Other Financial Issues
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New TV Distribution Rules: Everyone’s A Winner…?
On the same day that lots of people were getting giddy about Amazon buying one of the Premier League TV rights packages for 2019-22 for an ‘unspecified price’ (i.e. peanuts) the Premier League owners also sneaked through a new formula for the distribution of PL monies between clubs, in what was a textbook example of a slick PR operation choosing a good day to bury bad news for anyone outside of the Premier League. Q: What’s the problem? Some of the ‘Big’ clubs feel that they get a raw deal from the existing way that broadcasting monies are split in the Premier League, so want to change the rules. Q:…
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Aston Villa and FFP
Executive Summary Villa easily satisfied FFP in 2016/17 due to parachute payments and player sales despite spending £88 million on players. They should easily satisfy it in 2017/18 as player trading position reversed and sold more than they bought. Will need major belt tightening in 2018/19 as parachute payments fall from £34m to £15m and FFP loss limit falls from £61m to £39. If you want the long version read on… Introduction There’s nearly as many questions about Financial Fair Play (FFP) these days as there is about Katie Price’s love life, and the answers are usually equally confusing. I’ve been asked to look at Villa’s FFP position,…
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Premier League Club Values 2017
As the 2017/18 season comes to an end, all but one Premier League (EPL) club has submitted their accounts for publication, and that has allowed us to estimate values. The new domestic broadcasting deal that came into play in 2016/17, combined with wage restraint due to the EPL’s Short Term Cost Control rules, has boosted club income and profitability. As a result the total value of EPL clubs has risen over 30% from £12.1 billion to £15.8 billion. The clubs have been valued using the Markham Multivariate Model (MMM) devised by Dr Tom Markham, a graduate of the University of Liverpool’s Football Industries MBA programme, and is now head of…
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West Ham and the London Stadium: Flares ‘n’ Slippers
Introduction: We don’t particularly like politicians here at Price of Football. Not because we have any left/right leanings, our viewpoint is mid-Atlantic on most issues, but because they repeatedly fail the competence threshold, regardless of their affiliations. Present London mayor Sadiq Khan (Labour) commissioned an investigation into the deal which has resulted in West Ham residing in the former 2012 Olympic (now London) stadium. The deal to give the Hammers the stadium was granted by the former administration, run by foot in mouth former mayor Boris Johnson (Conservative). Herein lies the first point, had the previous mayor been Labour, what would be the chances of this investigation and report taking…
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Blackpool: Season in the sun
Owen Oyston, Blackpool’s controversial owner, has put the club up for sale, http://www.bbc.co.uk/sport/football/41944602 following losing a legal case with fellow investor Valeri Belokon. Wealthy they may be, but, after the court ruling, in which Oyston and his son, Karl, were ordered to pay Belokon £31.5 million, both Oystons’ had their assets seized. https://www.theguardian.com/football/2017/nov/06/oystons-blackpool-ordered-pay-shareholder-high-court-valeri-belokon Establishing reliable information as to the extent of the Oyston family wealth is difficult, as between them as Owen Oyston has at least 40 directorships according to Companies House. Never popular with fans, the Oyston empire has many tentacles, but valuing the sum of all the individual elements is difficult. One approach to unravelling the involvement of…
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Valuing Newcastle United Part II
In the last post we looked at the methods professionals use to value a business. We deliberately didn’t calculate using one method, known as the discounted cash flow method, because (a) it relies on clubs generating positive cash flows, which they traditionally have struggled at, and (b) designing the model involves a lot of nerding out on a spreadsheet. Some people have rightly pointed out though that with the latest TV deals, clubs are now far more cash rich than they used to be, and so perhaps such a model is worth attempting. Furthermore, being nerds here at the PriceOfFootball, the temptation to produce something that gives a value was…
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Newcastle: What’s The Colour of Money?
Newcastle: What’s the colour of money? Newcastle United are officially up for sale. http://www.espn.co.uk/football/english-premier-league/23/blog/post/3236029/mike-ashley-puts-newcastle-up-for-sale-but-can-club-be-great-again. That’s not significantly different from the position over the last few months, where they were unofficially up for sale. There are many interested parties, but the most important one is Mike Ashley, as the price that he’s prepared to accept that will determine whether recent noises from the club are to be taken seriously. Stories abound of prices being asked of about £350-400 million. Which begs the question, how do you value a football club? We’ve looked at a variety of methods, to try to determine a range of prices that might be acceptable to both…
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Football and the party manifestos
What does the figure one billion, nine hundred and twenty-two million, nine hundred and forty-one thousand pounds mean in terms of football and politics? (and before you ask, is isn’t Diane Abbott’s answer to the question, “If I buy two pints of lager and a packet of crisps, how much change will I get from a twenty-pound note”). This is in fact the money generated by Premier League football clubs in 2015/16 from broadcast income. (see breakdown in Appendix 1). The Labour Party has generated publicity with a proposal in its manifesto that the Premier League should commit 5% of this sum to grassroots football. We have therefore looked at…
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Deloitte Football Money League: Manchester United now the biggest earning club.
The business consultants Deloitte have just produced their annual football money league table, which reveals that Manchester United generated $635 million in 2015/16, the highest in the world. Real Madrid, who topped this table in 2014/15, dropped to third place with $572 million, but they did win the UEFA Champions League. Whilst the monetary success will no doubt delight the Glazer family who own the club, and the shareholders who have bought United on New York’s NASDAQ market, Uniteds fans are likely to be less impressed. The last time Manchester United won the Premier League was in 2012-13, when Sir Alex Ferguson was manager. Since then they have finished 7th,…