Do our footballers count as fixed assets?

[brasil_spur]

One for the finance guys who look through our accounts in detail:

Do we count our footballers as fixed assets in the clubs accounts? Particularly when it comes to depreciation?

i.e. when we buy a player do we assign a depreciation figure to that player over a set number of years (how many?) so that at the end of that period their value is effectively zero?

 

[Ron Burgundy]

They're assets alright, not sure if they're fixed or current (fixed I'd assume)

ANyway, they're amortised (not depreciated) over the life of their contract as I understand it

 

[SlickMongoose]

They count as intangible assets. As such, they are amortised. You'd depreciate a tangible asset such as a building, but the effect is the same, so the answer to your question is pretty much "Yes".

Edit: The lifetime of the asset will be the initial contract length, I believe.

 

[MattyP]

As mentioned above, when we transfer a player in, essentially the cost of the transfer is capitalised as an intangible asset and amortised over the length of the players contract.

Youth team players, or contract extensions, no additional value is assigned.

 

[Chimbo!]

I think their value is determined by their wage and the length of contract remaining. So a player on £100,000 a year is valued at £500,000 at the start of a 5 year contract and then £400,000 when there are 4 years left and so on. When their contract expires they are worth nothing.

 

[MattyP]

I think their value is determined by their wage and the length of contract remaining. So a player on £100,000 a year is valued at £500,000 at the start of a 5 year contract and then £400,000 when there are 4 years left and so on. When their contract expires they are worth nothing.

Nope, it is entirely based on the cost of the transfer, not wage related (apart from any signing on fees). Here's the notes the the financial statements on it, from our accounts

The costs associated with the acquisition of player and key football management staff registrations are capitalised as intangible fixed assets.
Any intangible assets acquired on deferred terms are recorded at the fair value at the date of acquisition. The fair value represents the net
present value of the costs of acquiring players and key football management staff registrations.

 

[SlickMongoose]

I believe wages come under wages, surprisingly enough, as an expense.

 

[tommo84]

As mentioned above, when we transfer a player in, essentially the cost of the transfer is capitalised as an intangible asset and amortised over the length of the players contract.

Youth team players, or contract extensions, no additional value is assigned.

Spot on. I'm an auditor and this is a common query by the new trainees - its one of the few things which makes accountancy sound interesting (another common question is a similar one about animals in a zoo).

Also, the capitalised cost at which purchased players are recognised is just the initial fee - not including add-ons for appearances etc. Any add-ons are disclosed as a contingent liability, and usually only the total of all such contingent fees are disclosed - no breakdown by player or variable is required to be published.

So for example, if (as is widely believed) we paid £5m up front for Gareth Bale with another £5m dependent on appearances, goals, trophies etc, Bale would have been initially recognised as an intangible fixed asset worth £5m. The additonal £5m would be included in the total contingent liability disclosed in the notes to the accounts, but not recognised anywhere on the balance sheet until such contingencies were realised.

 

[felmani26]

I would agree with the above in terms of player capitalisation recognised at cost plus any attributable acquisition costs, amortised over life expectancy which in this case is the contract length.

But what I would like to know is how players developed from within the organisation would be valued and also subsequently how for instance a revaluation to fair value would occur seeing as the market is not homogenous.

 

[MattyP]

I would agree with the above in terms of player capitalisation recognised at cost plus any attributable acquisition costs, amortised over life expectancy which in this case is the contract length.

But what I would like to know is how players developed from within the organisation would be valued and also subsequently how for instance a revaluation to fair value would occur seeing as the market is not homogenous.

Players developed from within the organisation are not valued and there is no revaluation to fair value.

Essentially it is the same reason why the value of a company's brand cannot be put on the balance sheet unless that company has been acquired.

 

[felmani26]

Players developed from within the organisation are not valued and there is no revaluation to fair value.

Essentially it is the same reason why the value of a company's brand cannot be put on the balance sheet unless that company has been acquired.

That's what I was thinking of, I know in my studies they would use mastheads, brands etc as intangibles unable to be revalued.

I guess ultimately a player is only worth what someone is willing to pay for him and thus recognised on sale but for instance the Man Utd team of the late 90's with Beckham, Scholes, Giggs, Neville's etc that must be a relatively huge worth of unrecognised assets in their financial statements.