[Football] Premier League club values

[El Presidente]

If anyone is interested I've put out a report on club values, Albion came in 18th at £187 million using the MMM formula.

The short version



The long version

http://priceoffootball.com/2728-2/

Two clubs, Newcastle United (owned by a FCW) and Crystal Palace (small club) have been valued on the basis of their 2018 accounts as they have taken advantage of an allowance by the Chancellor to delay publishing their accounts.

 

[WATFORD zero]

Wondered where this had come from

https://www.msn.com/en-gb/sport/premier-league/tottenham-crowned-premier-leagues-most-valuable-club-over-manchester-united-and-man-city-study/ar-BB13kN3A?li=BBoPWjQ&ocid=mailsignout

 

[El Presidente]

Wondered where this had come from

https://www.msn.com/en-gb/sport/premier-league/tottenham-crowned-premier-leagues-most-valuable-club-over-manchester-united-and-man-city-study/ar-BB13kN3A?li=BBoPWjQ&ocid=mailsignout

Probably from a DULLARD.

 

[blue-shifted]

I know nothing about the MMM formula, but on an initial look it seems to give a lot of weight to stadium capacity / cost and somehow has managed to get Burnley surprisingly high on the list

 

[Bozza]

Paging [MENTION=7]Mustafa[/MENTION]...

How much would you say we are worth then?

Amex + Lancing training ground alone £150m? Squad value £100m or more? And the business value?

If the club isn't worth £300m I'd be shocked.

The population of Newcastle is lower than Brighton, and we have a huge catchment area just like they do. They might have a moderately higher fanbase right now because of their history in the top flight, but it's not overly significant surely... and over time we easily have the potential to exceed theirs, with a more affluent population too.

In addition, in terms of material assets, we have a state of the art training ground and stadium in the South. Land value is surely a lot higher than theirs.

We would surely be a better investment and thus worth more money, if thinking surely from a business perspective. You are right though that our relatively low ground capacity limits our potential.

 

[Bozza]

I know nothing about the MMM formula, but on an initial look it seems to give a lot of weight to stadium capacity / cost and somehow has managed to get Burnley surprisingly high on the list

Exactly what I said last time round!

https://www.northstandchat.com/show...-%A3210m-worth-%A3700m-within-5-years-a-steal

 

[Barham's tash]

We’re hampered by TBs strategy of not cashing in on player assets. Had Covid not materialised I would have expected this to have changed this season as we possibly would have sold Dunk or Duffy at over inflated prices.

Also our commercial income next year will treble won’t it as the new Amex deal kicks into gear [again presuming no impact from Covid].

Either way the value is immaterial unless TB wants to sell in which case it’s what he wants for it - much like with our players.

Interesting to see the Newcastle formula value roughly matching the asking price from Ashley.

 

[crodonilson]

That gap between 6th and 7th is astounding, I'd expect that Villa will be in 7th for this season and plug that gap a bit but still quite staggering, shows how difficult it will be for any club even Newcastle with their now found wealth and massive clubs like Villa, will have to become a permanent top 6 outfit.

 

[Seasidesage]

I'm surprised how low our valuation is in comparison to say Burnley? Is that purely longevity in the PL [MENTION=31]El Presidente[/MENTION]?

 

[blue-shifted]

We’re hampered by TBs strategy of not cashing in on player assets. Had Covid not materialised I would have expected this to have changed this season as we possibly would have sold Dunk or Duffy at over inflated prices.

Also our commercial income next year will treble won’t it as the new Amex deal kicks into gear [again presuming no impact from Covid].

Either way the value is immaterial unless TB wants to sell in which case it’s what he wants for it - much like with our players.

Interesting to see the Newcastle formula value roughly matching the asking price from Ashley.

Does that apply here? This graph is talking about the value of the club. So if someone bought TB out, for example the players on the books would be one of the clubs assets taken over

 

[Barham's tash]

Does that apply here? This graph is talking about the value of the club. So if someone bought TB out, for example the players on the books would be one of the clubs assets taken over

I’m probably being thick but not sure what your point is? (I usually am...)

I just meant that nice as this calculation is TB if approached is likely to have his own valuation model in place and therefore the amount he would sell for is in his head and his head only.

 

[El Presidente]

Exactly what I said last time round!

https://www.northstandchat.com/show...-%A3210m-worth-%A3700m-within-5-years-a-steal

It's more to do with Burnley's ability to generate profits every year, relatively high season finishes (which generates extra prize money) compared to their wage bill and having little debt on the balance sheet.

 

[El Presidente]

I'm surprised how low our valuation is in comparison to say Burnley? Is that purely longevity in the PL [MENTION=31]El Presidente[/MENTION]?

Burnley are in my opinion (others are of course available) the best run club financially in the Premier League and the valuation reflects that. Gut reaction is that they should be lower in the table but they make money each year, keep wages low and have a strong balance sheet...and they do it year in year out.

 

[blue-shifted]

And Everton? Why so low. OK they don't have a new stadium, but they have several very expensive playing assets, an international brand, 40k+ every week and only a tiny chance of relegation.

West Ham are low as well, but I can sort of understand that given the circumstances surrounding their home ground.

Don't see what Cardiff have going for them to be worth £223m either

Spurs, clearly ridiculously overpriced. No way twice the value of Arsenal. I wouldn't be amazed to Spurs go under if this lockdown continues, given how they've mortgaged themselves to the hilt.

 

[blue-shifted]

It's more to do with Burnley's ability to generate profits every year, relatively high season finishes (which generates extra prize money) compared to their wage bill and having little debt on the balance sheet.

Well yes, but that profit will quickly evaporate if they go down, (which they might in the next few years). Whereas Leicester, who they are more valuable than, won't. In that respect, i'll deduce the MMM formula doesn't account for projected future performance / income.

If I was buying a football club and had to choose between Leicester at £304m or Burnley at £350m, I think I know which I'd choose.

 

[LlcoolJ]

Seeing as you're here EP. I was just wondering about the player valuation thing. I know how it works with the initial transfer fee being amortised over the length of the contract, but how is the corresponding liability with regard to wages accounted for? I'm guessing "not" but in a logical sense, it should be shouldn't it? At least a proportion. As without paying the wages involved in the contract, the asset has no value.

E.g. You buy a Chritian Benteke for £30m on a five year contract and agree to pay him £6.5m a year (I'm honestly trying to keep a straight face here).

His value starts at £30m in the accounts and quickly falls to around £30. Sorry, his value is written off at £6m per year based on his contract.

But as the contract states that the club must pay him £6.5m per year or he can walk away to Derby for free, surely as an asset, he has no value whatsoever.

It's like buying a machine for your factory that costs £10m but has maintenance costs of £2.2m a year......... and if you don't pay them it can f*** off to the factory next door for nothing. Oh and after 5 years it can do that anyway. I.e. worthless.

I get that it's the only semi logical way to value players, but it's still not logical.Is it?

 

[Superphil]

Interesting to see the Newcastle formula value roughly matching the asking price from Ashley.

He might be a massive bellend, but he's probably not to shabby in the business world. Self made billionaires don't do it by accident.

 

[Barham's tash]

He might be a massive bellend, but he's probably not to shabby in the business world. Self made billionaires don't do it by accident.

Indeed that was my insinuation from my post. Or he just knew this formula existed and plugged in the numbers. Either way you don’t make what he has through being thick.

 

[El Presidente]

And Everton? Why so low. OK they don't have a new stadium, but they have several very expensive playing assets, an international brand, 40k+ every week and only a tiny chance of relegation.

West Ham are low as well, but I can sort of understand that given the circumstances surrounding their home ground.

Don't see what Cardiff have going for them to be worth £223m either

Spurs, clearly ridiculously overpriced. No way twice the value of Arsenal. I wouldn't be amazed to Spurs go under if this lockdown continues, given how they've mortgaged themselves to the hilt.

Everton lost over £100 million in 2018/19, which explains their relatively low position in the table.

 

[El Presidente]

Seeing as you're here EP. I was just wondering about the player valuation thing. I know how it works with the initial transfer fee being amortised over the length of the contract, but how is the corresponding liability with regard to wages accounted for? I'm guessing "not" but in a logical sense, it should be shouldn't it? At least a proportion. As without paying the wages involved in the contract, the asset has no value.

E.g. You buy a Chritian Benteke for £30m on a five year contract and agree to pay him £6.5m a year (I'm honestly trying to keep a straight face here).

His value starts at £30m in the accounts and quickly falls to around £30. Sorry, his value is written off at £6m per year based on his contract.

But as the contract states that the club must pay him £6.5m per year or he can walk away to Derby for free, surely as an asset, he has no value whatsoever.

It's like buying a machine for your factory that costs £10m but has maintenance costs of £2.2m a year......... and if you don't pay them it can f*** off to the factory next door for nothing. Oh and after 5 years it can do that anyway. I.e. worthless.

I get that it's the only semi logical way to value players, but it's still not logical.Is it?

Hi LLJ

There's two player costs in the profit and loss account.

Registration cost (paid to the previous employer) which is as you correctly point out, spread over the contract period as an amortisation cost. The club can of course sell the player registration at a profit at a future date so that is why it's an asset.

Wage cost which is a monthly expense like rent, insurance etc.