raymondu999 wrote:WB - yes but I've never heard of CAGR going into valuation. Or even EBITDA.
I have no idea to the scale of deals; whether they be sponsorship; prize money; entrance fees - and ticket sales etc so I would honestly not know how accurate 10bn is.
Valuation is conservatively done by projecting all elements of the last five or ten balance sheets into the future. You kind of try to predict risks and how revenues and costs are going to change and what impact that is going to have on the bottom line. You finally get a cumulated earning projection and you discount that to the present day to arrive at your valuation.
FOM's revenues are coming from TV sales, race fees, track side advertising and the paddock club mainly. TV and race fees are the big chunks. There is no big growth in TV right now and race fees are supposed to grow at 10%. But that target is getting very difficult to achieve with various tax payers becoming more critical in the current economic climate.
You are right that one cannot valuate the company from the publicly available figures but one can easily see that 10bn is very optimistic if you know the historic figures of valuation.
I would quote Joe Saward's blog to support my opinion:
The ridiculous element in the story is the suggestion that a 15.3 percent share in the business is worth $1.5 billion. This is bull. Lovely though it might be for the finance people to think that the sport can be valued at $10 billion, it is worth a fraction of that at the moment – particularly as there are questions over the future as there is no Concorde Agreement with the teams, no ordered succession plan despite having a CEO who is 81 years old, not to mention a number of legals actions and investigations that would make potential investors wary in the extreme. Given that the story comes from a source that is considered in the business these days to be Bernie Ecclestone/CVC’s unofficial press office, it is obvious why the big numbers are being bandied around, but you would have to be a real schmuck to pay that kind of money for that much of the business. Right now it is worth about 15 percent of the figures being suggested and Lehman Brothers would be lucky to get $200 million.