- Using a DCF approach, evaluate each of the following decisions: - (use EBITDA)
- Build the new stadium
- Sign a new striker
- Build the new stadium and Sign a new striker
(Note that the past 10 years of Premiership revenue and point total data suggest that for every 1% increase in a teams point total, a team could anticipate a 1.52% improvement in revenues)
Use 10.25% as the discount rate
Company Tax Rate 35%,
20 Year Risk Free Rate: 4.57%
Tottenham Equity Beta: 1.29
| Assumptions | |
| Revenue growth | 9.0% |
| long-term growth | 4.0% |
| Salary growth | 10.0% |
| Long-term growth of everything else | 4.0% |
| Net Working Capital / Revenue ratio | -60.0% |
| Tax rate | 35.0% |
| Discount rate | 10.50% |
Current Forecast 1 3 4 5 6 7 9 10 11 12 13 2 2009 20.67 2013 2010 22.53 2011 24.56 2014 31.81 8 2015 34.67 2016 37.79 2017 41.19 2018 44.90 2019 48.94 29.18 Revenue Attendance Sponsorship Broadcast Merchandise Other Total 0 2007 17.40 15.70 28.70 5.20 7.10 74.10 2008 18.97 17.11 31.28 2012 26.77 24.16 44.16 20.33 37.17 26.33 48.13 31.28 57.19 34.10 62.33 18.65 34.10 6.18 8.44 40.51 74.06 28.70 52.46 9.51 12.98 37.17 67.94 12.31 22.16 40.51 7.34 10.02 104.60 44.16 80.72 14.63 19.97 2020 50.90 45.93 83.95 15.21 20.77 8.00 8.72 10.36 5.67 7.74 13.42 6.73 9.19 95.96 11.29 15.42 11.91 14.15 10.92 114.01 16.81 175.42 18.32 191.21 80.77 88.04 124.27 135.46 147.65 160.94 208.42 216.76 56.01 61.62 67.78 82.01 90.21 99.23 120.07 132.08 145.29 159.82 166.21 Operating costs Payroll Stadium Operating Expenses Other Total 17.72 50.92 16.38 1.80 69.10 19.93 17.04 1.87 74.56 19.16 2.11 18.43 2.02 88.23 109.16 22.42 2.46 134.04 20.73 2.28 113.22 21.55 2.37 123.16 23.31 2.56 1.95 24.25 2.66 2.19 26.22 2.88 25.22 2.77 173.28 27.27 3.00 196.48 74.92 81.28 95.82 104.13 145.95 158.99 188.92 13.61 14.99 17.93 6.76 2.38 8.77 2.57 16.43 3.26 3.01 3.39 EBITDA Depreciation EBIT Interest Taxes Net Income 5.00 2.20 2.80 2.26 0.19 0.35 4.38 5.85 2.29 3.56 2.46 0.38 0.71 7.73 2.47 5.26 2.93 0.82 1.52 9.88 2.68 7.21 3.48 12.30 2.90 9.41 4.13 11.06 2.78 8.27 3.79 1.57 2.91 6.20 3.19 3.13 11.86 4.91 10.60 4.50 2.13 3.96 13.17 5.35 2.74 5.09 2.69 0.59 1.10 19.49 3.52 15.97 6.36 3.37 6.25 14.55 5.83 3.05 5.66 20.27 3.66 16.61 6.61 3.50 6.50 1.05 1.30 2.42 1.85 3.43 2.43 4.52 1.96 Assets Current assets: Cash and equivalents Investments, available for sale Inventory - Merchandise Accounts Receivable Total current assets Property and equipment, net Intangible assets, net Total assets 26.29 0.63 1.17 19.99 48.07 55.78 49.35 153.20 Liabilities and Stockholder Equity Current liabilities: Accounts payable Total current liabilities Long-term debt and deferred interest, net of current portion Total liabilities Total stockholders' (deficit) equity Total liabilities and stockholders' equity 64.40 64.40 43.08 107.48 45.73 153.20 Shares Outstanding (millions of shares) Market Capitalization 9.29 128.20 Current Forecast 1 3 4 5 6 7 9 10 11 12 13 2 2009 20.67 2013 2010 22.53 2011 24.56 2014 31.81 8 2015 34.67 2016 37.79 2017 41.19 2018 44.90 2019 48.94 29.18 Revenue Attendance Sponsorship Broadcast Merchandise Other Total 0 2007 17.40 15.70 28.70 5.20 7.10 74.10 2008 18.97 17.11 31.28 2012 26.77 24.16 44.16 20.33 37.17 26.33 48.13 31.28 57.19 34.10 62.33 18.65 34.10 6.18 8.44 40.51 74.06 28.70 52.46 9.51 12.98 37.17 67.94 12.31 22.16 40.51 7.34 10.02 104.60 44.16 80.72 14.63 19.97 2020 50.90 45.93 83.95 15.21 20.77 8.00 8.72 10.36 5.67 7.74 13.42 6.73 9.19 95.96 11.29 15.42 11.91 14.15 10.92 114.01 16.81 175.42 18.32 191.21 80.77 88.04 124.27 135.46 147.65 160.94 208.42 216.76 56.01 61.62 67.78 82.01 90.21 99.23 120.07 132.08 145.29 159.82 166.21 Operating costs Payroll Stadium Operating Expenses Other Total 17.72 50.92 16.38 1.80 69.10 19.93 17.04 1.87 74.56 19.16 2.11 18.43 2.02 88.23 109.16 22.42 2.46 134.04 20.73 2.28 113.22 21.55 2.37 123.16 23.31 2.56 1.95 24.25 2.66 2.19 26.22 2.88 25.22 2.77 173.28 27.27 3.00 196.48 74.92 81.28 95.82 104.13 145.95 158.99 188.92 13.61 14.99 17.93 6.76 2.38 8.77 2.57 16.43 3.26 3.01 3.39 EBITDA Depreciation EBIT Interest Taxes Net Income 5.00 2.20 2.80 2.26 0.19 0.35 4.38 5.85 2.29 3.56 2.46 0.38 0.71 7.73 2.47 5.26 2.93 0.82 1.52 9.88 2.68 7.21 3.48 12.30 2.90 9.41 4.13 11.06 2.78 8.27 3.79 1.57 2.91 6.20 3.19 3.13 11.86 4.91 10.60 4.50 2.13 3.96 13.17 5.35 2.74 5.09 2.69 0.59 1.10 19.49 3.52 15.97 6.36 3.37 6.25 14.55 5.83 3.05 5.66 20.27 3.66 16.61 6.61 3.50 6.50 1.05 1.30 2.42 1.85 3.43 2.43 4.52 1.96 Assets Current assets: Cash and equivalents Investments, available for sale Inventory - Merchandise Accounts Receivable Total current assets Property and equipment, net Intangible assets, net Total assets 26.29 0.63 1.17 19.99 48.07 55.78 49.35 153.20 Liabilities and Stockholder Equity Current liabilities: Accounts payable Total current liabilities Long-term debt and deferred interest, net of current portion Total liabilities Total stockholders' (deficit) equity Total liabilities and stockholders' equity 64.40 64.40 43.08 107.48 45.73 153.20 Shares Outstanding (millions of shares) Market Capitalization 9.29 128.20
