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Accounting, Valuation and Duration of Football Player Contracts

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  • Eli Amir
  • Gilad Livne

Abstract

FRS 10 requires investments in player contracts by football companies to be capitalized and amortized. Given the high degree of uncertainty associated with such contracts, it is not clear that this treatment is consistent with asset capitalization criteria. The evidence provided in this paper does not support inconclusively this capitalization requirement in that it indicates weak association of investment in player contracts with three measures of future benefits. In particular, the duration of this association is at most two years, which is shorter than the duration implied by the amortization period reported by sample companies. Nonetheless, other findings suggest that market participants seem to agree with the treatment prescribed by FRS 10. These results should be of interest to practitioner and standard setters who (axiomatically) regard intangibles acquired in an arm's length transaction as assets.

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  • Eli Amir & Gilad Livne, 2005. "Accounting, Valuation and Duration of Football Player Contracts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3‐4), pages 549-586, April.
    • Handle: RePEc:bla:jbfnac:v:32:y:2005:i:3-4:p:549-586
    DOI: 10.1111/j.0306-686X.2005.00604.x
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    References listed on IDEAS

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    Cited by:

    1. Stephen Morrow, 2014. "Football finances," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 6, pages 80-99, Edward Elgar Publishing.
    2. Schiemann, Frank & Guenther, Thomas, 2013. "Earnings Predictability, Value Relevance, and Employee Expenses," The International Journal of Accounting, Elsevier, vol. 48(2), pages 149-172.
    3. Warren Maroun & Wayne van Zijl & Rottok Chesaina & Robert Garnett, 2022. "The Beautiful Game: Fair Value, Accountability and Accounting for Player Registrations," Australian Accounting Review, CPA Australia, vol. 32(3), pages 334-351, September.
    4. Carole Botton & Julien Fouquau, 2014. "L'Expertise De L'Evaluation : Une Construction Sociale," Post-Print hal-01899544, HAL.
    5. Carole Botton & Julien Fouquau, 2012. "Adjugé, Vendu...Assuré," Post-Print hal-00937902, HAL.
    6. Adrian R. Bell & Chris Brooks & David Matthews & Charles Sutcliffe, 2012. "Over the moon or sick as a parrot? The effects of football results on a club's share price," Applied Economics, Taylor & Francis Journals, vol. 44(26), pages 3435-3452, September.
    7. Müller, Oliver & Simons, Alexander & Weinmann, Markus, 2017. "Beyond crowd judgments: Data-driven estimation of market value in association football," European Journal of Operational Research, Elsevier, vol. 263(2), pages 611-624.
    8. Havran, Zsolt & Claro, Dániel, 2022. "A 2018-as labdarúgó-világbajnokság hatása a részt vevő labdarúgók értékére [The impact of the 2018 World Cup on the value of participating football players]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1555-1576.
    9. Patrizia Gazzola & Stefano Amelio & Fragkoulis Papagiannis & Elena-Madalina Vatamanescu, 2019. "Financial Reporting in European Football Teams: A Disclosure Analysis of Player Registrations," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(4), pages 182-206, October.
    10. Francisco Martín Lozano & Amalia Carrasco Gallego, 2011. "Deficits of accounting in the valuation of rights to exploit the performance of professional players in football clubs. A case study," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(3), pages 335-357, November.
    11. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    12. Dirk G. Baur & Sibylle Lehmann, 2007. "Does the Mobility of Football Players Influence the Success of the National Team?," The Institute for International Integration Studies Discussion Paper Series iiisdp217, IIIS.
    13. Nappert, Pier-Luc & Plante, Maude, 2023. "The assetization of baseball players: Instrumentalizing promise with signing bonuses and human capital contracts," Accounting, Organizations and Society, Elsevier, vol. 105(C).
    14. John Forker, 2005. "Discussion of Accounting, Valuation and Duration of Football Player Contracts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3‐4), pages 587-598, April.
    15. Maria Fotaki & Apostolos Kourtis & Raphael Markellos, 2023. "Human resources turnover as an asset acquisition and divestiture process: Evidence from the U.K. football industry," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2696-2711, July.

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