Valuation Methods of Sports Companies

The valuation of sports companies is indispensable during commercial buy and sell transactions, restructuring processes, determining premiums for the purposes of property insurance.

For the valuation of sports companies four approaches are possible i.e. assets-based, income-based, market-based and mixed-valuation approaches. For each approach there are specific company valuation methods. Using real-life examples, this paper discusses the following sports companies' valuation methods: book value, adjusted book value, replacement, liquidation, capitalized profit, discounted cash flow, comparative worth, market multiples and German valuation method. The mixed approach using the German method is applied when the output prices from conventional company valuation methods vary too much, and differences in values exceed 25%.

From the management accounting perspective the skilful application of valuation methods to sports companies should be regarded as one of the prerequisites for effective management of sports companies.