Investment Opportunity

Oakland Raiders
Chicago Cubs
Boston Red Sox

Prepared by,

Eric Wester
BUACT 340-001

Acquisition-Investment Opportunities
Oakland
Raiders

Price: $20M
Association: NFL

Chicago
Cubs

Price: $62M
Association: MLB

Boston
Red Sox

Price: $65M
Association: MLB

Oakland Raiders - Analysis

Price:

Payback Period:

Internal Rate
of Return:

$20 Million

2.99 Years

19.99%

Year

EBDT

Depreciation

EBT

Tax

EAT

Depreciation

Cash Flow

PV Factor

NPV

$
8,000,000

$
2,500,000

$
5,500,000

$
1,650,000

$
3,850,000

$
2,500,000

$
6,350,000

0.893

$
5,670,550

$
8,500,000

$
3,000,000

$
5,500,000

$
1,650,000

$
3,850,000

$
3,000,000

$
6,850,000

0.797

$
5,459,450

$
8,900,000

$
2,200,000

$
6,700,000

$
2,010,000

$
4,690,000

$
2,200,000

$
6,890,000

0.712

$
4,905,680

$
9,000,000

$
1,500,000

$
7,500,000

$
2,250,000

$
5,250,000

$
1,500,000

$
6,750,000

0.636

$
4,293,000

$
9,400,000

$
500,000

$
8,900,000

$
2,670,000

$
6,230,000

$
500,000

$
6,730,000

0.567

$
3,815,910

Sum $

24,144,590

Outflow (Cost) $

20,000,000

Net Present Value $

4,144,590

Chicago Cubs - Analysis

Price:

Payback Period:

Internal Rate
of Return:

$62 Million

2.93 Years

21.97%

Year

EBDT

Depreciation

EBT

Tax

EAT

Depreciation

Cash Flow

PV Factor

NPV

$
23,000,000

$
11,500,000

$
11,500,000

$
3,450,000

$
8,050,000

$
11,500,000

$
19,550,000

0.893

$
17,458,150

$
25,000,000

$
14,000,000

$
11,000,000

$
3,300,000

$
7,700,000

$
14,000,000

$
21,700,000

0.797

$
17,294,900

$
27,000,000

$
11,000,000

$
16,000,000

$
4,800,000

$
11,200,000

$
11,000,000

$
22,200,000

0.712

$
15,806,400

$
29,000,000

$
7,500,000

$
21,500,000

$
6,450,000

$
15,050,000

$
7,500,000

$
22,550,000

0.636

$
14,341,800

$
32,000,000

$
6,000,000

$
26,000,000

$
7,800,000

$
18,200,000

$
6,000,000

$
24,200,000

0.567

$
13,721,400

Sum $

78,622,650

Outflow (Cost) $

62,000,000

Net Present Value $

16,622,650

Boston Red Sox - Analysis

Price:

Payback Period:

Internal Rate
of Return:

$65 Million

2.94 Years

21.57%

Year

EBDT

Depreciation

EBT

Tax

EAT

Depreciation

Cash Flow

PV Factor

NPV

$
24,000,000

$
13,000,000

$
11,000,000

$
3,300,000

$
7,700,000

$
13,000,000

$
20,700,000

0.893

$
18,485,100

$
26,000,000

$
15,000,000

$
11,000,000

$
3,300,000

$
7,700,000

$
15,000,000

$
22,700,000

0.797

$
18,091,900

$
28,000,000

$
11,000,000

$
17,000,000

$
5,100,000

$
11,900,000

$
11,000,000

$
22,900,000

0.712

$
16,304,800

$
30,000,000

$
7,500,000

$
22,500,000

$
6,750,000

$
15,750,000

$
7,500,000

$
23,250,000

0.636

$
14,787,000

$
32,000,000

$
7,000,000

$
25,000,000

$
7,500,000

$
17,500,000

$
7,000,000

$
24,500,000

0.567

$
13,891,500

Sum $

81,560,300

Outflow (Cost) $

65,000,000

Net Present Value $

16,560,300

Side by Side Comparison

Oakland Raiders

Chicago Cubs

Boston Red Sox

Purchase Price

$20 Million

$62 Million

$65 Million

Payback Period

2.99 Years

2.93 Years

2.94 Years

Net Present Value

$4,144,590

$16,622,650

$16,560, 300

19.99%

21.97%

21.57%

Internal Rate of Return

Summary
Chicago Cubs rank best among all provided criteria:

Shortest payback period, highest net present value,

and highest internal rate of return.

Associated Risks and Opportunities

.

TV rights are expected to rise 10% per year

for the next decade.
Salaries are not expected to skyrocket.
Team is in need of rebuilding a new
stadium; the costs associated could be as
high as $20 million, and tax payers are not
inclined to help in funding.

Considered a baseball icon; coined the

lovable losers.
Apparel sales have the potential to
increase 15% in the next 10 years if they
begin winning.
Escalating player salaries may inhibit
investment growth.

Fenway Park has historic value.

Revenues have been strong in recent
years due to the teams success.
Player salaries are escalating.
May have to pay management more to
stay with the team.

Investment Suggestion

Suggested bid: Chicago Cubs (only)

The Cubs rank best in all investment criteria

analyzed: Shortest payback period (2.93 years),

highest net present value ($16,622,650), and
highest internal rate of return (21.97%).

Although the Oakland Raiders (which could also

be bid on) do have a positive net present value

($4,144,590), the cost of building a new stadium
outweighs the forecasted value.

Questions or Concerns