THE FINANCIAL STATEMENTS OF PROFESSIONAL SOCCER COMPANIES

THE FINANCIAL STATEMENTS OF PROFESSIONAL SOCCER COMPANIES

Football, over the years, has greatly increased its popularity, becoming one of the most followed sports in the world: this has inevitably made it an increasingly relevant industry, affecting and moving large amounts of money and capital. For this reason, the individual regulatory bodies had the need to frame administrative problems and insert control rules, in order to regulate and transform the then associative form of professional teams into corporate forms: therefore, in Italy, starting from 1966 the National Council of the F.I.G.C. has issued a series of regulations that have brought the form and obligations of football clubs closer to those relating to companies, while excluding in the statute any other purpose other than sports.

MAIN DIFFERENCES IN THE DRAFTING OF THE FINANCIAL STATEMENT

The preparation of the financial statements of professional football clubs presents the following main distinctive features:

as regards the regulatory sources, in addition to those of the clubs in general, there are regulatory sources specific to the football sector, namely the Internal Organizational Rules of the Football Federation (N.O.I.F.), the unified Accounting Plan and the Accounting Recommendations prepared by the F.I.G.C., the which oblige to derogate from some general principles contained in the Civil Code in terms of drafting. In fact, pursuant to art. 84 of N.O.I.F.: "The accounts must be kept by the companies in compliance with the law and using only the chart of accounts approved by the F.I.G.C.". The foregoing implies the obligation of filing financial statements and corporate relations, presupposes the composition of the financial statements between the Balance Sheet, Income Statement, Cash Flow Statement and Explanatory Note, as happens for companies, however presenting different financial statements, chart of accounts and typical;
as regards the administrative period, it differs from the ordinary one of companies which usually coincides with the calendar year, January 1st - December 31st, as it coincides with the period relating to the competitive season, or July 1st year x - June 30th year x + 1.

BALANCE SHEET

With regard to the Balance Sheet, the main typical items that characterize a professional football club are reported, namely those relating to assets:

Active

o Intangible fixed assets (player registration rights, concessions, licenses, trademarks)

o Tangible fixed assets (stadium, structures, land, plants, owned machinery)

The main characterizing item is that relating to "players’ registration rights", present in intangible assets: it corresponds to the purchase value of the player's card; all costs relating to the purchase are accounted for, including commissions to the agent, any bonuses on signature, bonuses and so on, items present even when the purchase is made on a free transfer basis. In addition, always in intangible assets there are trademarks, such as logos, company colors, coat of arms, denomination and in general all registered and protected property rights, badges of the club and its brand on the outside; Municipal concessions for the use of land, structures and stadiums are always included in intangible fixed assets, while all that is owned by the club in tangible fixed assets.

INCOME STATEMENT

As regards the Income Statement, the main typical items of the value and costs of production are reported, which distinguish a professional football club:

Production value

o Collections from the stadium (tickets and season tickets)

o Television rights

o Collections from sponsors

o Proceeds from advertising

o Merchandising

o Active player trading (capital gains from the definitive disposal of players, revenues from the loan of players)

Production costs

o Personnel costs (players' salaries and salaries)

o Various expenses (travel, transport, catering, talent scouting, youth sector, etc. etc.)

o Stadium and sports facilities rental (if not owned)

o Marketing and advertising

o Passive player trading (losses from the definitive disposal of the players, costs from the purchase of players on loan)

o Amortization of players

Unlike companies, professional football clubs base a large part of their revenues in relation to box office receipts, merchandising, television rights, which in Italy usually impact half of the turnover. A very important issue is that of capital gains relating to the management of players' property, an expedient that is very often used to inflate the balance sheet accounts according to individual needs: the player trading item constitutes the true specificity in the balance sheet of a professional football club, given which relates to the correct accounting of a player and the consequent amortization in the financial statements; the annual cost of a player is given by his salary plus the amortization of his card and for this reason the proceeds deriving from the definitive sale must be referred to this total amount.

Instead, in the section relating to production costs there are all the items relating to the salaries of the players, an amount that weighs for a large percentage of the budget, staff and employees of the club, rental of the stadium and training facilities where not owned, general expenses and finally the passive management of players, a component to be monitored carefully in this case, since it can generate significant losses and have a significant impact on the financial statements.

CONCLUSION

A virtuous football club should be able to finance the characteristic costs with the characteristic revenues, while the amortization of the cards should be covered exclusively by the revenues deriving from player trading: in this way you will have a healthy management that does not have to resort to the expedient of capital gains. to finance the entire sporting activity of the season; moreover, by making less use of player trading and differentiating its characteristic revenues, the company also exposes itself to a lower risk linked to sporting results, certainly more uncertain and less predictable, thus also managing to plan future seasons.

Lastly, by way of example, the financial statements of two of the most important Italian professional football clubs are presented:

Edited by: Massimo Giardino, Chartered Accountant and Statutory Auditor

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massimogiardino@valoreassociati.it