Sports as a Business and European Soccer Clubs Valuation and Profitability

The Table No 1 shows the data about Valuation , Revenue , EBIDTA , Margin , Valuation Multiples of Top 20 Soccer Clubs

Manchester United is the most highly valued Club commanding a valuation of USD 3.69 Billion at a multiple of 4.8 times of revenue and 12.8 times of EBIDTA.

Also the Overall Valuation is USD 29.33 Billion at a revenue multiple of 3.59 and EBIDTA multiple of 19.96 .

Now let us look at the same data for the Top 20 companies in terms of Market Cap

Now if we look at the valuation of Apple it is USD 741 Billion which is 3.44 times of Revenue ( MANU was at 4.8 ) & EBIDTA multiple of 12.36 ( against 12.84 of  MANU).

And this is not a One-off Exception . The overall Valuation of all Soccer clubs is at 29.33 B which is at a 3.59  multiple of Revenue and  19.9  6 multiple of EBIDTA .

The same numbers for the Corporate set up are at a 1.58 multiple for revenue and 18.92 for EBIDTA .

So our theory that Corporate valuations must be higher gets defeated .

And rightly so when we look at the profitability margins 


The valuation looks to be correct when we see the EBIDTA margin which is 38 % for MAN U and 28 % for APPLE .

And the oval EBIDTA for Soccer clubs is also much higher at 18 % vis-à-vis 11% for corporations.

And the following is the valuation of the Top 20 players 

And the Salary of the CEOs

INVESTMENT 

The business of owning these clubs getting so interesting and competitive .

Investment in major football clubs has long been increasing in expense, but following Roman Abramovich’s purchase and subsequent success with Chelsea, more billionaires have decided to try their hand at club ownership. These changes can be met with resistance by some subsets of fans, but typically the fan reaction to having money to invest is positive, as long as the results on the pitch live up to expectations. This trend has seen clubs perennially on the brink of relegation transformed into title contenders, however not all of these investments have gone so smoothly.

Many trends in world football come and go, however the influence of billionaire owners is one that will surely remain in the game for the foreseeable future. Club owners have a platform that allows them to reach legions of loyal fans located around the globe. These fans make sustained investment in a club a worthwhile one. New Financial Fair Play regulations in UEFA make a returned investment from fans just as important as the initial investment from club owners. When fans and ownership match their passion, ambition, and invest wisely the clubs that they love can reach amazing heights.

There was a time not too long ago when owning a soccer team was considered a billionaire’s ultimate luxury purchase. Today, after legendary clubs like Manchester United became public, anyone can own a stake in a soccer club.
So here we focus only on the most exclusive sub-set, the 11 richest soccer club owners in the world. With a combined wealth of $260.4 billion, the billionaires in our starting lineup dominate the business world just like Ronaldo rules soccer fields.  The world's richest man, Carlos Slim, leads the squad thanks to three recent purchases. These 11 billionaires, the poorest of whom is worth $10 billion and ranked 109 among the world's billionaires, amassed$26.2 billion in only one year, proving they make money as fast as soccer superstar Messi dribbles opponents.
Roman Abramovich is our most emblematic and the 10th richest soccer billionaire. In less than 10 years, the Russian tycoon has spent over $2.97 billion on his Chelsea, deserving to wear jersey number 10 in Forbes list of the world's richest soccer club owners.
More than 50 billionaires own stakes in soccer teams. Therefore, competition for a spot in our starting lineup is intense and our bench is full. Among the illustrious 39 bench warmers, not rich enough to be part of the soccer starting lineup, are the  following billionaires:
Florentino Perez, Real Madrid’s president, has a fortune of “only” $1.4 billion. Real Madrid was elected the best club of the 20th century and has been doing really well recently. However, Perez is still far away from claiming a starting position in the Forbes team of the world’s richest soccer clubs owners.
The inventor of Red Bull, Dietrich Mateschitz, is worth $7.1 billion and has stakes in two soccer teams: Red Bull Salzburg and New York Red Bulls.   He is worth $2.8 billion more than he was a year ago. If Red Bull keeps raking in the big bucks like Henry used to score goals when he played for Arsenal, Mateschitz might claim a position in our starting lineup in the next few years.

Silvio Berlusconi, former prime minister of Italy, owns A.C. Milan and a diversified empire. His estimated net worth of $6.2 billion is not enough to include him in our starting 11.
Dmitry Rybolovlev, worth $9.1 billion, is the owner of the soccer team from Monaco, A.S. Monaco F.C. The extravagant billionaire reportedly paid more than $300 million for a Monaco penthouse called La Belle Epoque, where he lives. He also bought a villa in Hawaii from movie star Will Smith and Donald Trump's Palm Beach mansion, Maison de L'Amitie. However, he can’t buy a position in our starting lineup. He will have to win it by performing well in the markets.
It is said that Prince Alwaleed, the Saudi King Abdullah’s nephew, is currently in talks to buy Swindon Town football club. Prince Alwaleed made international headlines complaining he should be considered one of the world’s 10 richest. However, Forbes valued him as the 26st richest in the world, with an estimated net worth of $20 billion. If he ends up buying the club that plays in League One, the third tier of English football, he will be part of Forbes starting lineup and will replace Philip Anchutz, who might be leaving the sport soon anyways having put LA Galaxy for sale.
Sheik  Mansour bin Zayed Al Nahyan,  Manchester City owner,  and Nasser Al-Khelaifi, PSG president, are not included in the list of the richest soccer club owners because Forbes does not value families or royal fortunes unless we can clearly see who owns the fortunes. For instance, the Qatari royal family is not on our list.
Interestingly, Brazil has 46 billionaires but none of them owns a soccer club. There were rumors that Antonio José Carneiro would buy Botafogo, one of Brazil's most well known soccer clubs. However, his PR confirmed to Forbes that he does not own the club.

However the Top 3 richest owners of the above mentioned clubs are as follows

George Soros (United States)

Net Worth: $19.2 Billion, down $800 million from last year.
Club: Manchester United (England)
Billionaire investor George Soros is known for having broken the bank of England.  Now, he’s betting on the UK’s largest soccer team, Manchester United.  In August 2012, Soros revealed a 7.85% stake in the football club, through his investment firm, Soros Fund Management.  Billionaire Malcolm Glazer is the club’s official owner. He took the team public the last year, retaining 98% of voting shares and netting $100 million in cash. The stock surged more than 33% in the following 6 months. Manchester United became the first sports team to be valued at more than $3 billion in January 2013.

Alisher Usmanov (Russia)
Net Worth: $17.6 Billion, down $500 million from last year.
Club: Arsenal Football Club (England)
The richest man in Russia, Alisher Usmanov, has his fingers in many pots: he got rich in metals (iron and steel), but now has interests in everything from Silicon Valley start-ups to Russia's largest business daily, Kommersant. He sold part of his stake in Facebook at the time of the 2012 IPO, pocketing $1.3 billion. Usmanov and billionaire partner Farhad Moshiri, who has a fortune of $2.8 billion, also own stakes in FC Arsenal. American billionaire Stanley Kroenke, with an estimated net worth of $5 billion, is the controlling shareholder of FC Arsenal. British press claims that a Middle East consortium is preparing a bid to buy out Arsenal for around $30,000 a share, totaling over $2 billion.

Roman Abramovich (Russia)
Net Worth: $10.2 billion, down $1.9 billion from last year.
Club: Chelsea Football Club (England)
The owner of Chelsea Football Club makes international headlines weekly. It is repeatedly suggested he will spend millions of Euros to bring the next soccer super star to London, and he often does. Abramovich bought Chelsea in 2003 for $233 million, the biggest takeover in British football history at the time. In less than 10 years, the Russian tycoon has spent over $2.97 billion in his Chelsea. Abramovich indulges in a number of luxury hobbies: he owns the world's largest yacht, a 377-foot ice boat, a Boeing 767 and homes in London, France, St. Barts, Colorado and Los Angeles.