CIMA Break OutPigs Flu Update

Valuing Superstars: Dr Noel Tagoe

Talking with Superstars: Steve Berry

© Private Eye

Valuing superstars(What Price Ronaldo & Rooney?)

Dr Noel Tagoe

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

Steve Berry FCMA

Talking with SuperstarsRooney and Ronaldo – the elevator pitch

• 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

Competence

Focused

Competitive

Rapidity

Results

Taking control

Taking risks

Activity

CIMA Break Out

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