Ginkyo Ratings assesses the value of soccer players

Ginkyo Ratings, a non-financial rating agency accredited by Finance Innovation, launches the first method for evaluating and accounting for the Human Capital of soccer clubs

Source: Olivier Kauf, Our Century, January 24, 2019.

The extra-financial rating agency for soccer clubs, Ginkyo Ratings, announces the development, with the support of the French Ministry of Economy and Finance and the Observatoire de l'Immatériel, of the first method for evaluating and accounting for the fair financial value of soccer clubs' player assets. The project was supported and accredited by the Finance Innovation global competitiveness cluster.

The new economy places people at the center of the company. However, this evidence is the opposite of what the accounting model of company representation reflects: if a company invests in its Human Capital to gain in competitiveness, the immediate accounting consequence is the deterioration of its results. The accounting systems are therefore unable to illustrate the value of Human Resources in the company.

An innovative methodology to enhance the richness of a company's human resources: the case of soccer clubs

In view of the imperative need for sporting performance, French soccer clubs have a huge asset: the recognized quality of their training centers, which allow them to create the Human-Player Capital of today and tomorrow. However, it is clear that there are currently very few tools for measuring this capital, and even fewer consensual evaluation methods.

" The implication is stark: on average in 2018, only 20% of Player Capital is activated in the financial statements of soccer clubs, " said Pierre Caillet, founder and chairman of Ginkyo Ratings.

Under these conditions, how can shareholders, investors and creditors be provided with impartial and objective information on the reality of the value of Player Capital and, by extension, on the fair value of the club's assets? How to value the management actions of the directors and the investment decisions that contribute to the creation of the value of the Player Capital (investment in the training center, etc.)?

It is this observation that led to the creation of the extra-financial rating agency Ginkyo Ratings. The strategic and particular positioning of a rating agency requires true independence and the use of a rigorous, transparent and recognized measurement methodology.

" The challenge is to improve the efficiency of the capital markets in order to help investors in their decision making. For soccer clubs, the challenge is to demonstrate their ability to create sustainable value and financial performance and thus obtain lower financing costs and gain in competitiveness," says Pierre Caillet.

Ginkyo Ratings and the process initiated by the Minister of Economy and Finance

As an expert in the measurement of companies' Intangible Capital, Ginkyo Ratings is part of the process initiated in 2011 by Christine Lagarde, French Minister of Economy and Finance. The construction of Ginkyo Ratings' innovative methodology is based on the combination of expertise in very different and complementary fields: soccer expertise (valuation framework), mathematical expertise (valuation method), IT expertise (modeling), economic expertise (Intangible Capital) and financial expertise (activation).

The result of this research, carried out in partnership with the Camille Jordan Institute (mathematics laboratory), which was tested and validated over several years in a League 1 club, led Ginkyo to formalize this method and develop the Standard for the evaluation and accounting of the Human-Player Capital of soccer clubs: Thesaurus-Football®.

The aim is to provide soccer clubs with a new method of measuring the value of their Human-Player-Capital, allowing them to assess and account for it at its true value. By adapting the tools of finance to Human-Player-Capital, the Thesaurus-Football® standard completes and extends the current system of measurement and financial communication of soccer clubs.

Today, the independent agency Ginkyo Ratings intervenes at the request of clubs (managers and/or shareholders) to produce a rating/valuation of the Human-Player Capital (solicited rating). " In the financial field, training clubs play with only 20% of their workforce. The measurement and valuation of the Human-Player Capital has therefore become essential ", says Pierre Caillet.

" We need to talk to our investors who do not take sufficient account of unrealized capital gains. With Thesaurus-Football®, we have a solid reference framework recognized by the Ministry of Economy and Finance to give additional visibility and security to banks and investors" , explains Thierry Sauvage, Managing Director of Olympique Lyonnais.

About Ginkyo Ratings
About Finance Innovation
About Ginkyo Ratings

Ginkyo Ratings, the first extra-financial rating agency specializing in measuring Human Player Capital to address the problems of soccer clubs. Launched in 2018, the fintech has registered in the labeling process of the global competitiveness cluster Finance Innovation.
The fair value assessment is based on the rating of soccer players. Seven components condition this rating: (1) physical capital, (2) technical capital, (3) tactical capital, (4) mental capital, (5) relational capital, (6) potential capital and (7) health capital. In order to respect strict rules of independence, the ratings are carried out by a College of Independent Evaluators (C.E.I.). The individual rating process results in an assessment of the fair financial value of the club's entire workforce or Player Capital. These valuations are based on a qualitative and quantitative analysis of several thousand transfers of professional soccer players.
These valuations are then updated on a monthly basis. The financial statements with Player Capital (IC-Report Football®) are a strict reflection of the reality of the club's assets.

About Finance Innovation

FINANCE INNOVATION, a global competitiveness cluster dedicated to the French financial industry, has been carrying out concrete actions since its creation in 2008 to accelerate the development of innovative projects on themes with high economic, social and environmental stakes, in the service of growth and employment.

With a network of more than 480 members, FINANCE INNOVATION federates a large ecosystem of financial players through 6 strategic sectors - Banking, Insurance, Asset Management, Accounting and Consulting, Real Estate, Social and Solidarity Economy - as well as Universities and academic centers of excellence, local authorities and public authorities.

A member of the FrenchTech #FinTech thematic network, FINANCE INNOVATION has accredited more than 500 innovative, high value-added projects throughout France since 2007, with public and private funding exceeding €250 million. Founding members of the cluster: EURONEXT Paris - Paris EUROPLACE - French Banking Federation (FBF) - French Insurance Federation (FFA) - French Management Association (AFG) - Paris Ile de France Chamber of Commerce and Industry (CCI) - Ile de France Region - City of Paris - Directe Ile de France, Bpifrance More information on https://finance-innovation.org


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