Sports Value Consulting, LLC provides a range of services including the valuation for purchase price accounting to meet both tax and financial reporting guidelines and the valuation of a professional sports franchise for:
- Asset Valuation – post acquisition valuation of assets for tax and financial reporting purposes
- Business Enterprise Valuation:
- Bank refinancing
- Estate/Gift tax planning
- Expert witness testimony – Michael Rapkoch has an ASA designation
- Internal management planning
- Minority/closely-held interest
- Related Services:
- Naming rights representation or valuation
- Lease negotiations
- Buy-side operational and financial due diligence
- RSN valuation
In its most basic form, the definition of the value of a team can be best described as what someone is willing to pay for one of these unique assets. Many of the teams are cash flow and EBITDA negative, so universally trying to apply multiples of these data points is usually an effort in futility. There really is no industry publication that is reliably instructive as to what the true value of major league professional franchises are really worth since most professional franchises are privately owned and do not publish their annual financial statements. As a result, any publication that currently does attempt to value professional sports franchises is usually operating on bits and pieces of data that are publicly available, such as attendance and average pricing for tickets sold or information, which are anecdotally available.
These publications also refuse to share with readers the methodology they use when trying to value professional sports franchises, often claiming that their methods are proprietary and not available for public review. As a result, there have been sizable discrepancies between what these publications say a professional team is worth and what they actually sell for to a new buyer.
Investment Bankers, Brokers, and Sports Consultants representing potential buyers have traditionally used a wide array of data points when trying to determine a recommended acquisition price for professional sports franchises. None of the information is used in a singular fashion, and a great deal of thought is put into how all of the information and measurable to be acquired interact with each other both quantitatively and qualitatively. A list of these data variables include, but are not limited to:
- size of marketplace
- size of Television DMA
- quantity of professional sports teams in marketplace
- quantity and size of business community in marketplace
- disposable income in marketplace
- current ticket sales and pricing
- club seats sold
- luxury suite sold
- current sponsorship revenues
- arena/stadium naming rights deal
- impact of venue
- local and regional television revenue
- concession sales
- novelty sales
- Salary Caps and Revenue Sharing Payments or Receipts, which are analyzed and measured for length of current contractual commitments.
All of the aforementioned data is reviewed and looked at in full context with historical audited financial statements and current team forecasts for future operations as these experts try to estimate the future earnings potential for the franchise.
At Sports Value Consulting, we understand these issues in detail as well as the specifics of recent transactions. We consider all the data points, tangible and intangible, when assessing the value of a sports franchise. Our conclusions are based on data pertaining to the specific team as well as information in our proprietary database.
Our methodology, skill set and database is unmatched by any other firm.
Sports Value Consulting, LLC has performed over 40 of these types of valuations for teams in the NFL, MLB, NBA, NHL, MiLB, AFL, and EPL.
Given our experience in this field, we understand management’s time is vital and thus prepare each analysis with this in mind. Our process is as follows:
- We first start with a brief call to review the transaction to understand what was purchased, the price, and any tax concerns of the client.
- Next we prepare a brief, perhaps two pages long, data request.
- Upon receiving the data, all key elements are summarized and questions are prepared to better understand the information.
- Our firm then prepares an Agenda, which outlines who we need to speak to, how long it will take, and the questions we will ask them. This allows the team’s management to be better prepared for our meetings. We typically only need to meet once.
- Once a date is set, we visit with the client at their offices.
- The information gathered from the data and meetings is utilized to prepare the valuation analyses.
- The draft results are discussed with the client.
- A draft report is then prepared, which outlines the assets valued, the methodology employed as well as the assumptions utilized.
- Upon comments from the client and its audit/tax advisors, a final report is issued.
- During the entire process, we have constant communication with both the client and its auditing/tax firm.
- Unlike other firms, Sports Value Consulting, LLC will work with management and its advisors to create an opening balance sheet for both tax and financial reporting purposes.
Information is key. In professional sports, the true transaction price, not what is reported in the press, is what is used to start the comparative analysis of the application of market multiples. Few firms have this data, and can only complete the analysis if the league provides data on transactions and compete financial overview of those teams. In other words, those firms who have not been part of a transaction have no knowledge of (i) the true price paid, (ii) capital structure of the deal, (iii) purchase price adjustments, (iv) motive for the acquisition or (v) the financial and operational overview of the team which sold. Thus, the only way for them to complete the analysis is to ask for private information on clubs from the leagues.