Balancing player values in German professional football – A critical analysis of German GAAP

Abstract

Rising transfer fees in professional football are causing an increasing influence of player transfers on the balance sheet of the clubs. However, proper accounting and valuation of player assets entails some ambiguities and problems in the context of accounting. The aim of the present work is to illustrate the accounting treatment of a player transfer in accordance with the provisions of the German Commercial Code. Furthermore, it is considered to what extent the accounting practice in football fulfils the basic purposes of accounting. At the beginning there is a presentation of the legal framework of player transfers. Subsequently, the rules for the recognition and measurement of player assets are explained in more detail in order to finally show which problems arise from the current accounting practice. The results show that clubs have to take into account additional football-specific items in addition to the general regulations of the German Commercial Code (HGB). This leads to a comprehensive regulatory construct that nevertheless leaves the clubs room for manoeuver in terms of balance sheet policy. The balance sheet item player assets therefore has only a limited significance with regard to the actual economic circumstances in the club.

Keywords: Accounting; Football; Player values; Player transfers.