Forbes Valuation of Clubs

[Flashspur]

I think we all have heard of the 'value' of the top clubs in the game and the number of PL clubs in that list.

However, I am confused with this Forbes article quoted in Four Four Two which has us at 9th with a value of £1.29B. We have a stadium in the middle of London worth £1B so does that mean the rest of the club is worth a paltry £290m quid? Or is this some formula based on earning power?

https://www.fourfourtwo.com/feature...nal-liverpool-tottenham-real-madrid-barcelona

So I went to the source article itself and I am still confused how they arrived at that value. I think Uncle Joe will want a lot more then £1.29B for THFC.

https://www.forbes.com/sites/mikeoz...most-valuable-soccer-teams-2019/#3f697aa440d6

 

[Lilbaz]

I think we all have heard of the 'value' of the top clubs in the game and the number of PL clubs in that list.

However, I am confused with this Forbes article quoted in Four Four Two which has us at 9th with a value of £1.29B. We have a stadium in the middle of London worth £1B so does that mean the rest of the club is worth a paltry £290m quid? Or is this some formula based on earning power?

https://www.fourfourtwo.com/feature...nal-liverpool-tottenham-real-madrid-barcelona

So I went to the source article itself and I am still confused how they arrived at that value. I think Uncle Joe will want a lot more then £1.29B for THFC.

https://www.forbes.com/sites/mikeoz...most-valuable-soccer-teams-2019/#3f697aa440d6

We should have the highest value of fixed assets of any club. Not just the stadium and training ground but we have property all over tottenham.

Agree with you not sure how they came to the valuation. Or when it was done. Does our debt reduce our valuation?

 

[LexingtonSpurs]

“Value” is generally derived from projected future earnings less expenses. Old Trafford would still be considered more valuable in that sense - until THFC can show sustainable annual revenues for the new stadium.

Same for overall valuation of the clubs - United will be projected to deliver consistently higher revenues than Spurs.

Continued success could change that, but for now we are probably where we belong in terms of most valuable clubs.

 

[carmeldevil]

The value did increase over 30% in one year and it's no doubt due to CL, stadium, etc. If the team stays on its track, the value will keep going up but probably not 30+%.

 

[kr1978]

It’s all down at the bottom of the article so

1. Revenues and operating income are for 2017-18 season-So new stadium wouldn’t count here
2. “The values include the economics of the team's stadium, but exclude the value of the real estate.” So even when they allow for new stadium it’s only the earning power when in reality we would command a hefty premium on all clubs out of London.
3. Debt is interest bearing debts and includes stadium debts. So interest free loans from an owner (abromovitch has about £1bn in loans to Chelsea I believe) wouldn’t count but our stadium debt would be deducted from our value.

 

[waresy]

So interest free loans from an owner (abromovitch has about £1bn in loans to Chelsea I believe) wouldn’t count but our stadium debt would be deducted from our value.

I've wondered How does that work for the valuation and future sale of the club?
Is it assuming these clubs with rich owners who have interest free loans will never have to pay them back and therefore are effectively gifts?

The report when updated to reflect this last accounting year will be interesting for us

 

[Neon_Knight_]

It’s all down at the bottom of the article so

1. Revenues and operating income are for 2017-18 season-So new stadium wouldn’t count here
2. “The values include the economics of the team's stadium, but exclude the value of the real estate.” So even when they allow for new stadium it’s only the earning power when in reality we would command a hefty premium on all clubs out of London.
3. Debt is interest bearing debts and includes stadium debts. So interest free loans from an owner (abromovitch has about £1bn in loans to Chelsea I believe) wouldn’t count but our stadium debt would be deducted from our value.

Maybe the article should be re-titled "Forbes Valuation of Clubs in 2018" then.

I always take these rankings with a pinch of salt, but it's really not an accurate reflection of the current status quo (for any club) if nothing that happened during the last 15 months is being considered. Competitive performances and CL qualifications from the 2018-19 season (and the associated prize money and sponsorship prospects) could easily make a 10% difference to a club's valuation, and must have reduced the gap between Man Utd and us/Liverpool.
The actual rankings might not be significantly changed, but the monetary figures are historic, not current. If I was looking to buy shares in a club, I don't think I'd be too comfortable going by data that's almost 1.5 years out of date.

I really do hope Abramovich calls in that £1bn loan eventually!

 

[Lilbaz]

Maybe the article should be re-titled "Forbes Valuation of Clubs in 2018" then.

I always take these rankings with a pinch of salt, but it's really not an accurate reflection of the current status quo (for any club) if nothing that happened during the last 15 months is being considered. Competitive performances and CL qualifications from the 2018-19 season (and the associated prize money and sponsorship prospects) could easily make a 10% difference to a club's valuation, and must have reduced the gap between Man Utd and us/Liverpool.
The actual rankings might not be significantly changed, but the monetary figures are historic, not current. If I was looking to buy shares in a club, I don't think I'd be too comfortable going by data that's almost 1.5 years out of date.

I really do hope Abramovich calls in that £1bn loan eventually!

Problem is we all release our financials almost a year late. We released our year ending june 18 in april this year.

It's how finance works.

 

[Neon_Knight_]

Problem is we all release our financials almost a year late. We released our year ending june 18 in april this year.

It's how finance works.

That depends on the sector (public sector organisations have to report their finances to central government fairly promptly at the end of each financial year), but point taken.

 

[BehindEnemyLines]

Valuation of business is a real minefield, and tends to be a negotiated thing in reality. However, there are a few basic ways to value a company, so it depends on whether they've looked at it from a business perspective or have used the same method for each club to retain consistency of comparibility.

I have listed a few (very simplified) methods below, and I suspect they are using the last one:

The easiest (and probably most accurate) way to value a business is using the equity value of the shares in circulation (i.e. if the shares are £1 each and there are 10m then it would be valued at £10m). The theory is that the market for shares will value them accurately over the longer period, though this would be based on the value of information available to value them in the first place, and this is only really usable for listed companies.

You could value using the equity value (i.e Assets less liabilities), though this would normally give a low valuation as it doesn't take into account future cash flows.

You could value using the discounted value of future cashflows (i.e. the total value of future estimated cashflows discounted by the weighted cost of capital). This would generally give the most accurate valuation, though it is debatable as to what discount factor to use and whether the valuation of cashflows is accurate or otherwise. *the cost of debt and income from the stadium is factored into the value of cashflows - this might be why a club like Chelsea don't account for the £1bn debt as effectively there is no cost of debt if it is interest free.