Assuming Tottenham Hotspurs continue in their current stadium following their current player strategy:

Perform a DCF analysis using the cash flow projections given in the case. Based on this DCF analysis, what is the value of the Hotspurs?

Perform a multiple analysis. Based on the multiples analysis, is the value of Tottenham any different?

At its current stock price of 13.80, is Tottenham fairly valued?

Hints:

There are multiple ways to find the answer; individual's answers may vary. Be sure to provide a logical reasoning for your assumptions.

Exhibit 5 (Above) provides values for Discounted Cash Flows

DCF can be done a couple ways, based on EBITDA or calculating Free Cash Flows

If you use the Free Cash Flow Method, you will also need to include capital acquisitions by year and change the net working capital by year

Regardless of method, you need to determine a terminal value of the business (the present value of a perpetuity)

Use 10.25% as the discount rate

Company Tax Rate 35%,

20 Year Risk Free Rate: 4.57%

Tottenham Equity Beta: 1.29

Remember to determine the value you will need to subtract the value for debt

For adding a new stadium and new striker, you need to adjust your original DCF model and find the new cash flows. Remember to adjust for related revenues and expenses and recalculate the value of the enterprise.

Assume the Weighted Average Cost of Capital (WACC) is 10.25%

Figures represented in the tables below are in millions

Exhibit 4

Exhibit 5