J.2 Relevant income - Club Licensing

J.2.1

Definitions for the calculation of relevant income are as follows:

1. Revenue – Gate receipts

   Revenue derived from general admission and corporate match attendance, from both season tickets and matchday tickets, in relation to the club’s matches. Gate receipts also include membership fees.

2. Revenue – Sponsorship and advertising

   Revenue derived from the main sponsor, other sponsors, pitch-perimeter and other board advertising, and other sponsorship and advertising.

3. Revenue – Broadcasting rights

   Revenue derived from the sale of broadcasting rights to television, radio, new media and other broadcast media, in relation to national competitions and other matches, excluding UEFA club competitions.

4. Revenue – Commercial activities

   Revenue derived from merchandising, licensing of the club’s brand, matchday food and beverage sales, and other commercial income from football activities.

5. Revenue – UEFA solidarity and prize money

   Revenue derived from UEFA in respect of participation in a UEFA club competition and/or solidarity distributions.

6. Revenue – Other operating income

   Remaining operating income derived from football activities not otherwise categorised under Annex J.2.1(a) to (e), including grants and subsidies from a national football body or government of the territory of the licensee and rent.

7. Net result from non-football activities related to the club

   Income from non-football activities related to the club, net of directly attributable costs (including employee benefit expenses and rent/amortisation costs).

   The financial result of all non-football activities related to the club must be combined and the corresponding net result must be included:

   • if positive net result, as relevant income; or

   • if negative net result, as a relevant expense. If applicable, these net costs can be considered a relevant deduction under Annex J.5.1(e).

8. Profit on disposal of player registrations and/or income on disposal of player registrations

   For the calculation of relevant income, whether a club includes either (i) profit on disposal of player registrations or (ii) income on disposal of player registrations will depend on the club’s method of accounting for player registrations in its financial statements, in application of the requirements defined below:

   i. For a club that uses the capitalisation and amortisation method of accounting for player registrations:

   • The profit on disposal of a player’s registration is calculated by deducting the net book value of the player’s registration at the time of the transfer, from the net disposal proceeds received and receivable.

   • A profit on disposal of a player’s registration is reported if the net disposal proceeds exceed the net book value of the player’s registration at the time of the transfer.

   • Any such profit must be included in relevant income for the calculation of football earnings.

   ii. For a club that uses the income and expense method of accounting for player registrations, income from the disposal of a player’s registration is the net disposal proceeds generated from the transfer of the player’s registration to another club. The net disposal proceeds should equate to the monetary income from the disposal of the player’s registration.

   iii. For the calculation of football earnings:

   • A club that uses the capitalisation and amortisation method of accounting for player registrations in its annual financial statements must apply the same method to relevant income and relevant expenses;

   • A club that uses the income and expense method of accounting for player registrations in its annual financial statements can elect to apply either the income and expense or the capitalisation and amortisation method (to be set out in restated financial information as per Annex G). The selected method must be applied consistently from one reporting period to the next.

   Appropriate adjustments must be made such that any profit or income in respect of a player whose registration the licensee retains is excluded from the calculation of football earnings.

   The above applies by analogy to the payment of release costs for any other personnel, e.g. head coach.

9. Other non-operating income

   Other non-operating income not otherwise included in another non-operating line in the profit and loss account. Appropriate adjustments must be made such that any non-operating income or profit arising from the sale or transfer of assets other than player registrations is excluded from relevant income for the calculation of football earnings.

10. Finance income

    Finance income refers to the following revenue that a licensee earns from its cash, cash equivalents, financial assets and treasury activities (excluding cash received as contributions or as related-party loans):

    1. Interest revenue arising from the use by others of entity assets yielding interest, such as income on cash balances, term deposits and other interest-bearing instruments;

    2. Gains from disposals of financial instruments (e.g. traded shares, bonds) which do not represent an indirect disposal of assets, rights or activities of the club;

    3. Income resulting from the effects of the time value of money.

    For the avoidance of doubt, the following income is not included in the calculation of football earnings:

    • Fair value gains on financial derivatives used for hedging interest rate or currency exposure;

    • Interest on loans given by the licensee to another party.

11. Foreign exchange result

    The net of gains and losses on monetary items included in relevant income and expenses, whether realised or unrealised. Foreign exchange gains and losses on non-monetary items, whether realised or unrealised, are non-monetary items and must be excluded from football earnings (see Annex J.2.1(l) and Annex J.3.1(k)).

12. Non-monetary credits/income

    Appropriate adjustments must be made such that non-monetary credits are excluded from relevant income for the calculation of football earnings.

    Non-monetary items (e.g. tangible assets and intangible assets such as goodwill and inventories) are items which do not meet the definition of monetary items. Monetary items are defined as units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. The essential feature of a monetary item is a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency.

    Examples of non-monetary credits/income:

    • Upwards revaluations of tangible assets, investment properties, intangible assets (including player registrations), investments, financial instruments and inventories;

    • Write-backs of depreciation/amortisation or impairment of tangible assets and intangible assets (including player registrations); and

    • Foreign exchange gains on non-monetary items.

13. Income transaction(s) above fair value

    For the calculation of football earnings, the licensee must reflect any income transaction, irrespective of whether it is with a related party, at fair value. If the estimated fair value is different to the recorded value, then the relevant income must be adjusted accordingly, bearing in mind, however, that no upward adjustments can be made to relevant income.

    Examples of income transactions that may require a licensee to demonstrate the estimated fair value of the transaction:

    • Revenue from sponsorship arrangements;

    • Revenue from corporate hospitality tickets and/or use of executive boxes;

    • Any transaction whereby goods or services are provided by the club.

    Examples of income transactions that are not relevant income:

    • Monies received as a donation; and

    • Waivers of liability.