Prestwich_Blue
Well-Known Member
The "value" of anything, at the end of the day, is what someone is prepared to pay for it.
There are various methods of valuing companies but Hicks is relying on the valuation that Forbes Magazine has used, which is known as Equivalent Value. I'm sure someone will correct me if I'm wrong but that involves adding the shareholder funds to any debt (as it is assumed debt provides working capital and therefore contributes to a return on investment).
But in the case of Liverpool (as well as the rags and other football clubs) that debt is dead money and is reducing profits not creating them. Therefore it's a wholly inappropriate valuation in my view. And in any commercial situation, the more the pressure to sell, the less the asset will command.
There are various methods of valuing companies but Hicks is relying on the valuation that Forbes Magazine has used, which is known as Equivalent Value. I'm sure someone will correct me if I'm wrong but that involves adding the shareholder funds to any debt (as it is assumed debt provides working capital and therefore contributes to a return on investment).
But in the case of Liverpool (as well as the rags and other football clubs) that debt is dead money and is reducing profits not creating them. Therefore it's a wholly inappropriate valuation in my view. And in any commercial situation, the more the pressure to sell, the less the asset will command.