13 June 2009

The Buying Power.

Its shocking to see how much these rich tycoons are willing to pay for a stake in football today. One textile tycoon is reportedly offering a £150million to take up the entire stake in Newcastle United - the football club recently relegated from the EPL and boasts a history including football greats such as Kevin Keegan, Peter Beardsley and more recently, Alan Shearer.

£150million is about RM 800 million ++; I think that is a crazy amount of money to put in.

But that is not all.
Its also very amazing and surprising in this slumpy economy that big money are still spent today so easily. I was very shocked to hear that Real Madrid had made an offer of £80million for Cristiano Ronaldo this week - thats close to half a billion ringgit for the 24 year old superstar!!!

Is he really worth RM 480 million? Are we saying that this guy here is worth the same as... say... Lion Corporation? (As of yesterday's The Star, Lion Corp has a market capitalization of RM 482.5 million). Thats over 6 times the current market cap of Crest Builder - and I think that is an enormous amount of money to pay for ONE player.

However, I believe there are some form of business opportunity behind this acquisition.

Lets say, Cristiano Ronaldo signs up for 6 years and leaves for free at the end of his contract. His total income package for the 6 years is about £107million + his transfer fee of £80million = its about £187million! (Thats over RM 1 billion ringgit!!!) Every year, Real Madrid would need to make sure he sells enough merchandise and jerseys and tickets and ultimately win trophies - if he alone can attract extra £32million per annum, then perhaps Real Madrid would be making the right purchase at the right price.

£32million a year for 6 years? Thats more than 17% in yield.

We shall see.


Post a Comment