Quote:
Originally Posted by Strange Brew
Purchasing a franchise is not revenue. Selling franchise rights is. How are you suggesting an entity accounts for the sale of franchise if not revenue? (hint: it is in the revenue standard).
As for your earlier comment, I have read the definition of HRR and it excludes franchise fees. I am suggesting players will negotiate to broaden the definition.
All revenue in the NHL is the result of playing hockey. If arena sponsorship revenue can be included in HRR, why can't franchise fees?
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I will cheerfully admit to not being an accountant, but it makes sense that IFRS would account for the sale of franchises as revenue. When McDonalds sells a franchise that comes with the right to run a business using their systems in a defined territory. That payment is clearly revenue to the McDonalds corporation.
However, when McDonald's sells a new franchise it DOESN'T include any ownership in McDonald's corporation. So franchisees don't share in any existing revenue streams or in the franchise fees paid by subsequent purchasers.
That's different than the NHL. Vegas/Seattle paid their fee, and are now part owners of the league. They get an equal share of league wide revenue, even though their contribution to the national TV deals is probably small. They also get an equal share of future expansion fees.
That portion of the expansion fee should reasonably be considered a capital item. They bought a share in the league along with their franchise.