Tottenham Hotspurs Case

Assignment Questions

ASSUMPTIONS;

The roughly $26$M in cash on the balance sheet described as excess cash should be excluded from net working capital.

Net working capital is assumed to increase in proportion with total revenues.

Assume the Weighted Average Cost of Capital $($WACC$)$ to be $10\mathrm{.}25\%$

REQUIREMENTS:

$1.$

Assuming the Tottenham Hotspurs continue in their current stadium following their current player strategy.

Perform a Discounted Cash Flow $($DCF$)$ analysis using the cash flow projections given in the case. Based on this DCF analysis, what is the value of the Tottenham Hotspurs?

At the current stock price of $13\mathrm{.}80$ is Tottenham fairly valued? Is the stock overvalued or undervalued? Explain your answer.

$2.$

Using the DCF approach, evaluate each of the following decisions:

Build a new stadium

Sign a new striker

Build a new stadium and sign a new striker

$3.$

Based on the results from $(2),$ select a best choice and provide a logical argument to support it$.$

$4.$

Determine the enterprise value of the Tottenham Hotspurs using the Multiples Approach both as a multiple of revenues and average points $($See Exhibit $1)$

HINTS:

You will need to determine a terminal value of the business $($Present Value of Perpetuity$)$

To determine the value of equity, you will need to subtract the value for debt

For adding a new stadium and a new striker, you will need to adjust your original DCF Model for the related revenues and expenses and recalculate the value of the enterprise.

$*$Can you answer in excel spreadsheet