TOTTENHAM are worth more than Premier League champions Manchester City and traditional giants Liverpool, according to a new method of valuing football clubs devised by a former City worker.
Spurs are fourth, only behind Manchester United, Arsenal and Chelsea, according to the model devised by Tom Markham, a qualified accountant with an MBA in Football Industries who was formerly a foreign exchange trader at Allied Irish Bank.
Markham, who is completing a PhD in Football Finance at Henley Business School’s ICMA Centre, argues that his MMM (Markham Multivariate Model) system is the most accurate measure for comparing English top flight teams.
He used established business valuation tools to evaluate sales of Premier League clubs between 2003-04 and 2011-12 and found none to be reliable or universally applicable, so he devised his own.
“Traditional corporate valuation techniques don’t work because most clubs are loss making,” he told City A.M. “The MMM method is not just using generic means – it’s looking at specific assets, revenue generation and key performance indicators.”
Tottenham’s high placing is partly due to their regular profitability, while Manchester City’s valuation suffers because they do not own their home, the Etihad Stadium.
Low matchday income and a failure to reach the lucrative Champions League in recent years has devalued Liverpool, according to the MMM table.
Manchester United’s market capitalisation values them at £1.8bn, some £750m more than Markham’s metric, while Arsenal, the other listed club, have a market cap of £995m compared with an MMM value of £943m and have been the subject of a rumoured £1.5bn bid.
“Market cap is okay for some instances, but only two clubs are listed or partially listed,” he added.
Markham says his formula is based on audited accounts and takes into account revenue, profitability, net assets, stadium utilisation – or matchday income – and a club’s wages to turnover ratio.