sponsorship deals can be a valuable source of additional earnings
Your first encounter with kit sponsorship will likely involve receiving complimentary boots, training wear, and other personal equipment. The immediate benefits are that you will save money and it is likely to be top-quality stuff!
Arrangements beyond that can start to become more lucrative, both for you and your club.
Wearing certain brands, either through a personal or club-wide arrangement, can become a valuable secondary income stream alongside your other rugby-related income.
Furthermore, sponsorship agreements have become a significant source of commercial revenue for professional clubs.
In addition to the sponsorship payment, deals could also extend to annual retainers and appearance exposure fees, especially on television and social media.
However, sponsorship income can fluctuate, and this variability means it is particularly important to plan how you use these earnings carefully. We can support you here.
Bear in mind that sponsorship deals usually come with obligations
With the adage that there is “no such thing as a free lunch” in mind, it is important to be aware that sponsorship deals come with strings attached.
In particular, you will need to take care not to breach any deal with competing brands. There may also be obligations around your social media activity and promotional events.
Failing to meet your contractual requirements could result in reduced payments or termination of the agreement.
Because of this, we would recommend seeking legal advice before signing any endorsement contract relating to a personal arrangement.
Sponsorship and endorsement income is taxed
From a financial planning perspective, sponsorship income is generally taxed in the same way as your club salary.
This fact is often overlooked, which can result in an unexpected tax bill. We wrote about this in a previous article about Shaquille O’Neal, who received a $1 million cheque for an endorsement deal and spent all of it within half an hour.
Even the kit and other equipment you are provided with as part of a deal could be considered a benefit in kind, and have tax implications depending on how it is provided and used.
As a result, we would always suggest that you keep accurate records of sponsorship income you receive.
It can help to demarcate your sponsorship income from your other earnings
A common financial mistake made by professional athletes, including rugby players, is to allow sponsorship income to fund higher spending.
To an extent, it is understandable to want to enhance your lifestyle. However, it is important that you also adopt a longer-term view when deciding how to use sponsorship earnings.
Bear in mind that such deals may be short-term. Personal factors such as injuries and transfers could affect these deals. Likewise, external issues, including shifts in brand marketing strategy, can affect future endorsement opportunities.
Because of this, you should treat sponsorship income differently from your regular salary and use it to build long-term financial security while you have the opportunity.
Ways to achieve this could include:
- Investing sponsorship earnings
- Using the money to build your emergency savings
- Making additional pension contributions
- Reducing outstanding debt.
Treating sponsorship income as wealth-building capital rather than spending money can significantly improve your long-term financial resilience.
Sponsorship deals could result in career development opportunities
Looking further ahead, sponsorship agreements you enjoy as a player could continue into your post-rugby career.
The average professional rugby career is relatively short, making every commercial opportunity more valuable.
Building strong relationships with sponsors today can open doors long after you hang up your boots. For example, you may have opportunities to leverage your relationships with sponsors into post-retirement income, including ambassador roles, consultancy, coaching partnerships, or media work.
It is also worth considering earmarking sponsorship earnings to help fund future qualifications, business ventures, or property investments, all of which can provide income once your rugby career has finished.
Get in touch
We can help you make the most of your sponsorship earnings to secure your long-term financial future.
If you would like to talk to us about your own arrangements, please get in touch.
Email enquiries@dbl-am.com or call 01625 529499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All content is based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
The value of your investment can go down as well as up, so you could get back less than you invested.