Events

What is the Optimal Method to Value a Football Club?

What is the Optimal Method to Value a Football Club?
And
Are Parachute Payments Distorting Competitive Balance within the Championship?

Wednesday 2nd February  2011 at 6pm

Room G01 – Lankaster Lecture Theatre (University College London)
Medawar Building,
Malet Place (off Torrington Place),
London WC1
(For directions click here)

Given by: Tom Markham, PhD in Football Finance Candidate at the ICMA Centre, Henley Business School, University of Reading.

Synopsis

This presentation will be divided into two distinct subject areas, both of which are extremely pertinent to the world of football, but remain surprisingly under scrutinised in the public domain. The subject areas in question are; Football Club Valuation and Premier League Parachute Payments.

The English Premier League has become a truly global phenomenon thanks to the advent of satellite broadcasting. This in turn has lead to an influx of investors into English football with football clubs changing hands on a regular basis. In 2008/09, the 92 English professional clubs made a combined pre-tax loss of £488m. Traditionally, a commercial entity is valued by calculating the present value of the future cash flows generated by that entity. There is a glaring difficulty when this methodology is applied to football as most clubs are consistently loss making entities. This consequently renders the aforementioned method useless in the valuation of the majority of clubs. In this presentation, the alternative techniques for valuing clubs will be examined and a bespoke methodology derived from key football driven variables will be revealed.

Solidarity payments or “parachute payments” were introduced at the inception of the English Premier League to assist clubs relegated from the division in adapting to the financial climate in the Football League. The second part of this presentation examines; the rationale behind such payments, how clubs in receipt of them have historically performed and whether the new payment structure is distorting competitive balance in the Championship.

Reading

Biography

Tom’s passion for football was enthused at an early age by Ireland’s golden years under the tutelage of Jack Charlton. On realisation that he was not going to be the next José Luis Chilavert, Tom completed a BA (Hons) in Accounting and Finance in his native Dublin in 2003. During the programme he became extremely interested in the finances underpinning the beautiful game. An MSc in International Banking and Finance from John Moores’ University in Liverpool followed. Tom’s MSc dissertation ‘The Plight of Football Clubs as Listed Companies from an Investor’s Viewpoint’ analysed the investment potential and financial performance of the then seventeen listed British clubs using comprehensive ratio analysis and a bespoke multivariate bankruptcy prediction model.

In early 2005, Tom joined Allied Irish Bank (AIB) Capital Markets as a Treasury Accountant. He subsequently completed the ACCA professional accountancy qualification before gaining promotion to a front office position in 2006. Tom gained a wealth of experience at a time of unprecedented market volatility as a Currency Trader within AIB. He has comprehensive practical trading experience in the areas of Foreign Exchange, Fixed Income and Liquidity.

In September 2008, Tom quit his trading position in AIB to follow his passion by enrolling in the University of Liverpool’s MBA in Football Industries programme. Completing the MBA with distinction, his dissertation ‘The Valuation and Solvency of Top Tier British Clubs since the Inception of the Premier League: Is the Current Model Sustainable?’, supervised by Professor Tom Cannon, won the Premier League Best Dissertation award.

Tom is currently embarking on a PhD in Football Finance at the ICMA Centre, Henley Business School at the University of Reading under the supervision of Professors Adrian Bell and Chris Brooks. His research interests include the optimum time to time to sack a football manager and football club valuation.

Contact Details

For further details on this seminar series contact:

Sean Hamil
Department of Management
Birkbeck College
Malet Street
London
WC1E 7HX

Tel: 020-7631 6763
Email: s.hamil@bbk.ac.uk

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