Are Messi and Neymar Tangible Assets? Part Two: A Closer Look at how Talent is Valued

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Who creates and who reports value?

David Beckham was recruited by Manchester United when he was very young; no one could estimate his future “value”. He developed very fast and became a superstar with very high value. Yet Manchester United could not recognize his value in the club’s balance sheet and thus could not report this value on the stock exchange. His value was “zero”. But the moment another club acquired him against payment, he was then recognized in that club’s financials at the amount paid to acquire him. 

This is what reporting under accounting standards looks like! One club creates the value and another shows it in their balance sheet!


We have already established how we can determine whether to classify a person as an asset. 

When we talk about a football player like Neymar Jr., or Lionel Messi, ideally, a football club should look into the future and estimate what cash benefits are expected from this asset (the player). That would be the “value” in the balance sheet. 

How accurate can this forecasting be? 

Can we assume that the management of the club are able to make such estimates? If they paid €222 million to acquire a player for five years, surely they expect that the club will obtain a benefit that is a multiple of the €222 million. Can they therefore just apply “judgement” and put in the balance sheet (in accounting it is called “recognition”) a number that comes off their head? 

And how can we know that the estimate for Neymar that was “judged” by his club is comparable to the estimate of the Messi brand? Surely the two clubs will have used different “methodologies” and different judgement to estimate these two brands and none will be correct and none will be wrong! The problem that remains though is that investors or fans will find it difficult to compare asset values between the clubs.

However, before this point of “valuing” the brand, the management will have had a number of reasons for recruiting a particular footballer. One reason is obviously the number of  goals that the player is expected to score for his new club – or the number of assists to goals he will provide. Recently the Polish player Robert Lewandowski is thought to be a guarantee of 25+ goals per season. The more goals, the more fans and more prizes and the more income to the club! Moreover, Lewandowski rarely gets injured - what a great reputation to have! He thus creates value in a variety of ways, including by simply being on the pitch more often and reliably.

One other reason is the popularity that a player will have for the fans and how many additional fans will be attracted to the club. When David Beckham was transferred to Madrid from Manchester and from Madrid to LA Galaxy, the clubs were doing it primarily for commercial reasons rather than the goals. With such a well-established career, he was a huge brand in the industry and fans were expected to follow him wherever he went.

Assets vis-à-vis cash flows

In either case the management are making these decisions with one aim in their mind: the future cash flows of the club. But if a club pays €222 million and estimates to earn €500 million from this player, can this €500 million be shown as an asset in the balance sheet even if this is a very prudent estimate? Unfortunately for the clubs the answer is no. The maximum that the accounting standards will allow for a brand to be recognized in the financial statements is the amount that was actually paid for the transfer, minus amortization due to the passage of time.

And if the player suddenly loses his incentive to play and to participate as expected? Then even that amount (€222 million in the case above) will be reduced even further – sometimes to zero if it becomes obvious that the player does not cooperate with the management. The reason for this is that the original intentions and agreements are no longer valid, and as a result there are no economic benefits visible in the near future!


So as soon as decreased future cash flows are visible, clubs are obliged to report these. 

In contrast, when the value of the player is even higher than anticipated, clubs need to remain prudent in their forecasts. For example, when Lewandowski scored five goals in one match, his value at that point in time went to the sky. And yet his value in the BAYERN balance sheet remained the same as what they paid to acquire him, net of course of any amortization.

Zero value? Lewandowski scores five goals in nine minutes.

So remember that in the accounting world, any increase in value cannot be shown so easily, while any decrease in value must be shown immediately! 

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