Tottenham Hotspurs, Plc.
This certain case has many different possibilities for evaluation which gives it much complexity and much liberty while evaluating it. The soccer business sure has a certain relation with the performance and their revenues which makes it highly unstable when speaking of forecasted income of the club.
We must first value the firm at its current position in order to be able to value as compared to acquiring the new stadium and obtaining a new goal scorer. In order to do so we must evaluate the company by creating a Discounted Cash Flow analysis projecting the expected future revenues in the same current strategy which they are in. We would then lay out the future expected cash inflows with no initial cash out flow laid out due to the fact that they have already covered their initial expenses. We must take into account the growth rates that are expected for our liabilities such as capital expenditures, player salaries, depreciation, and such. We must then evaluate the growth rates for the cash inflows for the revenues expected due from increased ticket prices, product sales, sponsorship and televising their games. We must then implement these rates and growth in numbers to evaluate the future position a number of years down the line.
We could then evaluate the current capital structure and their cost of capital in order to determine whether they are fairly valued and obtain a second analysis to compare with. We have sufficient data such as their beta and stock returns in the market in order for us to evaluate these numbers. The case also contains the current risk free rate which is needed when using the Capital Asset Pricing Model in order to obtain the cost of equity of the firm. After performing a multiples analysis we can then compare the two analyses and determined whether the firm is fairly valued. If it is then great, but if not then we have an even greater reason for Tottenham to look into the...
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