The New Business of Football: Accountability and Finance in Football PDF
Preview The New Business of Football: Accountability and Finance in Football
THE NEW BUSINESS OF FOOTBALL The New Business of Football Accountability and Finance in Football Stephen Morrow Heriot-Watt University, Edinburgh ~ !\;1ACMILLAN Business © Stephen Morrow 1999 Softcover reprint of the hardcover 1st edition 1999 978-0-333-72308-1 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 1999 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world ISBN 978-1-349-40532-9 ISBN 978-0-230-37174-3 (eBook) DOI 10.1057/9780230371743 A catalogue record for this book is available from the British Library. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 2 1 08 07 06 05 04 03 02 01 00 99 For Caitlin Contents List of Tables and Figures xi Preface and Acknowledgements xiii Introduction 1 1 The New Economics of Football 4 Television - Football's Economic Driver 4 Football's Peculiar Economics 8 The demand for football 8 Television and the supply of football 11 Regulatory capture 14 Redistribution and competition 15 The Scottish dimension 25 Reaching for the Sky 27 2 Rich Man, Poor Man - Players in the New Business of Football 30 The Historical Role of Players 30 The transfer market 30 Salaries 34 Bosman - Football's Cost Driver? 36 The Bosman case 36 Uncertainty of outcome and redistribution? 37 Implications for salaries 41 Implications for the transfer market 50 Compensation for training and development 52 3 The Capital Structure of Football Clubs 58 Introduction 58 Equity Finance 60 Role of the Stock Exchange 62 The primary market 63 Ownership Framework in Football Clubs 75 An ownership classification 77 Corporate control issues 87 Paper prophets? 88 vii viii Contents The Secondary Market 90 Valuing football club shares 90 Liquidity in football club shares 98 Role of Bank Funding 107 Analysis of club positions 110 Security for borrowing 116 The lending decision 118 Efficiency of borrowing 119 4 Accounting in the Football Industry 121 The Objectives of Financial Reporting 121 Accounting for Intangible Fixed Assets 124 Accounting for players 124 Accounting implications of FRS 10 126 Brand accounting 132 Accounting for Tangible Fixed Assets 135 Accounting treatment 136 Revaluations 136 Depreciation 140 Grants for stadium developments 141 Foreign Exchange Risk 145 Football - A Cash Business? 147 Football's cash inflows 147 Conclusion 152 Disclosure - Role of the Operating and Financial Review 152 Player valuation 154 Training and development 155 Conclusion 156 5 Accountability within the Football Industry 157 Introduction 157 Financial Accountability 158 Investors 159 Employees 162 Supporters and the community 163 Stakeholder Conflicts 164 Club versus company 164 Community accountability 171 Contents ix A New Framework for Tomorrow's Club? 180 Tomorrow's company? Tomorrow's club? 181 Regulation in the football industry 183 The inclusive approach in practice 187 Conclusion 197 Conclusion 198 Appendixes 1 Index of Company Names 202 2 Draft Football Association Code of Conduct 203 Notes 205 References 216 Index 223
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