Amortisation of transfer prices...

Discussion in 'General football forum' started by Damanino, 10 Aug 2017.

  1. Wafty Cranker

    Wafty Cranker

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    That's the conclusion I reached but it seems crazy if that's how they're accounted for. Look at Barcelona, players like Messi wouldn't be included on the balance sheet when he's arguably their biggest asset!
     
  2. Bob Smiles

    Bob Smiles

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    I'm not sure I agree with the 'profit improvement' section in the video
     
  3. Prestwich_Blue

    Prestwich_Blue

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    It's not the player who's on the balance sheet but his contract. Important difference.
     
  4. Wafty Cranker

    Wafty Cranker

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    I get that amortisation is based on the duration of the contract, but other than that what is the difference between it being the player or the contract on the balance sheet? The initial value of the player's contract would be the same as the cost to acquire the player, so why is it the contract that's deemed to be capitalised?

    Using Messi as an example, would he or his contract be on the balance sheet? I'm guessing not which seems ridiculous!
     
  5. Prestwich_Blue

    Prestwich_Blue

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    When you buy a player from another club you're effectively buying his registration and you pay a fee to the selling club to acquire that. Obviously the money that changes hands has to be accounted for.

    Clubs used to put the whole fee through the books but accounting standards plus bigger transfer fees required clubs to treat them as they would a capital asset like a building or piece of machinery. It's a general accounting principle that you value things conservatively so any stock you hold will be valued at the lower of its cost or net realisable value. The exception is property, which is independently revalued every few years.

    So it's the transfer fee that is used as the accepted figure and not the market value of a player. The point of having accounting standards is that, in theory, you can compare like with like with like. If you values players at what you consider to be their market value every year, this would cause profits to fluctuate and be open to manipulation.

    There has been lots of debate over the years about valuing players (or human capital generally) with no real answer. So players like Messi or Iheanacho (before we sold him) effectively aren't on the balance sheet at all.
     
  6. Wafty Cranker

    Wafty Cranker

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    Cheers for the information.

    I just find it bizarre that you have players worth millions that aren't accounted for. You could get two really similar players that are accounted for totally different on the grounds that one is home grown and one isn't. I'm not sure how you would account for them mind to solve it, but surely the Balance Sheets aren't accurate!?

    Selling a few academy players each year would certainly help balance the books!
     
  7. dickie davies

    dickie davies

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    oh please do fuck off
    As PB says, there has to be a standard accounting procedure or any club can value any player at whatever they want
    But it also highlights the corrupt nature of football as a company like the rags is allowed to hide their true finances offshore
     
  8. geoff clipp

    geoff clipp

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    I still find it strange though as there accounting standards in place relating to fair value which could be used to prevent clubs from doing that. Seems crazy to me that a player of Messi's value wouldn't impact the accounts in some way. They could at least be classed in a similar way to intangible assets?
     

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