Indregningen af fodboldspillerkontrakter

Alexander Fussing Tengberg & Mads Nørnberg Viktorius

Student thesis: Diploma thesis


The objective of the paper is to identify if contract rights from football player contracts are presented more fairly if the accounting is performed at fair value based on IFRS 13 fair value presentation. We have analyzed the company Parken Sport & Entertainment A/S and identified that contract rights are presented as an intangible asset based on historic cost and amortized through the asset's lifespan. If a contract has a value of 1 million DKK and a contract period of 5 years, the contract right will be amortized by 200 thousand DKK a year. This accounting practice prepared by Parken Sport & Entertainment A/S is aligned with the IAS 38 presentation of intangible assets. We have analyzed the differences between the Danish statutory act and the international accounting standards (IFRS) for presentation of contract rights. Danish statutory act is more and more aligned with IFRS hence we have focused our paper on IFRS. Furthermore, we have analyzed Parken Sport & Entertainment A/S because the company is a public listed entity in Denmark and therefore obligated to prepare the company’s external financial statement in accordance with IFRS. IFRS disclosure requirements are more subject to information compared to the Danish statutory act, why we below have augmented for a further disclosure requirement for the present accounting standards. The reason to change the accounting principle from Historic cost to fair value presentation is because fair value could show a more true view of the financial statement. Contract rights are generally the most significant operating asset and therefore the most significant asset for the financial statement. We have identified that contract rights more often are sold to a different company at a much higher amount then the booked amount in the financial statement. This results in a gain from transfer activities in the comprehensive income statement. And as we have identified for most Danish football clubs the profit/loss in the year is heavly affect by the profit from transfer activities. Most football companies in Denmark make their profit from transfer activities as the normal course of business is not generating enough profit. A different indicator that contract rights should be presented at fair value is the interest of investors and other significant stakeholder. In order to give the contract rights value more transparency a to present at fair value could be beneficial. We have identified that the market value of Parken Sport & Entertainment A/S is 20 times the value of the equity (carrying amount). If the contract rights were presented at fair value the equity would show a more correct value compared to the market value on the stock exchange. IFRS 13 describe 3 different methods of valuation the market approach present the most reliable valuation approach. The sales prices of the contracts are already the reason for the possible change in accounting principle. The market approach gives a possibility to use a valuer to determine the valuation of contract. The practice is to valuate each contract separate and not as a combined group. During the interviews, we identified from both the IFRS expert and the Parken Sport & Entertainment A/S that a valuation calculation would provide the most accurate and true valuation. We discussed the inputs used and identified 4 main topics and more sub topics which should be included as inputs. • The player’s contract with the selling club. • The players sporting performances • The selling clubs sporting performances. • Media outlook on the player. Through an analysis and discussion of each input, we identified that the calculation should account for too many variables. The amount of variables reduced the reliability of the valuation method to a not acceptable degree. Furthermore, some of the critical inputs were to intangible to quantify which also would decrease the reliability of the valuation method. The overall conclusion is though a fair value accounting would give the most fair and true view of the financial statement a valuation method is not possible to set up reliable enough. Furthermore, a success criterion is similarities of the accounting in the industry, as stakeholders to the industry should be able to compare companies. The criteria would not be meet as the reliability would not be sufficiently precise to determine the fair value of each contract. We identified a recommendation to the disclosure requirements for the standards which are applicable now. We analyzed that if companies list all significant contracts with age, contract length, booked value investors and stakeholders would be able to make their own valuation. This would provide more transparency in the industry.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2019
Number of pages80