Valuation of a football club : key considerations

Abstract

PURPOSE-- While valuation methodologies for commercial undertakings are commonly used, there are no tried and tested methodology which can be applied to Maltese football clubs and which therefore takes into account the peculiar circumstances that prevail in such organisations. International papers and dissertations deal with the subject matter however; no similar study has been conducted on local clubs. The first objective of this study is to propose a financial methodology that targets the fair valuation of the assets of a football club thus creating a particular methodology that could be implemented in an efficient and reliable manner by clubs. There is presently a lacuna in this space. The second objective of this research is to determine the key considerations one should consider when valuing a football club. Consequently, there are two fundamental criteria which one should consider: the importance that the valuation is reliable and reflects the real position of the club and that it also needs to be universally applicable to football clubs in Malta. DESIGN-- In order to assess a club and arrive at its fair value certain mechanisms need to be analysed. It is also essential to know all regulations that regulate the workings of a club in order to set parameters. The suggested methodology incorporates the use of both interviews and content analysis. Semi structured-interviews ere conducted with both professional valuers, in order to obtain information about important aspects which one considers when doing such a valuation and also with local football clubs. Moreover, content analysis was performed to identify and evaluate similar systems and techniques which are used across Europe. FIINDINGS-- The study underscored different key considerations which one should consider when carrying out a valuation of a local club such as poor revenue and the fact that most clubs have no legal title over the property they use for their operations. Furthermore, respondents gave their opinion on different valuation methodologies which were are used abroad to value football clubs and how relevant they are to the local scenario. CONCLUSIONS-- The study revealed that not all methodologies could be used in the local scenario as most valuation techniques would not give a reliable estimate of the value of clubs in the local scenario mainly due to certain considerations present in the local football industry. VALUE -- Based on the conclusions reached, it is hoped that such study can be used as a basis for further studies in this novel area.