Introduction to modern football economy

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Fair value accounting

Standards of accounting have changed significantly over the past decades. Changing from historical cost accounting to promote market value accounting in order to communicate an up-to-date value of companies’ balance sheet to investors and other stakeholders (Lhaopadchan, 2010). Historical cost accounting is likely to create hidden reserves since the value of an asset is not re-valued to the conditions of the market (Laux & Leuz, 2009). Market-valueaccounting uses the term fair value which is explained by ‘IFRS 13 – Fair value Measurement’ to be ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date’ (IASB, 2012, p. B907).

Human Resource Accounting

During the last 70 years, accountants have recognized the value of human assets, considering it as a production factor and explored different ways of measuring it. According to Conner (1991), the most specific asset of an enterprise is its personnel, as their knowledge is used in the production process and would explain why some firms are more productive than others. With the same assumption, a strong team of human resource makes all the difference (Archel, 1995, cited in Barcons-Vilardell, MoyaGutierrez, Somoza-Lopez, Vallverdu-Calafell & Griful-Miquela, 1999). According to the article “Human Resource Accounting” (Barcons-Vilardell, MoyaGutierrez, Somoza-Lopez, Vallverdu-Calafell & Griful-Miquela, 1999), there are two reasons for including human resources in accounting. First, people are considered valuable to the firm as long they perform quantifiable services. Secondly, the value of an employee depends on how he/she is employed, meaning management style will affect the human resource value.

Agency & Stakeholder theory

Agency theory is the description of the relationship between owners and management of a company and is a concept within corporate governance (Mallin, 2013). Management is called agents who act on the behalf of the principals, who are the owners of the company and possesses voting power (Jensen & Meckling, 1976). The basic idea of agency theory is the agents shall try to use the resources of the principals in the most efficient way in order to generate economic yield for the owners (Jensen & Meckling, 1976; Schrieffer & Vishny, 1997). The corporate concept Stakeholder theory is an extension of the agency theory. The stakeholder theory includes the relationship between owners and management, but take into consideration a wider group of constituents. Stakeholders are a group or individuals who are, or can be affected of the companies activities (Mallin, 2013). Mallin (2013) gives examples of stakeholders as employees, supporters, local community, providers of 17 credit, customers and others affected by activities taken by the company.


According to Svenning (2003), in order to answer research questions, choosing appropriate method is essential for success. The process started with a wide perspective followed by the decision of focusing upon football player registrations on an international level. The clear sample selection process generated early focus on the five clubs, and from the initial starting point to final conclusions, issues were dealt with back and forth. Gathering substantial theoretical framework was of high importance to grasp the topic of choice. Time spent on theoretical research and conducting the research design was comprehensive in order to generate an end product of high quality and with a high degree of trustworthiness.

Manchester United

Figure 4-4 is a copy of Manchester United’s presentation of player registrations. The cost in the beginning and end of each period is presented with respect to additions and disposals during the same period. Amortization is presented in a similar way, with the total value in the beginning and end, showing additions and disposals. The net book value is calculated by adding new player registrations and deducting amortizations and disposals. Their way of reporting is in line with the minimum rules and regulations stated by IASB and UEFA. No additional comments are made to enhance understandability for the reader.

Table of Contents :

  • Abbreviations
  • 1 Introductory chapter
    • 1.1 Background
    • 1.2 Problem
    • 1.3 Research questions
    • 1.4 Purpose
    • 1.5 Delimitation
    • 1.6 Disposition of thesis
  • 2 Frame of references
    • 2.1 Introduction to modern football economy
    • 2.2 IAS 38 – Intangible Assets
    • 2.3 Fair value accounting
    • 2.4 Human Resource Accounting
    • 2.5 Disclosure theory
    • 2.6 UEFA club licensing and Financial Fair Play regulations
    • 2.7 Agency & Stakeholder theory
  • 3 Method & Data
    • 3.1 Methodology
    • 3.2 Method
      • 3.2.1 Research design
      • 3.2.2 Sample selection process
      • 3.2.3 Data collection
      • 3.2.4 Interviews
      • 3.2.5 Trustworthiness
  • 4 Findings
    • 4.1 Arsenal FC
    • 4.2 Manchester United
    • 4.3 Borussia Dortmund
    • 4.4 Juventus F.C
    • 4.5 FC Porto
    • 4.6 Additional disclosure information
    • 4.7 Purchased vs. Home-grown/Free agents
    • 4.8 Interviews
  • 5 Analysis
    • 5.1 Capitalization of player registrations
    • 5.2 Fair value accounting
  • 6 Conclusion
    • 6.1 Discussion
    • 6.2 Reflections and suggestion for further studies
  • 7 List of references
    • 7.1 Corporate documentation

Accounting and disclosure of football player registrations: Do they present a true and fair view of the financial statements? A study of Top European Football Clubs

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