TOP 100 EUROPEAN CLUBS BY ENTERPRISE VALUE

publicly traded clubs included) without taking into consideration of market capitalization, debt, and cash? Yes, TOP 100 European clubs by enterprise value calculated!

After four months of research, I and my team were dealing with calculations of the enterprise value of TOP 100 European clubs using statistical analysis to find an algorithm that does not use data about market capitalisation, debt, and cash, but data from financial reports.

So, what is enterprise value? It is a value you would pay for business if you were aiming to purchase it or, a value you would receive if you would sell your business. The following formula is used to determine the enterprise values of publicly traded businesses:

Enterprise Value = Market Capitalization + Debt (short and long term) – Cash (and cash equivalents)

But what if you want to buy a club which is not publicly traded? There are several methods how for calculating it:

1. Comparable Company Analysis (CCA)

2. Discounted Cash Flow (DCF) method

3. First Chicago Method

4. Asset-based method

All of these methods are in more detail explained on the following link (https://corporatefinanceinstitute.com/resources/knowledge/valuation/private-company-valuation/ ), but one can find a lot of literature on the web.

I will just quote snapshots from definitions:

Ad1. The Comparable Company Analysis (CCA) method operates under the assumption that similar firms in the same industry have similar multiples.

Ad2. The Discounted Cash Flow (DCF) method takes the CCA method one step further. As with the CCA method, we estimate the target’s discounted cash flow estimations, based on acquired financial information from its publicly traded peers.

Ad3. The First Chicago Method is a combination of the multiple-based valuation method and the discounted cash flow method. The distinct feature of this method lies in its consideration of various scenarios of the target firm’s payoffs. (Usually, this method involves the construction of three scenarios: a best-case (as stated in the firm’s business plan), a base-case (the most likely scenario), and a worst-case scenario. A probability is assigned to each case.)

Ad 4. The asset-based method is used when is more profitable to liquidate a firm than continue with business because with liquidation firm will have better cash flow than if it continues with business.

If you don’t know which method to use, help could also be found at „The International Valuation Standards Council” – IVSC or national agencies for evaluation of firms.

In this research, the goal was to assess publicly and non-publicly traded clubs to calculate their enterprise value. Since there is no share price for non-traded clubs, we have been looking for the club’s overall environment which would influence on share price to go up or down. There is a lot of literature about reasons for share price fluctuation generally, but also specifically for the football industry as well. Joao Duque and Nuno Abrantes Ferreira from Instituto Superior Economia e Gestao, Universidade Tecnica de Lisbao have found positive relationship between sporting performance and share price. José Allouche from Université de Paris 1 Panthéon-Sorbonne, Paris and Sébastien Soulez from Université Lumiere Lyon 2, Lyon have found that sporting results positively influence on share price after victory and vice versa. Further on, they have found that managerial decisions about running and investing in sporting facilities, sponsoring and positive financial results influence positively the share price and in case of unfavourable financial results influence negatively the share price. Also, they have found the relationship between human resources (players) and share price. Similar is found in Turkey regarding winning (https://www.jstor.org/stable/41343433), where winning in the European cup does not affect club stock share returns while winning in domestic matches does influence positively.

However, a number of “things” might influence share price, and those “things” make “footprints” for enterprise value in the world around us. So, our first goal was to identify as many “footprints” as possible and collect data about them. Data we have been using were data which are not data from financial reports, not data about share prices. Instead, we have been using a spectrum of external (not from club documents or reports) and exclusively publicly available data.

The final goal was to find the algorithm in the standardized model for the spectrum of clubs from the lowest enterprise value in Europe to clubs with the highest enterprise value in Europe (from 0mil € or something less to 3200mil€). The second goal was to find an algorithm which is time resistant as long as possible. Finally, the algorithm was found using different analyses in inferential statistics and we have made the list of TOP100 clubs in Europe by enterprise value (MoF further in text).

Before release, an algorithm in a standardized model was tested in several ways. First, algorithm results were checked by logical enterprise value in reality for the whole span of club values, from lower valued clubs as well as high valued clubs (span should go from 0 to 3200mil€ in the logical sense). The second quality check was confirmed by statistical analysis rules. The third was a comparison with enterprise value calculated by KPMGs spin-off, Football Benchmark (https://www.footballbenchmark.com/library/football_clubs_valuation_the_european_elite_2022); comparing results of enterprise value with KPMGs spin-off, Football Benchmark we receive 99.4% of statistically positive significant correlation between results. The fourth was sales which happened in 2021 in the UEFA report (https://editorial.uefa.com/resources/0272-145b03c04a9e-26dc16d0c545-1000/master_bm_high_res_20220203104923.pdf). Fifth was using data from years before instead of one, last year.

We have been looking on 11 external areas as “footprints” of what’s happening within the club for a period of time. Those areas are 1. success in European competitions (UEFA), 2. investment in the team, 3. social networks, 4. team structure, 5. value of the team, 6. Sale-buying, 7. stadium, 8. attendance, 9. domestic competition, 10. general environment and 11. football environment. Through different stages of research, we have been using in total more than 160 different variables to find the final standardized algorithm. Also, we have been using data about single variables from 5 years before and for some variables even 10 years before.

We have been analysing 227 clubs from 36 European leagues. 31 leagues are from the 1st national tier and 5 leagues are from the 2nd national tier:

1	ESP – La Liga
2	ESP – La Liga 2
3	ENG – Premier league
4	ENG – Championship
5	GER – Bundesliga
6	GER – 2. Bundesliga
7	FRA – Ligue 1
8	FRA – Ligue 2
9	ITA – Serie A
10	ITA – Serie B
11	TUR
12	POR
13	NED
14	SCO
15	SVI
16	ROU
17	UKR
18	BEL
19	RUS
20	GRE
21	POL
22	SER
23	CRO
24	AUT
25	HUN
26	CZE
27	DEN
28	NOR
29	SWE

In the analysis were included all clubs from the Big 5 leagues and the best clubs from other listed leagues. More clubs per league were selected from the following leagues: Netherlands, Portugal, Turkey, Belgium, English Championship and Russia (*this year’s results are not affected by the war in Ukraine for Ukraine and Russian clubs).

Of all those clubs, the TOP 100 clubs by enterprise value are:

	Club	State	EV – mil€
1	Real Madrid	SPA	3139
2	FC Barcelona	SPA	3019
3	Manchester United	ENG	2867
4	Liverpool FC	ENG	2847
5	Bayern Munich	GER	2727
6	Manchester City	ENG	2540
7	Chelsea FC	ENG	2299
8	Paris Saint-Germain	FRA	2053
9	Tottenham Hotspur	ENG	1761
10	Arsenal FC	ENG	1623
11	Juventus FC	ITA	1558
12	Borussia Dortmund	GER	1347
13	Atlético de Madrid	SPA	1116
14	Inter Milan	ITA	1052
15	AC Milan	ITA	766
16	Leicester City	ENG	670
17	SSC Napoli	ITA	655
18	Everton FC	ENG	633
19	RB Leipzig	GER	625
20	Bayer 04 Leverkusen	GER	582
21	AS Roma	ITA	544
22	Olympique Lyon	FRA	542
23	AFC Ajax Amsterdam	NED	469
24	AS Monaco	FRA	451
25	Valencia CF	SPA	431
26	FC Porto	POR	401
27	SL Benfica	POR	377
28	Real Sociedad	SPA	356
29	Olympique Marseille	FRA	350
30	Wolverhampton Wanderers	ENG	346
31	Atalanta BC	ITA	344
32	Aston Villa	ENG	341
33	SS Lazio	ITA	326
34	Borussia Mönchengladbach	GER	312
35	Galatasaray A.S.	TUR	309
36	Southampton FC	ENG	305
37	Sevilla FC	SPA	292
38	TSG 1899 Hoffenheim	GER	274
39	Sporting CP	POR	274
40	ACF Fiorentina	ITA	272
41	West Ham United	ENG	259
42	Eintracht Frankfurt	GER	244
43	Crystal Palace	ENG	242
44	Fenerbahce SK	TUR	241
45	Newcastle United	ENG	239
46	Villarreal CF	SPA	237
47	VfL Wolfsburg	GER	233
48	LOSC Lille	FRA	232
49	PSV Eindhoven	NED	226
50	Athletic Bilbao	SPA	222
51	FC Schalke 04	GER	221
52	Red Bull Salzburg	AUT	207
53	AFC Bournemouth	ENG	204
54	OGC Nice	FRA	202
55	Real Betis Balompié	SPA	198
56	Shakthar Donetsk	UKR	184
57	FC Zenit	RUS	178
58	Torino FC	ITA	177
59	Brighton & Hove Albion	ENG	174
60	Stade Rennais FC	FRA	174
61	US Sassuolo	ITA	168
62	Fulham FC	ENG	168
63	Hertha BSC	GER	161
64	Watford FC	ENG	155
65	Club Brugge KV	BEL	149
66	PFC CSKA Moskva	RUS	141
67	FC Girondins Bordeaux	FRA	140
68	Getafe CF	SPA	139
69	Celtic FC	SCO	136
70	FC Spartak Moskva	RUS	136
71	RSC Anderlecht	BEL	135
72	VfB Stuttgart	GER	134
73	Burnley FC	ENG	133
74	Celta de Vigo	SPA	132
75	SV Werder Bremen	GER	130
76	Feyenoord Rotterdam	NED	129
77	SC Braga	POR	125
78	Udinese Calcio	ITA	123
79	AS Saint-Étienne	FRA	122
80	GNK Dinamo Zagreb	CRO	122
81	1.FSV Mainz 05	GER	120
82	Cagliari Calcio	ITA	119
83	West Bromwich Albion	ENG	119
84	Dynamo Kyiv	UKR	118
85	Bologna FC 1909	ITA	118
86	SC Freiburg	GER	116
87	Leeds United	ENG	116
88	UC Sampdoria	ITA	111
89	Stoke city	ENG	108
90	RCD Espanyol Barcelona	SPA	106
91	Olympiacos Piraeus	GRE	106
92	KRC Genk	BEL	104
93	FC Nantes	FRA	103
94	Swansea city	ENG	102
95	AZ Alkmaar	NED	101
96	Norwich City	ENG	101
97	Montpellier HSC	FRA	99
98	Trabzonspor	TUR	97
99	Lokomotiv Moscow	RUS	96
100	FC Basel 1893	SVI	93
TOTAL	50 414 mil€

The total value of TOP 100 clubs is 50,414 bil. € coming from 18 European leagues with two leagues from the 2nd national tier (English Championship and German 2. Bundesliga):

		Tot value clubs-TOP100	% of league clubs-TOP100	Average value-TOP100
1	ENG – Premier league	18349	95%	882
2	SPA	9386	60%	469
3	GER – Bundesliga	7226	67%	382
4	ITA	6332	70%	317
5	FRA	4468	55%	223
6	POR	1177	22%	65
7	NED	925	22%	51
8	ENG – Championship	700	21%	29
9	TUR	647	15%	32
10	RUS	551	25%	34
11	BEL	387	17%	22
12	GER – 2. Bundesliga	351	11%	20
13	UKR	302	13%	19
14	AUT	207	8%	17
15	SCO	136	8%	11
16	CRO	122	10%	12
17	GRE	106	7%	8
18	SUI	93	10%	9

In the above table, values of clubs from a single league were summarized to identify differences between leagues in TOP 100 enterprise value. The highest enterprise value of clubs from a single league in TOP100 is having English Premier league (18349mil€) followed by Spain La Liga (9386mil€), German Bundesliga (7726mil€), Italy Serie A (6332mil€) and French Ligue 1 (4468mil€). English Premier league is pointed out with almost double as value as Spain La Liga. Further on, English Championship is the 8th league (700mil€) in Europe by the value of clubs in TOP100 (German 2. Bundesliga is the 12th league by value (351mil€) of clubs from one league in TOP100).

If we look at the column “% of league clubs-TOP100” we will see again that the English Premier league pointed out, that 95% of clubs from the league, or 19 (Brentford is out) are part of TOP100, followed by Italy Serie A (70%), German Bundesliga (67%), Spain La Liga (60%) and France Ligue 1 (55%).

The column “Average value-TOP100” is the value from all clubs from one league in TOP 100 divided by the number of clubs in the observed league. Leagues with a higher number of clubs will have less average if they have the same number of clubs in the TOP 100 as leagues with fewer clubs in it. Again, the English Premier League is having the highest average (882mil€) followed by Spain’s La Liga (469mil€), German Bundesliga (382mil€), Italian Serie A (317mil€), and France Ligue 1 (223mil€).

Those two columns (“% of league clubs-TOP100”, and “Average value-TOP100”) might indicate the concentration of overall competition and quality of the observed league. A higher percent of league clubs and average might mean higher quality and competition in the league.

If we compare results from the MoF EV list and results from KPMGs spin-off Football Benchmark, the biggest positive differences are with the following clubs (MoF EV – KPMG EV):

	Club	MoF-KPMG (EV)
1	Liverpool FC	291
2	FC Barcelona	205
3	AC Milan	188
4	SSC Napoli	172
5	Leicester City FC	144
6	AS Roma	131

It is noticeable that generally Italian clubs are generally higher valued in the Mof EV algorithm than in KPMG’s spin-off, Football Benchmark with the highest percent of the difference in EV from KPMGs (SSC Napoli 36%, AC Milan 32%, and AS Roma 32%).

Biggest negative differences (MoF EV – KPMG EV):

	Club	MoF-KPMG (EV)
1	Tottenham Hotspur FC	-151
2	Atletico de Madrid	-118
3	Atalanta BC	-110
4	Sevilla FC	-98
5	Paris-Saint Germain FC	-79
6	Villareal CF	-66

The list of 32 clubs from Football Benchmark is different from Mof EV list. Clubs which are on Mof EV list but not on Football Benchmark one, are RB Leipzig, Bayer 04 Leverkusen, AS Monaco, Real Sociedad, Olympique Marseille and Wolverhampton Wanderers.

The characteristic of this method is that at any moment value of any club in Europe can be calculated based on publicly available data. Although results were tested with KPMG’s spin-off Football Benchmark and sales which really happened, using financial reports for another step of testing the model would be beneficial.

Model by itself reveals what from reality influences most on the enterprise value of the clubs and as such, they can be used for setting relevant and measurable goals for the top management of the club, and for setting KPIs for the top management of the clubs.

Although enterprise value is important when one is investing in the club, estimating the potential of an individual club and the gap which it can fill is of big importance as well. It depends not just on clubs’ inner potential (financial, human resources, community, infrastructure …) but also on football’s external environment and general environment and based on other research results that are interesting in combination with EV research.

Next research…

The quality of human capital in club management is interesting as well as sports staff especially. So, on my list of next research is a calculation of standardized model of quality of management of clubs and standardized model of quality of sport management of the club. Besides that, two research on the “to do” list is research about brand and research on talents.

If you have any comments, we would be grateful to talk about this, what do you think about the possibility of this kind of calculations of enterprise value, what do you think about results and do you have maybe any idea about improving this research (combining with financial reports would, of course, be very useful but here is an idea to use date, not from financial research) and about further research. Special thanks go to Nikica Krnić, Konstantin Kornakov and Josip Korda.

Check out this article on LinkedIn: