[bangkokbaggie]

no this was on WBA MAD earlier this afternoon.

That same poster seemed to suggest that a deal was virtually done a few weeks ago and then the sale of Villa at £80M threw a spanner in the works.

[tuamigos]

The only thing i can think would command the price he is asking is the assets, ie WBA Holdings and the land he has bought around the stadium.
You can't tell me seriously £80m for Vile with the stadium and fan base they have and located in the countries second city, is not worth as much as our small Black Country ground.
What they had the foresight to do was build good stadiums ready for any future rich buyer. It's called foresight, ambition, sometimes it works sometimes not.
To be honest when they rebuilt the Halfords in 1980 i thought we had missed a great opportunity. Wolves had just built the John Ireland/Steve Bull/Fatty Shaw stand, and i thought we would build something similar. What we got was a main stand not good enough for the third tier.
I know Wolves ambitions almost cost them their existence, but it didn't did it,and their ground looks far more symmetric now than ours.
What makes Albion worth £200m of anyones money? You tell me. OK we are premiership...for now, but Vile and Wolves will soon be if their owners take big interest in investing in them.
Anyone who buys us for £200m wil then have to pay to strengthen the team and if successfully,enlarge the ground.
How long do you think it would take for them to recoup their money, unless they are filthy filthy rich,and all reprts say they aren't?
Aint going to happen.

Awful lot of 'if's' in that argument.

[Standaman]

Compare and contrast

Wolves Projected turnover 2016/2017 £16m
Villas Projected turnover 2016/2017 £75m
WBA Projected turnover 2016/2017 £125m

We are making money the other two are losing money and will continue to lose it while they are in the Championship.

Is it easier to keep a team in the Premier League or get one promoted from the Championship? I honestly don't know. Villa have a real advantage over the rest of the league but that only lasts 3 seasons, Wolves are back in the pack and the experience of Notts Forrest shows just how difficult even with substantial investment getting out from there can be. 

Stoxman did an excellent post a while back on the valuation of the club you could equally apply that methodology to the Wolves and Villa sales. If I had the time I would but for the time being there you go that is why we are worth a lot more than either Villa or Wolves. History is all well and good but it doesn't pay today's bills.

[liverbaggie]

And what happens if villa don't get promoted for 3years when the parachute money runs out?
How much money does the doctor have?
I can see him wanting out pdq.
What if they get relegated next year do the parachute payments continue regardless?
They are under great pressure to get back up,the manager and players don't care these days do they they're all money chasers.

[stokelad84]

And what happens if villa don't get promoted for 3years when the parachute money runs out?
How much money does the doctor have?
I can see him wanting out pdq.
What if they get relegated next year do the parachute payments continue regardless?
They are under great pressure to get back up,the manager and players don't care these days do they they're all money chasers.

Yeah they carry on if a club falls into League 1.

[tommcneill]

Compare and contrast

Wolves Projected turnover 2016/2017 £16m
Villas Projected turnover 2016/2017 £75m
WBA Projected turnover 2016/2017 £125m

We are making money the other two are losing money and will continue to lose it while they are in the Championship.

Is it easier to keep a team in the Premier League or get one promoted from the Championship? I honestly don't know. Villa have a real advantage over the rest of the league but that only lasts 3 seasons, Wolves are back in the pack and the experience of Notts Forrest shows just how difficult even with substantial investment getting out from there can be. 

Stoxman did an excellent post a while back on the valuation of the club you could equally apply that methodology to the Wolves and Villa sales. If I had the time I would but for the time being there you go that is why we are worth a lot more than either Villa or Wolves. History is all well and good but it doesn't pay today's bills.

Kind of answers the argument on why JP values the club so high

Thanks for posting that

[VANDERLEI]

Compare and contrast

Wolves Projected turnover 2016/2017 £16m
Villas Projected turnover 2016/2017 £75m
WBA Projected turnover 2016/2017 £125m

We are making money the other two are losing money and will continue to lose it while they are in the Championship.

Is it easier to keep a team in the Premier League or get one promoted from the Championship? I honestly don't know. Villa have a real advantage over the rest of the league but that only lasts 3 seasons, Wolves are back in the pack and the experience of Notts Forrest shows just how difficult even with substantial investment getting out from there can be. 

Stoxman did an excellent post a while back on the valuation of the club you could equally apply that methodology to the Wolves and Villa sales. If I had the time I would but for the time being there you go that is why we are worth a lot more than either Villa or Wolves. History is all well and good but it doesn't pay today's bills.

And there we have it.... the reason why we are worth considerably more than Divinewind's valuation. As a going concern we are worth far more than Villa, Blues due to our guaranteed income. Villa literally got relegated at the worst possible time.

[baggiejohn]

Compare and contrast

Wolves Projected turnover 2016/2017 £16m
Villas Projected turnover 2016/2017 £75m
WBA Projected turnover 2016/2017 £125m

We are making money the other two are losing money and will continue to lose it while they are in the Championship.

Is it easier to keep a team in the Premier League or get one promoted from the Championship? I honestly don't know. Villa have a real advantage over the rest of the league but that only lasts 3 seasons, Wolves are back in the pack and the experience of Notts Forrest shows just how difficult even with substantial investment getting out from there can be. 

Stoxman did an excellent post a while back on the valuation of the club you could equally apply that methodology to the Wolves and Villa sales. If I had the time I would but for the time being there you go that is why we are worth a lot more than either Villa or Wolves. History is all well and good but it doesn't pay today's bills.

Turnover is a good indicator, profit is better, but businesses are largely valued based on their assets, & the largest contribution to assets in a football club are the players.

As I understand it, player values are based on the residual value of the contract added to an estimate of what the player would cost to replace. For example, an average EPL player would have a 3 year contract with an average wage of circa £50k per week, so worth £7.5 million, if the club then estimate that the cost to replace that player was another £7.7 million he would sit on the books at £15million.
A Championship player on the other hand would probably have a 3 year contract with an average wage of circa £25k per week, so worth £3.75 million, an estimated cost to replace that player might be £3 million, so he would sit on the books at £6.75 million. Less than half the value of an EPL player.
In the case of Villa, their players will have EPL value, but in some cases they might have flex down clauses, so the value decreases following relegation, & I suspect that is why the club is valued higher than Wolves, but lower than us.

[baggiejohn]

This is Stoxman's piece on the isssue, covers a lot more factors than mine, I took a simple view of comparing asset values, but it does demonstrate the difference between where we are at the moment & Wolves/Villa

I had a quick look at valuing Albion based on what we know.  As I've said before, I'm not involved in this deal but have bought and brokered a few that have similarities and I used the same model I have previously used. Someone earlier mentioned a multiple of EBITDA.  Personally I wouldn't use that as earnings are far too easy to (legitimately) manipulate although I accept that it's much better than the net profit figure that the E&S etc quote.  I much prefer to use cash flow as it is much harder to dispute.  You either have cash or not.  This is especially important when looking at the massive impact of player transfers.  I believe one needs to take out all player profit and loss and then add in a normalised net player transfer loss per annum.   The methodology I used was:

Apply something called Discounted Cash Flow (DCF).  This is basically a way of turning a stream of future cash flows (such as future TV rights, gate receipts etc) into a value today.  For those who haven't come across the concept you can think about what value you would place on a fiver each year promised by your mate.  A fiver next year is worth less than a fiver today due to inflation and it is worth even less if there is a risk he won't pay.  Albion have an uncertain stream of cash flow as you go out further into the future.  Next year they have revenues guaranteed by the PL and parachute payments after that.  There is therefore a lot of short term certainty (although we aren't certain about net cash flows as wage increases etc are unknowns) but long term rapidly gets uncertain.  The discount rate that is applied to these cash flows is a function of the cost of financing and/or the internal rate of return( IRR)demanded by an investor.  The more leverage needed and the higher the perceived risk,  the more the cash flows are discounted.   We can get a pretty good idea of the discount rates from the cost of "factoring" that almost every PL club uses when selling a player on deferred payment terms.  The costs of these are in the 6-9% range and that gives us a fair indication of the market price of finance.

The DCF part is the crucial part of the valuation.  It's got nothing to do with whether we play good or bad football.  It's just the present value of a stream of cash and allows Albion to be compared to other cash generating assets such as an annual rock concert, a pay and display car park or block of student flats. 

I have read the comparison made by others with the value of Everton but I personally believe that the "half as much=half as valuable" argument is wrong from a DCF perspective for two crucial and linked reasons.  If I were building a DCF for Everton I would happily assume PL cash flow for 10+ years, much longer than for Albion.  I know that other Everton sized clubs have lost PL status but in general,  I believe there is much more (and more than twice) the cash flow predictability than for Albion.  I would also suggest that the risk is great and therefore the IRR or finance cost would need to be much higher (and therefore the discount rate greater).  To give an analogy,  is a tenner a year twice as valuable as a fiver a year?  What if the tenner was promised by a very wealthy and trustworthy friend and the fiver was promised by someone far less reliable? The former is probably 3 or 4 times more valuable, not twice as valuable.

Beyond the very short term  (I modelled 3-5 years),  PL survival is so unpredictable that I simply added a stub value of £20m that could be thought of as the option value attached to a Championship club.  We know that a club's value jumps when it enters the PL and therefore a Championship club with a chance of returning to the PL must have an option value even if its assets and operating cash flows aren't worth much more.

The only thing to add to the equation of DCF+Stub value is any trophy asset premium or hidden asset value. Someone may be happy to pay over the top for the rights to own something cool.  I have assumed in my model that this isn't the case for Albion and that there is no realisable value from redeveloping the Hawthorns in the way that Chelsea, Fulham etc could.

Using this model and publicly available data I struggled to get anywhere near £200m.  To do so required one or more of the following:

-PL cash flows to be modelled way out beyond 5 years
-Unrealistic cost control, especially around player wages. Basically one would have to assume that the new TV deal all goes into the club's coffers rather than players and agents.
-A very low cost of funds or very low IRR expectations.
-A high stub value in the Championship
-A trophy asset premium
-A spell in the Champions League

There's clearly a lot of detail that I don't know about this deal which could effect my model but based on what I can see,  the value of £120-150m is (in my view) much closer to the mark than the £200-250m that is now being mentioned.  Let's see...

[charlebaggie]

The wise old bird is still sitting there, its everyone else doing the talking. What ever they say it will change nothing, and that wise old bird will say something when he's ready.Be Patient !

[liverbaggie]

I know its picky but what is EPL?

Its called Premier League, not English Premier League!

Get it right please.

[baggiejohn]

I know its picky but what is EPL?

Its called Premier League, not English Premier League!

Get it right please.

It's EPL (English Premier League) as opposed to SPL (Scottish Premier League), but if you'd prefer it, I'll just call it PL in future.

[Albionic]

It's EPL (English Premier League) as opposed to SPL (Scottish Premier League), but if you'd prefer it, I'll just call it PL in future.

swansea?

[baggiejohn]

swansea?

Berwick Rangers?

[liverbaggie]

fair enough baggiejohn PL from now on.

[Albionic]

Berwick Rangers?

Good point, well made !

[Zebidee]

Seen on side of a Birmingham bus, a picture of a Chinese female.. And it says "good is coming.... it is WJ"
Could this be Wang Jianlin?

Also we getting more publicity as on digital billboards in city centre, they advertising ALBION and match day hospitality at hawthorns, and shows ticket prices.

[seteefeet]

Seen on side of a Birmingham bus, a picture of a Chinese female.. And it says "good is coming.... it is WJ"
Could this be Wang Jianlin?

Also we getting more publicity as on digital billboards in city centre, they advertising ALBION and match day hospitality at hawthorns, and shows ticket prices.

Walters, Jonathan??

[kie the baggie]

Turnover is a good indicator, profit is better, but businesses are largely valued based on their assets, & the largest contribution to assets in a football club are the players.

As I understand it, player values are based on the residual value of the contract added to an estimate of what the player would cost to replace. For example, an average EPL player would have a 3 year contract with an average wage of circa £50k per week, so worth £7.5 million, if the club then estimate that the cost to replace that player was another £7.7 million he would sit on the books at £15million.
A Championship player on the other hand would probably have a 3 year contract with an average wage of circa £25k per week, so worth £3.75 million, an estimated cost to replace that player might be £3 million, so he would sit on the books at £6.75 million. Less than half the value of an EPL player.
In the case of Villa, their players will have EPL value, but in some cases they might have flex down clauses, so the value decreases following relegation, & I suspect that is why the club is valued higher than Wolves, but lower than us.

The players value is dependant on how much the buying team are willing to pay end of, in this case your valuation of berahino would be 15k??

[Floydy]

This is Stoxman's piece on the isssue, covers a lot more factors than mine, I took a simple view of comparing asset values, but it does demonstrate the difference between where we are at the moment & Wolves/Villa

This is a cracking and very informed piece.  The only other consideration I would add is that the pound is now significantly weaker than before Brexit and providing that funding is coming from abroad makes it much cheaper in a foreign currency than it was a few weeks ago.

[WorcsWBA]

This is a cracking and very informed piece.  The only other consideration I would add is that the pound is now significantly weaker than before Brexit and providing that funding is coming from abroad makes it much cheaper in a foreign currency than it was a few weeks ago.

It'll probably just mean that Peace would put the price up - "you were willing to pay X yen before, so that'll now be Y pounds please"!

[baggiejohn]

The players value is dependant on how much the buying team are willing to pay end of, in this case your valuation of berahino would be 15k??

My valuation of Berahino would be, the value remaining on his contract plus what we would have to pay to replace him. So (allegedly) £15 k per week for 40 weeks = £600,000 plus around £20 million to replace him so circa £21 million.

There is a difference between a players buying/selling price & his value on the club's accounts. I'm taking about his value on the accounts. Taking that into consideration, I don't think a valuation of £150 to £200 million for WBA is too far adrift.

[cj21]

What about the value of the acadmey. If there are a couple of gems in there then they could be significant future assets. Surely part of the price should encompass projected academy returns although clearly they are uncertain.

[baggiejohn]

What about the value of the acadmey. If there are a couple of gems in there then they could be significant future assets. Surely part of the price should encompass projected academy returns although clearly they are uncertain.

I imagine academy graduates, such as Jonathon Leko are probably included in the asset valuation. The academy itself, would be included in the profit & loss statement as a cost.

[kc56wba]

http://www.expressandstar.com/sport/west-bromwich-albion-fc/2016/07/21/west-brom-shareholders-want-the-club-sold/

Shareholders want the club sold.