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Sergio Macías and Gabriela Martín

​Football from a different perspective. Economic analysis and indications of accounting embellishments

Junior auditor at Deloitte and accounting and tax advisor

Based on our paper "The football teams of the first Spanish division: economic-financial situation and possible indications of accounting embellishment" published in 2018, where the available data corresponds to the 2016-2017 season, we present the results and conclusions obtained, dividing them in relation to the economic-financial situation and possible accounting embellishments.


The football sector is one that is renowned for its extensive social and economic prominence, provoking controversies confronted with numerous cases of fraud. It deals in exorbitant amounts of money and because of this attracts the interest of big investors and telecommunications companies. In general, it generates substantial social impact and media interest, and because of this requires studies directed at shedding more light on the sector. The objective of our work is to provide an analysis of different aspects of the football sector economic-financial structure.

After studying various statistics, we observe that the economic-financial situation of the Spanish first division football sector in the 2016-2017 season was not the best. Some specific indicators stray into realms which give cause for concern, and ultimately could pose problems for the sector in the future. Nevertheless, La Liga teams have made a noteworthy effort to improve this situation with respect to previous seasons.

Net worth strengthened and there was an improvement in solvency, liquidity and indebtedness with the passing of the seasons.

Despite this, there was a slight worsening during the 2016-2017 season with respect to the previous seasons, particularly in the negative manoeuvre fund that experienced a substantial increase. The Spanish league first division football sector's low liquidity would cause it to have problems dealing with its short-term debts. Because of this, it is a sector that functions with a higher-than-appropriate debt, and in all the seasons analyzed this ratio was negative. Nevertheless, the negotiation capacity of the teams has to be taken into account because, given their expectations of future income, they are able to exert considerable pressure on their creditors. Even so, this is not the recommended situation and it would be necessary to continue and increase the effort to obtain a healthier ratio.

If we carry out the sector analysis on each of the teams individually, we reveal that Celta de Vigo, Athletic Club de Bilbao and Éibar present a better economic-financial situation than the rest. Deportivo de La Coruña is at the tail, being the team with the worst results in our analysis. In addition, we have to comment on the difference between the situation of the two most leading teams in La Liga: while Real Madrid is in the middle of the ranking, FC Barcelona is the second worst team according to our analysis. It also highlights that these teams, despite being the most influential, are in an unfavourable position in the ranking: the higher positions are occupied by teams with less weight in the sector.

Returning to the sector as a whole, it is worth noting the significant difference in the income from television rights between La Liga and the Premier. The English league earns 128% more in this regard than the Spanish league, positioning itself as the football competition with the highest income in the world. In addition, the Spanish teams' income is sustained mainly by television rights, amounting to more than 40% of net turnover in all the seasons analyzed.

Regarding the income from television rights, we should take note of this: in April 2018, the award of these rights for the 2019-2020 and 2020-2021 seasons by competitive bidding began.

The main operators publicly described the prices being considered for the following seasons in the market as exorbitant, and that it would be necessary to reduce costs to more reasonable figures. Telefónica lost around 400 million Euros per year broadcasting football. Nevertheless, Telefónica has once again acquired these rights, not only used by themselves but also resold to other operators. Even so, there is some uncertainty as to the amount for which the television rights of the sector will be purchased in the future, which constitutes a significant threat to the teams, particularly for those in which this income represents more than 50% net turnover, This is so for all the teams analyzed with the exception of FC Barcelona, Real Madrid and Sevilla.

Given that the economic-financial information available to a third party is extracted from the annual accounts, we have carried out an analysis of them in the search for possible indications of accounting embellishments. As a result, we conclude that the football sector is indeed prone to embroidery.

The main accounting concept that can be manipulated is asset value, particularly the intangible assets where the value of those involved is declared. This is the most risky part because it is easily manipulated by means of different criteria for valuation, and, as well as being the most quoted section in audits, it represents a large proportion of all teams' balance sheet.

In their accounting reports, no team explains the methods used to calculate the amount declared as intangible assets.

Only a few clubs reveal that the methods used are their own and internal, being those that best reflect the situation of the value of those involved and stating that any other alternative method would not be as reliable as the one currently used by the club. Therefore the ambiguity in the valuation of those involved allows the asset to be valued in the most convenient way, either to make good a negative result or to show a lower profit margin and pay less tax. In addition, 8 of the 17 teams analyzed did not provide all the mandatory information in their report, incurring an omission of information in the audit, such as information about changes in accounting criteria.

On top of this, there have been scandals and tax frauds in the sector for not presenting the real situation of the team, and for breach of tax obligations.

In conclusion, we deduce that the economic-financial situation of the Spanish first division football teams in the 2016-2017 season and earlier was not adequate, although there was a trend towards improving it. In addition, there is a high probability of possible accounting embellishments in the annual accounts of the teams due to the high number of alternatives available in relation to the criteria for estimating asset values.



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