IAS 38 — Player transfer payments

Date recorded:

Agenda Paper 5


In its November 2019 meeting, the Committee discussed a submission asking whether a football club transferring a player to another club recognises the transfer payment received as revenue applying IFRS 15, or instead recognises the gain or loss in profit or loss applying IAS 38. The player is registered in an electronic transfer system managed by a third party. Registration means that the player is unable to play for another football club. In the meeting, the staff concluded that an entity should recognised the gain or loss applying IAS 38 if such right is recognised as an intangible asset. Only when the ordinary activities of an entity include the development and transfer of players and the registration rights associated are recognised as inventories, the entity would recognise the transfer payments as revenue under IFRS 15.

Of the 18 responses to the tentative Agenda Decision, eight agreed with the Committee's analysis. Five respondents expressed concerns about classifying registration rights as inventory. Two respondents disagreed with the technical analysis and considered the transfer payments could be recognised as revenue under IFRS 15 even the registration right is classified as an intangible asset.

Staff analysis

Some respondents raised concerns on including fact patterns in which a registration right is recognised as inventory and the fact that this goes beyond the fact pattern in the submission. A number of questions would have to be addressed in order to provide helpful and informative material for the discussion on the possibility of classifying it as an inventory. Moreover, no football clubs currently report registration rights as inventory and such discussion may create differences in reporting practice. The staff continued to consider the registration rights could meet the definition of inventories under IAS 2 as long as the entity intends to sell the right and the development and transfer of players is part of the club's ordinary activities. However, assessment of whether a registration right meets the definition of inventories require judgement with consideration of particular facts and circumstances. Providing more information addressing those questions for the classification of the right as inventory in this agenda decision would be difficult and go beyond an agenda decision responding to the question specified. Therefore, the staff recommend deleting all references to IAS 2 and the responses to the possibility of recognising the transfer payment received as revenue applying IFRS 15 from the tentative agenda decision.

Two respondents were of the review that an entity could apply the principle in IAS 16:68A similarly to the disposal of intangible assets if developing and selling the intangible assets is part of the ordinary activities. Accordingly, such right is transferred to inventory and the proceeds are recognised as revenue applying IFRS 15. The staff disagreed and explained IAS 16:68A is an exception to the general derecognition requirements in IAS 16 which is not applicable to IAS 38. IAS 38:113 specifies the derecognition requirements on disposals of intangible assets and should be applied in the fact pattern described. These respondents also suggested amending IAS 38 to include a similar exception to the general derecognition requirement. The staff responded that this aspect of IAS 38 has not been identified by the Board as a potential project in the 2020 Agenda Consultation but they may share the comment letters with the Board to consider.

Staff recommendation

The staff recommend finalising the agenda decision, with the deletion of certain discussion and changes in the wording as stated above.


The main discussion was on whether to remove the analysis with regard to IAS 2 in the agenda decision. A few preferred keeping it because they considered it is relevant in responding to a question raised in the fact pattern. Most of the Committee members agreed with removing because it is not relevant in the particular fact pattern set out and similar transactions are widespread in other industries, adding this may result in diversity in current practice. Instead, a future project for the related issues on IAS 38 will be suggested to the Board.

The Committee decided, by a vote of 13:1, to finalise the agenda decision without referring to IAS 2 and revenue recognition, but with some changes to the wording.

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