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CIMA Break OutPigs Flu Update
Valuing Superstars: Dr Noel Tagoe
Talking with Superstars: Steve Berry
Employee Value: Dilbert’s Way
Financial Reporting• Governed by FRS 10 & IAS 38
• To show as asset or not?
– Show as asset if transfer fee paid
• At what value?
– Transfer fee
• To amortize or not?
– Amortize over period of contract
Manchester United 2005“The costs associated with the
acquisition of players’ registration are capitalised as intangible fixed assets.”
Notes to the Accounts, MUFC 2005
Implications: Man U 2005Bought Players
• Ronaldo• Rooney• Ferdinand• Saha• Heinze• etc
Total Value = £75m
Home Grown Players
• Scholes• Giggs• O’Shea• G. Neville• Brown• etc
Total Value = £0
Implications: BarcelonaBought Players
• Ronaldinho• Henry• Zambrotta• Deco• Eto’o• Etc
Total Value = €119m
Home Grown Players
• Messi• Xavi• Iniesta• Puyol• Valdes• Etc
Total Value = €0
Manchester United 2005
“These costs are fully amortized over the period covered by the player’s initial contract. Where a playing contract is extended, the unamortized balance at the date of the amendment is spread over the remaining revised contract life”
Notes to the Accounts, MUFC 2005
Implications: C. Ronaldo
• Man U Balance Sheet June 2009:– Between £0 million and £1.7million
• Sold to Real Madrid in July 2009– £80 million
• Financial reporting missing a trick or two?
• Any lessons for valuation?– Based on player contribution to earnings
Man U TurnoverTurnover Origin
2007 2008 2009
Match Day 44% 40% 39%
Media 29% 35% 36%
Commercial 27% 25% 25%
100% 100% 100%
Players contribution to these should reflect in their valuation
A Valuation ModelPlayer
AttributesRevenue Sources
Performance
Popularity
Fan Base
Media
Match Day
Commercial
Free Transfers?• No Free Lunch
• “Buying team” pays implicit transfer fee– Salary premiums
– Over contract period
– DCF?
• Implicit transfer fee paid to owner of player registration– Player
– Not originating team
Free Transfer: Michael Ballack
Years Total Normal Premium
1 6,760 3,120 3,640
2 6,760 3,120 3,640
3 6,760 3,120 3,640
4 6,760 3,120 3,640
Total 27,040 12,480 14,560
Implicit Transfer Fee
Summary• Statutory accounts reporting of player
value inadequate• Management Accounting supported by
good financial management can help
• Human capital valuable whether captured in statutory accounts or not
• “Value” and manage them with care
• Quick to act • Directing• Competitive • Decisive• Seeks change • Unafraid of risk
In stress and conflict situations:
• Tendency to become angry, short-tempered and intolerant of others mistakes
• May also take over and do it their way
• Gets louder and goes up on the ‘temperature’ scale on conflict
• Tenacious • Practical• Careful • Impartial• Firm • Methodical
In stress and conflict situations:
• May become stubborn, overly critical
– Unwilling to shift position on an argument,
position or situation
• Will stick with something no matter what sometimes as a matter of principle
• Considerate • Modest• Trusting • Helpful• Responsible • Seeks improvement
In stress and conflict situations:
• May sulk, become moody and over-emotional
– Eventually give in as an attempt to remove or avoid the conflict, regardless of the failure to complete the task at hand
• Could head away from conflict
– May seek refuge in a safe environment
• Flexible • Sociable• Empathetic • Adaptable• Resourceful • Humorous
In stress and conflict situations:
• May become playful and use humour to dismiss serious events jokingly
• Will avoid conflict and danger using charm, wit or by ensuring the source of the conflict is avoided
– e.g. physically removing themselves from conflict