Valuation of two England football clubs - Essay Example

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Financial Analysis of Portsmouth FC and Southampton FC Name: Instructor Financial Analysis of Portsmouth FC and Southampton FC Introduction In the global economy currently, investors are increasingly investing their financial capital in the football clubs…
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Valuation of two England football clubs
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Download file to see previous pages Consequently, this paper undertakes a valuation review of two leading teams in the English premier league namely the Southampton Football Club and Portsmouth Football Club. This has been done by reviewing the financial performance of the two clubs over the last five years to depict the current and future possible value of investing in the two different clubs. Southampton Football Club Southampton football club is one of the oldest football organizations in the English premier league since its formation in 1885. The club has been associated with the church since its formation that has earned it the saint’s nickname (Southampton.com, 2013). The performance of the team in the past has been relatively poor since it was relegated on 15 May 2005 from the premier league competitions. However, the club has been able to return to the premier league tournaments in the latest season. Furthermore, the club has been able to win the FA cup title in 1976 and second position in First Division tournament in 1984 (Southampton.com, 2013). Accordingly, the performance of the club in the past has been relatively poor compared to other clubs in the English major tournaments. Currently, the team is ranked at position 33 in the English premier league tournament after it was promoted last season. ...
This has seen the financial returns of the club been relatively stable and attractive. Indeed, the club is one of the highest owned clubs by the fans due to its performance over the years. In addition, the club has been able to attract a number of the best players in the English tournaments. Currently, the club is at position 24 in the English premier league (Portsmouth.com, 2013). Financial Ratios valuation To demonstrate the financial valuation of the two organizations, a five years financial ratios computation has been undertaken. In addition, financial valuations of the two clubs have been undertaken by using the financial results of 2012. This is as demonstrated by the computations below. Financial Ratio 2012 2011 2010 2009 2008 Liquidity ratios Current ratio = (current assets/ current liabilities) (Stickney, 2010) Southampton Football Club = (20,07700/ 37,306,000) = 0.54 Portsmouth Football Club = (3133294/ 361,098) = 8.68 Southampton Football Club = (14,694,000/ 25,650,000) = 0.57 Portsmouth Football Club = (6046092/ 339482) = 17.81 Southampton Football Club = (15472/ 7990 = 1.9 Portsmouth Football Club = (2480024/ 314692) = 7.88 Southampton Football Club = (1359.2/ 620) = 2.2 Portsmouth Football Club = (1974021/ 239,815) = 8.23 Southampton Football Club = (1362.0/ 614.8) = 2.22 Portsmouth Football Club = (1471235/ 235240) = 6.25 Quick ratio = (quick assets/ current liabilities) Quick assets = (current assets – inventories) Southampton Football Club = [(20,077,00 – 2,806,000)/ 37,306,000] = 0.46 Portsmouth Football Club = (3,133,294 – 32,541)/ 361,098) = 8.5 Southampton Football Club = [(14,694,000 – 1,902,000)/ 25,650,000] = 0.45 Portsmouth Football Club = (2207669 – 30,282)/ ...Download file to see next pagesRead More
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