Tottenham Hotspur F.C.

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Tottenham Hotspur is worth more than $400 million at the time. How does a professional sports club make money? Ticket sales account for less than 20% of revenues. How does a better player and a larger stadium affect a soccer club's revenues, costs, and profits? Why is Manchester United and Arsenal worth more in the stock market? Past 10 years data suggest that for every 1% increase in a team's season point total, revenues improve by 1.52%. Three scenarios: Adding a new player Adding a stadium Adding both a new player and a stadium Is a larger stadium substitute or complement for a great player? What is "synergy gain"? (You probably hear this term very frequently in financial news.) Learn how to read financial statements. Understand EBITDA, Depreciation, Amortization, EBIT. After reading the financial statements in Exhibit 5, can you understand how Tottenham Hotspur make money? Is running a soccer club any different from running Nike, General Motors, or IBM? Accountant-speak Players are called Intangible Fixed Assets! They are worth more than the stadium. When you believe they are worth less now than when you bought them, you say "our intangible assets have been impaired" When you sell/trade the players to other teams for less, you say "we realize losses on the disposal of intangible assets" Why can Spartan Football Team make $27 million profit on $44 million annual revenues (a 61% net income margin!)? Players are not paid market salary. MSU doesn't need to pay any taxes (save 40%!). Just for your information, Wolverines' net income margin is 71%, higher than ours. How do we value a soccer club? Free Cash Flow: The club generates profits from customers (tickets, sponsorship, media contracts): EBITDA. However, not all revenues are received immediately. Corporate sponsors or media companies may pay you later and Accounts Receivables are

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