Unit 3.5 Balance Sheets – Ronaldo saves Man United

Higher Level students need to learn the role and importance placed on intangible assets on the balance sheet. Here’s the latest example from the world of football…

Alex Ferguson once said “There’s only one Ronaldo”. Manchester United’s world record sale of Cristiano Ronaldo last year to Real Madrid helped to raise £80 million. Football clubs, like many corporate businesses, do not tend to record intangible assets such as the (estimated) value of their players on their balance sheets. However, the case of Ronaldo shows that world class players are indeed an asset to the business. In the case of Ronaldo, the sale actually prevented Manchester United Football Club from making an annual loss since it managed to declare pre-tax profits of £48.2 million. This means that the company would have reported a loss of £31.8 million had it not been for the sale of Ronaldo.

The football club also reported that they had paid £41.9 million in interest payments of its (huge) loans of £509.5 million. That puts into figures the dangers (to liquidity) of opting for high gearing! For the Club, if only they had another Ronaldo…