Critical discussion regarding the valuation of the most relevant assets in soccer clubs: Auditors´insights

Abstract

This paper proves that under current international accounting standards, the most relevant assets of all professional soccer clubs at year-end, “players' transfer fees”, can be measured and disclosed at fair value. Research was based on a triangulation approach. Firstly, a theoretical discussion regarding the feasibility of Fair Value Accounting as opposed to Historical Cost Accounting as currently applied was carried out. Secondly, an extra-accounting assessment technique occasionally used by clubs was analysed in depth. Thirdly, qualitative research work was undertaken which included surveys and interviews with soccer clubs’ financial auditors. This work shows how unreliable the financial statements’ figures of these intangible assets in soccer clubs are, and consequently points to the lack of transparency generated by applying the inadequate currently accounting valuation. It also demonstrates the need to apply a valid and feasible external valuation technique at fair value complying with IFRS requirements. A new contribution is made using a valuation and disclosure proposal which could avoid current accounting misreporting, thus helping not only the football clubs' stakeholders’ in their decision-making process, but also the UEFA with their "Financial Fair Play"1 regulation which monitors clubs’ finances.

Keywords

• Soccer players
• Transfer fees
• IFRS
• Fair value
• Interview
• Auditors