Finance and accounting in football
During the last century, football has evolved from a noble sport – played for reasons of entertainment – to a business. However, the business of football is no ordinary business with the emphasis on profit making often substituted with maximising on-field success. As such, football clubs can be leveraged by significant levels of debt – often in the form of “soft (interest-free)” loans from their owners. Furthermore, a high proportion of club revenue is normally spent on player acquisition and wages. There is significant pressure on the trade-off between managing the balance sheet and managing fan expectations at club level.
Against this backdrop, this chapter considers the role that finance and accounting play in shaping the football business by incorporating a number of key themes such as: the regulatory frameworks and legal requirements; the balance between income and costs (including the asset valuation of players to the football business); the financial strategies and performance; and the financial health through recognised industry techniques. The themes will enable the reader to evaluate the business performance of football clubs and the potential for future growth in the industry.