The on topic thread

[Magma]

Seems its essentially club value minus debt.

Although you have to doubt its accuracy considering it has the 2015-16 finishing positions of Man City and Spurs wrong.

he explains himself in the thread.

 

[Bojan KantKick]

we can pretty much write off those rankings completely lol

You add debt, not subtract it to value a business and private company valuations are usually discounted vs listed companies.

 

[chef]

Seems pretty creative to get an certain outcome.

 

[chef]

Has been so professional this season.

Yep, hes been a great pro about it.

Apparently we are trying to extend his contract and hes happy in London, i hope with the added extra games next season he hangs around.

 

[Zidane98]

we can pretty much write off those rankings completely lol

You add debt, not subtract it to value a business and private company valuations are usually discounted vs listed companies.

It seems because we've spent 200 million quid on the ground redevelopment which was paid for by a loan (and is being repaid over 6-7 years) the muppets that generated this report have deducted the loan from the total value of LFC. I suspect the Forbes valuations will turn out significantly different when they are released.

 

[SM]

It's like whoever made that list doesn't understand how valuations or even basic accounting work.

 

[glenferry23]

It's like whoever made that list doesn't understand how valuations or even basic accounting work.

 

[moomba]

The list was based on the Markham Multivariate Model. From what I can see it's pretty much a set formula with not much room for subjectivity.

It's been around for quite a few years now and apparently correlates more closely with purchase figures than other valuation methods.

Just found it interesting without meaning a whole lot.

 

[Gosha]

The list was based on the Markham Multivariate Model. From what I can see it's pretty much a set formula with not much room for subjectivity.

It's been around for quite a few years now and apparently correlates more closely with purchase figures than other valuation methods.

Just found it interesting without meaning a whole lot.

Would you have posted it if City were ranked 6th? Be honest...

 

[Bojan KantKick]

so they used a model which nobody else uses to value businesses.

I can probably manipulate a gordon growth model to make Leicester the most valuabke club in the world.

 

[moomba]

Would you have posted it if City were ranked 6th? Be honest...

I've posted plenty of financial stuff in the past where City havent been ranked top.

In the long run, City being on top of this method doesnt benefit me one bit.

 

[Art Vandelay_]

Would you have posted it if City were ranked 6th? Be honest...

Does faith post coaches votes when Sloaney is shite
Birds of a feather.

 

[elhadjihenry]

You add debt, not subtract it to value a business and private company valuations are usually discounted vs listed companies.

As someone who knows next to nothing about business, how does this work? Is debt used as a tax write off or something?

 

[jd2010]

As someone who knows next to nothing about business, how does this work? Is debt used as a tax write off or something?

The debt is generally being used to create something of greater worth. You don't take out £500m of debt for £200m worth of improvements

 

[moomba]

Surely if two clubs have equal assets, revenue etc the club with no debt will be worth more than one with debt.

 

[Zidane98]

Surely if two clubs have equal assets, revenue etc the club with no debt will be worth more than one with debt.

It's a flawed model. You bought John Stones for nearby 50m pounds - we bought Matip for 0 pounds. The method you quoted would add the money spent on Stones to the value of City where Matip adds nothing to the value of LFC with no purchase price paid.

 

[moomba]

It's a flawed model. You bought John Stones for nearby 50m pounds - we bought Matip for 0 pounds. The method you quoted would add the money spent on Stones to the value of City where Matip adds nothing to the value of LFC with no purchase price paid.

Liverpool wouldn't place a value on Matip in their own accounts so I'd imagine that would be the case in any valuation model.

 

[Art Vandelay_]

It's a flawed model. You bought John Stones for nearby 50m pounds - we bought Matip for 0 pounds. The method you quoted would add the money spent on Stones to the value of City where Matip adds nothing to the value of LFC with no purchase price paid.

So any club wouldn't be 100% accurate as there's usually academy graduates that cost nothing to acquire.

 

[Zidane98]

Liverpool wouldn't place a value on Matip in their own accounts so I'd imagine that would be the case in any valuation model.

In reality Matip is an asset worth 30m plus pounds now. Not sure how clubs account for free transfers on their books though.

 

[Zidane98]

Because for accounting purposes Matip can't be valued as it'd be subjective.
Only when he's sold would a value be attributed.

So any club wouldn't be 100% accurate as there's usually academy graduates that cost nothing to acquire.

Academy graduates cost a shitload in capital to train. There must surely be a value for them on club books.

 

[elhadjihenry]

The debt is generally being used to create something of greater worth. You don't take out £500m of debt for £200m worth of improvements

What I don't get is that a club could take out £200m in debt and spend it on crap players, those players are then £200m in assets to the clubs value, then an an extra £200m in debt is added to the value of the club even though they have essentially wasted the money?

Or is the model based on the fact than any money spent is likely to improve the value of the company by 200% of the outlay? ie: £200m on assets and the associated £200m debt is going to improve the value of the company by £400m?

 

[Art Vandelay_]

Academy graduates cost a shitload in capital to train. There must surely be a value for them on club books.

Costs to train players would be expenses. Academy players often are acquired for no fee so have no book value. Based on this study this is correct by UEFA as of 2014

4.7 Purchased vs. Home-grown/Free agents
As UEFA only allow purchased players to be capitalized on the balance sheet, these players solely represent the intangible assets (excluding goodwill) of each club. Figure 4-14 is an assembly of respective first team squads, where the blue pile represents capitalized players. The red pile is either home-grown players or free agents with no cost of acquisition, hence no option to capitalize the contract. However, home-grown players represent a substantial part of players registered with each club (figure 4-14). These players are not considered intangible assets, but if sold, they would generate income to the club. Figures of home-grown players with regard to total registered players range from 12,90% (Juventus) to 41.38% (Dortmund).

 

[SM]

The list was based on the Markham Multivariate Model. From what I can see it's pretty much a set formula with not much room for subjectivity.

It's been around for quite a few years now and apparently correlates more closely with purchase figures than other valuation methods.

Just found it interesting without meaning a whole lot.

Fairly sure anyone with half a brain accounts for debt when purchasing a business.

 

[SM]

As someone who knows next to nothing about business, how does this work? Is debt used as a tax write off or something?

In a very simple scenario debt means you have cash you wouldn't otherwise have, so if someone is paying you for your business they will need to pay you to take that cash.

 

[SM]

Surely if two clubs have equal assets, revenue etc the club with no debt will be worth more than one with debt.

Depends how the debt is financed.