I expect the convenience of having a complete package adds a convenience component. (Some other owner does not need to go through the last 20 years of false starts to have an "owned" stadium).
The valuation of the dohickey is $150. You sell the dohickey for $150 and pay the debt off with the proceeds. Or, sometimes the buyer can assume the debt also.
To peasants like you who make that trip in an automobile, that might seem like quite a trip. But it's a hop skip and a jump as the human-sized quad-copter drone flies. The New Jersey Generals owner might disagree. I don't know, Nice let his contract run out, which is not something you see every day with a legit talented player. DCU are also likely a matter of potential. DC is almost always in the top 10 markets for ratings for non-MLS soccer events--and those are usually measured as a percentage, not raw viewer numbers, where DC is probably in the top 5. If MLS turns the corner as a quasi-major league (which I think it probably will do), DC rockets up the relative league standings of market desirability. The price of a company is usually inclusive of debt, which the new owner will typically take on.
Not that I particularly trust this number but you can think about the stadium part of the valuation in a couple of ways. Say that you had a $200m stadium with $50m contributed by the owners (or the city?) and $150m financed by debt. Buying the stadium and assuming the debt would make it worth $50m. A better way to look at it though might be to emphasize the revenues. I get so much revenue from owning the stadium and I pay out so much in interest and the difference between the two is the value I get from the stadium per year and then you turn the yearly values into a single number. Sports teams are complicated because there is value in simply saying that you are a sports owner. Also, there's option value in buying into MLS because the league might take off some day.
Actually it can and is both. A Cost Approach to value can be created using historical costs minus accrued depreciation. Or it can be created by determining how much rebuilding something of same or similar utility would cost. The Cost Approach to value has nothing to do with revenues, but is still just as commonly used valuation technique as an Income Approach. The Income Approach focuses on Future Net Operating Income, so not really revenues either. You have to factor in expenses as well. A property that brings in a ton of revenue but nets out a negative NOI will not be as valuable as a low revenue property that has a positive NOI. And most income approaches don't necessarily account for all future NOI, but instead make a lot of assumptions about NOI continuing into perpetuity. For a stadium, the best income approach would likely be a DCF, which uses a limited life, but by the time you are doing a limited life model, a cost approach, again, is every bit as useful. Valuation in general uses a lot of assumptions and will typically have a range that a value can be considered correct. Due to this nature of it, it is best to use multiple valuation methodologies to help you find your range. Then consolidate them on what data you feel is the most credible. Overkill on the response here I apologize, but I do Valuation for a living for State Property Tax purposes. (And yes, I can be a real joy at parties )
I think spot's technique mirrors the logic used by most investors. People will look at the asset value - depreciation as a check, but serious investors like to identify imbalances in perceived valuations in order to exploit opportunity. Lots of properties are assessed at one value for tax purposes, but are genuinely worth more or less. As Todorojo points out, there are lots of different ways to look at it.
I have an office full of state property tax guys over here! I just had a dizzying conversation about the maximum output of a power plant and possibility frontiers so as not to reward managers for misuse.
The market for whatnot-upgraded dohickies, for one thing. I mean, sure it was cool at first, but then everybody and their grandmas were upgrading their dohickies with whatnots. Really, a thingamajig is what you should be looking into for your dohickey. It offers almost all the features of a whatnot and is readily available at a comparable price point. I suppose if you wanted to go old-school you could get a wimwom or a timmynoggy, but you'll have to do some jiggerypokery to get them to work with modern dohickies. And don't even get me started on the whole hullabaloo you'd have to go through if you wanted to use a gilguy!
Another factor not to be ignored is just that the stadium exists. Having all the regulatory legwork done and dusted in a historically difficult area to build in does not come at zero cost. This part is notoriously difficult to value, but there is no doubt that DC United with its own stadium is a much surer bet than DC United at RFK. Much like purchasing an expansion MLS team in 2018 versus 2004, you pay not just for expected future revenues, but a much higher floor.
Agreed with PackMan above. DC United is a sleeping giant for the league. A very large market with a soccer savy audience. There is no reason why DCU couldn't average 30K plus with the right players, style, and capacity (which is low right now). An ambitious owner could easily follow Tim Liewieke's (sp?) lead and expand over time. Winning with bunkerball will not draw the fans in this market. DC area fans want to see the game played with style. The last part is presumption on my part, but the best crowds always show for the the games where the likelihood of a well played game are high. Despite the low promotion and short prep time, DCU drew about 28K for the Inter-American Cup match against Vasco De Gama. That was one of DCU's most entertaining matches ever.
Investments are not always about what a product is worth today. Sometimes it is what the product will be worth in five years and ten years. MLS is on the cusp of being considered a true major league. When that fact sets in on the public’s mind in another five or ten years, these ridiculous seeming valuations will seem very cool headed. This is about the future. And the future is nigh.
I completely agree with this. What made DC United prominant in the early days was it was the only serious club in a cartoon character league. Good Management, Great Players with flair, Best in Class facilities, and fans that appreciated that approach. DC United supporters don't even care about player pedigree. They will take 11 guys they have never heard of if they can play with flair, win the league, and challenge for CONCACAF honors. But it's going to take more than deep pockets to get that back....
I've stated many times over the years that MLS is the ONLY league with a real chance to challenge the big leagues in Europe. We have the wealth, cultural diversity, and standard to living to attract the best players. When the money is here.....the players will follow. But we have a LONG way to go. And right now Liga MX is the only competition we need to concern ourselves with.
I don't quite agree with you. I think Liga MX has a chance as well, but they are more reliant on their country making changes. Mexico as a country is improving bit by bit, so if they keep it up, Liga MX will as well.
China has a shot as well. But really, if the European lock on all the top talent is to be broken, it isn't going to be just one country that does it, it will be a group of countries with some meaningful international play.
Absolutely. I don't think a lot of fans realize it, but the whole Mexico/USA soccer rivalry is absolutely symbiotic, anx would be the reason the pair escalates to fight with the top Euro leagues. I do, however, believe that the shot callers in all three countries (Canada included) are fully aware of it, and are actively working on it. My question is if two countries are enough to generate meaningful international play.
I don't quite agree. Europeans only care about Europeans and Mexicans only care about Mexicans or at least Hispanic people. I mean they allow a team in their league that actively discriminate against non Mexicans. Right now Liga MX is the more respected league but as the gap closes and MLS starts racking up more frequent wins in international competitions then more Europeans will start seeing MLS as the better league. Not there yet but moving that way. It also helps that more euros play in MLS as opposed to Liga MX.