December 02, 2008 REVENUE RECOGNITION Conclusion The professional sports industry follows CON 5 as the general guideline for revenue recognition in the absence of specific revenue recognition standards within the industry. The primary sources of revenues in the sports industry include live event ticket sales, licensing, and franchising. Revenue generated from licensing should be deferred and documented as income when earned. Ticket sales revenue should be recognized upon the delivery of the product (ticket). The franchise fee revenue follows the general rule of revenue recognition for franchisor under FAS 45. The professional sports industry did not reveal unique revenue recognition practices. Firms operating in the Sports Industry
Licensing Ticket Sales Franchising Opinion The sales of tickets provide revenues for the companies but WPHL and Football Equities recognize revenue using different methods. WPHL recognizes revenue immediately when the tickets are sold. In contrast, Football Equities recognizes revenue on game day. The differences in these practice occurred because the operations of tickets sales are different. WPHL generates revenue from the fees collected from the sale of tickets from franchised teams while Football Equities sales tickets for games played by teams it operates. REFERENCES Emerging Issues Task Force (EITF). (2000). EITF 99-19 -- Reporting revenue gross as a principal versus ...