The Hague University
IFMC
Project Marvel:
Acquisition of Goalstar
,Table of Contents
Executive summary of the investment proposal ................................................................... 5
1.0 Introduction .......................................................................................................................... 6
2.0 Initial investment ................................................................................................................. 7
2.1 Acquisition cost .......................................................................................................... 7
2.2 Working Capital ......................................................................................................... 7
3.0 Operating cash flow ............................................................................................................. 8
3.1 Revenue ...................................................................................................................... 8
3.2 Other operating expense ............................................................................................. 8
3.3 Finance costs .............................................................................................................. 9
3.4 Tax credit expense ...................................................................................................... 9
3.5 Projection of Goalstar’s income statement ................................................................. 9
3.6 Operating cash flow .................................................................................................. 11
4.0 Terminal cash flow ............................................................................................................ 12
5.0 Cost of capital .................................................................................................................... 13
6.0 Investment selection........................................................................................................... 14
6.1 NPV method ............................................................................................................. 14
6.2 IRR Method .............................................................................................................. 15
6.3 The Payback method ................................................................................................ 15
7.0 Risk analysis ...................................................................................................................... 16
7.1 Pessimistic scenario .................................................................................................. 16
7.2 Most likely scenario ................................................................................................. 16
7.3 Optimistic scenario ................................................................................................... 17
7.4 Cost of capital scenario ............................................................................................ 18
8.0 Advice for the investment .................................................................................................. 18
Executive summary of the financing proposal .................................................................... 20
9.0 Financing requirement ....................................................................................................... 21
10.0 Alternative financing ....................................................................................................... 22
10.1 Cash ........................................................................................................................ 22
10.2 Factoring ................................................................................................................. 22
10.3 Issuance of common stock...................................................................................... 22
10.4 Preferred financing alternative ............................................................................... 23
11.0 Cash flow including new financing ................................................................................. 23
12.0 Capital structure ............................................................................................................... 26
13.0 Financing proposal ........................................................................................................... 27
12.0 Current Cost of Capital .................................................................................................... 27
2
,Conclusion ............................................................................................................................... 29
References ................................................................................................................................ 31
Appendix A .............................................................................................................................. 32
Appendix B .............................................................................................................................. 32
Part 1: Consolidated income statement .......................................................................... 32
Part 2: 15 year forecasted income statement .................................................................. 33
Part 3: Operating cash flow ............................................................................................ 34
Appendix C: Marvel’s past balance sheet ................................................................................ 34
Appendix D: Monthly cash balance estimation ....................................................................... 35
List of Tables
Table 1 shows the current ratio of Marvel from year 2015 to 2017 ......................................... 7
Table 2 shows the working capital of Marvel from year 2015 to 2017 ..................................... 7
Table 3 shows the first part of the projection of Goalstar’s income statement.......................... 9
Table 4 shows the second part of the projection of Goalstar's income statement ................... 10
Table 5 shows the calculation of operating cash flow from 2016 to 2032 .............................. 11
Table 6 shows the total non-current debt and total equity of Marvel. ..................................... 13
Table 7 shows the calculation of CAPM. ................................................................................ 13
Table 8 shows the current cost of capital of Marvel. ............................................................... 14
Table 9 shows the calculation of NPV of the 15 year cash flow of Goalstar. ......................... 14
Table 10 shows the NPV calculation. ...................................................................................... 14
Table 11 shows the calculation of IRR in excel. ..................................................................... 15
Table 12 shows the calculation of the payback period of the investment. .............................. 15
Table 13 shows the pessimistic scenario for the operating cash flow. .................................... 16
Table 14 shows the most likely scenario for the operating cash flow. .................................... 17
Table 15 shows the optimistic scenario for the operating cash flow. ...................................... 17
Table 16 shows the percentage of cost of capital that will result in NPV equals to zero in
three different scenario. ........................................................................................................... 18
Table 17 shows the debt ratio of Marvel from 2015 to 2017................................................... 21
Table 18 shows the estimation of impact on Marvel, extracted from the project description. 21
Table 19 shows the calculations related to factoring and the required trade receivables
required to meet the finance cost. ............................................................................................ 22
Table 20 shows the number of employees and the target after the acquisition. ...................... 23
Table 21 shows the plan on selling players for the upcoming years after the acquisition. ...... 23
Table 22 shows the plan for retrenchment and hiring of coaches after the acquisition. .......... 24
Table 23 shows the estimated free cash flow after the acquisition. ......................................... 25
Table 24 shows the plan for the repayment of principal and issuance of dividend. ................ 25
Table 25 shows the repayment plan for the senior secured note. ............................................ 25
Table 26 shows the payment plan of dividend to the shareholders. ........................................ 26
Table 27 shows the repayment plan for EURIBOR and bank loan. ........................................ 26
Table 28 shows the calculation of new cost of capital............................................................. 27
3
, List of figures
Figure 1 shows the revenue projection of Big Five league clubs .............................................. 8
Figure 2 shows the percentage of wage costs to revenue generated from the big five European
league clubs. ............................................................................................................................... 8
Figure 3 shows the global interest and global participation in football ................................... 12
4
IFMC
Project Marvel:
Acquisition of Goalstar
,Table of Contents
Executive summary of the investment proposal ................................................................... 5
1.0 Introduction .......................................................................................................................... 6
2.0 Initial investment ................................................................................................................. 7
2.1 Acquisition cost .......................................................................................................... 7
2.2 Working Capital ......................................................................................................... 7
3.0 Operating cash flow ............................................................................................................. 8
3.1 Revenue ...................................................................................................................... 8
3.2 Other operating expense ............................................................................................. 8
3.3 Finance costs .............................................................................................................. 9
3.4 Tax credit expense ...................................................................................................... 9
3.5 Projection of Goalstar’s income statement ................................................................. 9
3.6 Operating cash flow .................................................................................................. 11
4.0 Terminal cash flow ............................................................................................................ 12
5.0 Cost of capital .................................................................................................................... 13
6.0 Investment selection........................................................................................................... 14
6.1 NPV method ............................................................................................................. 14
6.2 IRR Method .............................................................................................................. 15
6.3 The Payback method ................................................................................................ 15
7.0 Risk analysis ...................................................................................................................... 16
7.1 Pessimistic scenario .................................................................................................. 16
7.2 Most likely scenario ................................................................................................. 16
7.3 Optimistic scenario ................................................................................................... 17
7.4 Cost of capital scenario ............................................................................................ 18
8.0 Advice for the investment .................................................................................................. 18
Executive summary of the financing proposal .................................................................... 20
9.0 Financing requirement ....................................................................................................... 21
10.0 Alternative financing ....................................................................................................... 22
10.1 Cash ........................................................................................................................ 22
10.2 Factoring ................................................................................................................. 22
10.3 Issuance of common stock...................................................................................... 22
10.4 Preferred financing alternative ............................................................................... 23
11.0 Cash flow including new financing ................................................................................. 23
12.0 Capital structure ............................................................................................................... 26
13.0 Financing proposal ........................................................................................................... 27
12.0 Current Cost of Capital .................................................................................................... 27
2
,Conclusion ............................................................................................................................... 29
References ................................................................................................................................ 31
Appendix A .............................................................................................................................. 32
Appendix B .............................................................................................................................. 32
Part 1: Consolidated income statement .......................................................................... 32
Part 2: 15 year forecasted income statement .................................................................. 33
Part 3: Operating cash flow ............................................................................................ 34
Appendix C: Marvel’s past balance sheet ................................................................................ 34
Appendix D: Monthly cash balance estimation ....................................................................... 35
List of Tables
Table 1 shows the current ratio of Marvel from year 2015 to 2017 ......................................... 7
Table 2 shows the working capital of Marvel from year 2015 to 2017 ..................................... 7
Table 3 shows the first part of the projection of Goalstar’s income statement.......................... 9
Table 4 shows the second part of the projection of Goalstar's income statement ................... 10
Table 5 shows the calculation of operating cash flow from 2016 to 2032 .............................. 11
Table 6 shows the total non-current debt and total equity of Marvel. ..................................... 13
Table 7 shows the calculation of CAPM. ................................................................................ 13
Table 8 shows the current cost of capital of Marvel. ............................................................... 14
Table 9 shows the calculation of NPV of the 15 year cash flow of Goalstar. ......................... 14
Table 10 shows the NPV calculation. ...................................................................................... 14
Table 11 shows the calculation of IRR in excel. ..................................................................... 15
Table 12 shows the calculation of the payback period of the investment. .............................. 15
Table 13 shows the pessimistic scenario for the operating cash flow. .................................... 16
Table 14 shows the most likely scenario for the operating cash flow. .................................... 17
Table 15 shows the optimistic scenario for the operating cash flow. ...................................... 17
Table 16 shows the percentage of cost of capital that will result in NPV equals to zero in
three different scenario. ........................................................................................................... 18
Table 17 shows the debt ratio of Marvel from 2015 to 2017................................................... 21
Table 18 shows the estimation of impact on Marvel, extracted from the project description. 21
Table 19 shows the calculations related to factoring and the required trade receivables
required to meet the finance cost. ............................................................................................ 22
Table 20 shows the number of employees and the target after the acquisition. ...................... 23
Table 21 shows the plan on selling players for the upcoming years after the acquisition. ...... 23
Table 22 shows the plan for retrenchment and hiring of coaches after the acquisition. .......... 24
Table 23 shows the estimated free cash flow after the acquisition. ......................................... 25
Table 24 shows the plan for the repayment of principal and issuance of dividend. ................ 25
Table 25 shows the repayment plan for the senior secured note. ............................................ 25
Table 26 shows the payment plan of dividend to the shareholders. ........................................ 26
Table 27 shows the repayment plan for EURIBOR and bank loan. ........................................ 26
Table 28 shows the calculation of new cost of capital............................................................. 27
3
, List of figures
Figure 1 shows the revenue projection of Big Five league clubs .............................................. 8
Figure 2 shows the percentage of wage costs to revenue generated from the big five European
league clubs. ............................................................................................................................... 8
Figure 3 shows the global interest and global participation in football ................................... 12
4
