• Register
Return to: Home > Comments > Editor's letter: Football et circenses

Editor's letter: Football et circenses

Panem et circenses, or bread and circuses, the Latin expression coined by Roman poet Juvenal, is from a diatribe in which he described the distraction of his contemporaries from their duties as citizens of ancient Rome.

Possibly Juvenal was right. Over time, the Roman Republic, an imperfect form of democracy, evolved into the Roman Empire, a genuine form of dictatorship.

Today some think that football is the refined equivalent of the Roman circus, which alienates citizens from more important matters. Whatever may be said about it, football has become a lucrative business, and rather more than just a game.

It's one, however, in which the majority of key stakeholders, the fans, are emotionally attached to what their clubs represent. Can the accounting profession put down this extraordinary form of goodwill on a balance sheet?

Football poses further challenges for accountants. This summer Real Madrid paid a record transfer fee of £85m ($135.8m) for Gareth Bale. That's the price of the Welsh gladiator, but surely accountants must have immediately questioned what his real value is.

Bale's transfer fee topped the previous record of £80m for Cristiano Ronaldo, paid by the same club in 2009, which begs the question: is football a sustainable business when clubs are getting increasingly indebted as if there were no tomorrow?

Reporter Vincent Huck investigates the accounting perspective of this unique business (see pages 8-9) in light of the Union of European Football Associations' (UEFA) Financial Fair Play (FFP) rules, which will be implemented for the first time this season.

FFP rules are aimed at putting clubs' finances in order based on the idea that they should break-even at the end of the fiscal year. Then UEFA will check if they are compliant, assisted by Deloitte or PwC in certain cases, otherwise clubs will not qualify for participation in European competitions.

But every law has its loophole. According to Noel Tagoe, from the Chartered Institute of Management Accountants, clubs would be able to amortise the cost of a player over a period of time, such as the length of the contract, instead of taking into account the financial year in which the transfer occurs.

Moreover, clubs can offset the cost of a new signing by accounting for the profits made when other players are sold.
Therefore, Gareth Bale would represent just a £14m liability, as he is on a six-year contract, but Real Madrid could consider as profit the £42.5m it is believed to have made when striker Mesut Özil was sold to Arsenal in the same financial year.

All this happens five years on from Lehman Brothers' collapse, which triggered the current global financial crisis, a massive wake-up call to do business in a sustainable way.

Accountants are yet again called to play a fundamental role: to be champions of financial fair play, regardless of the field they work in.

Top Content

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    FASB: a quest for simpler standards

    FASB chair Russell Golden addressed the IMA 2019 Annual Conference and Expo at the Sheraton San Diego Hotel and Marina, California, on 18 June. IMA immediate former chair-emeritus Alex Eng acted as moderator. Joe Pickard reports.

    read more

    The future of audit, and how to get there

    Two recent reports peer into the future of the audit profession. One analyses what an audit should offer, while the other looks at how the audit process will be carried out. Robin Amlôt takes a closer look at both.

    read more

    EFAA elects new president, focuses on digital future

    EFAA’s new president, Salvador Marin, outlined his key priorities for the next two years at the organisation’s 2019 annual general meeting, while outgoing president Bodo Richardt offered advice. Robin Amlôt reports.

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.