Guangzhou Evergrande Taobao FC: Valuing Growth Potential

Case Solution

Stephen Sapp, Willow Yang
Ivey Publishing ()

In 2016, the Chinese soccer club Guangzhou Evergrande Taobao Football Club (Evergrande), which was recently named the most valuable soccer club in China by Forbes magazine with a value of $ 282 million, also had a market capitalization in China. of more than 3.3 billion US dollars. . The team had yet to turn a profit, so these ratings raised the question of how this particular team was rated and how sports franchises were rated in general. Many sports teams have tended to lose money building their talent bases, and investors often valued these assets similar to tech stocks. A football fan interested in investing in the Evergrande club was concerned about the high price of its shares. He wondered if the club was really worth that much money and if the share price could continue to rise in the future. To answer these questions, he needed to understand how the team was valued.

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