Valuation of Football Clubs: A Thesis on Valuation of Danish Football Clubs

Jakob Dalsø & Casper Friis Jensen

Student thesis: Master thesis

Abstract

There are an increasing number of takeovers in the football industry. However, the science of valuating football clubs is not clear. Therefore, this thesis seeks to detect, which valuations methods are most optimal, when valuing Danish football clubs from the two highest leagues in Denmark. The purpose is to ease the valuation in a takeover scenario or as a stakeholder in a football club. To investigate the problem, a deductive method has been preferred. The theories of Discounted Cash Flows, multiples, and real option are therefore tested on a sample of 25 Danish football clubs. To support the tests, an analyzes of accounting differences and the Danish football industry, has been made. These analyses were based on different sources, as annual report, semi-structured interviews, articles etc. The key findings were that a general DCF approach could not be applied, while a tailored DCF approach yielded a satisfying result. In this method unstable business elements were valued with a real options approach separately. It was only performed on one club, which made the result insignificant. Lastly, a multiples method was conducted, where revenue multiples yielded partly satisfying results. However, the peer group and the sample were not perfectly comparable, and optimally the peer group should be tailored for every club in the sample. All approaches consisted of several biases and estimations, as for example estimations of financial leasing of stadiums and estimations of transfer rights. The conclusion of the thesis is that no optimal approach was detected for valuating every club in a general manner, due to several biases and high volatility in income sources from year to year. However, if tailored for the specific club, both the multiples and DCF can possibly be applied, but the results were insignificant. For future research, a further analysis of the tailored DCF approach combined with real options could be made for every club, to test its significance. Moreover, other valuation theories can be tested.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final ThesisMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages131