Case Week 6: Tottenham Hotspur

Prepare a self-contained PowerPoint presentation in groups. You will have to hand in

a hard copy of this presentation at the beginning of the class and send a electronic
version of the excel file with your solutions. The questions are designed in a way that
allows you to refresh the material on which the course builds up on and to check the
material we have covered in class or the lecture notes. Focus in the presentation on
question 1 and 2 below. If times allows also prepare question 3 and 4, but you do not
have to add this in your PowerPoint presentation.

Questions

1. Assume Tottenham Hotspur, plc. continues in their current stadium following their
current player strategy.

a.) Perform a DCF analysis using the cash flow projections given in the case.
Based on this analysis, what is the value of Tottenham Hotspur, plc.? Also add
a sensitivity analysis regarding the most important assumptions.

b.) Perform a multiples analysis. Based on the multiples analysis, is the value
of Tottenham Hotspurs any different?

c.) At its current stock price of GBP 13.80, is Tottenham fairly priced?

2. Using a DCF approach, evaluate each of the following decisions:

a.) Build the new stadium

b.) Sign a new striker

c.) Build the new stadium and sign a new striker

Note that the past 10 years of Premiership revenue and point total data suggest that for
every 1% increase in a team’s point total, a team could anticipate a 1.52%
improvement in revenues. Do also some sensitivity analysis with respect to this
assumption.

3. What would be the likely stock market reaction to a surprise announcement of each
of the decisions considered in Question 2 (i.e. build stadium, sign new striker, or do
both)?

4. Exhibit 3 provides data on Tottenham’s stock price reaction to outcomes of their

matches in the Premiership. How does this data inform your assessment of how the
stock market might value the addition of a new striker and his expected contribution
to the team?

Good luck!