Rethinking The Valuation of Soccer Clubs (in Ghana)

By January 29, 2023 Articles

In Ghana like elsewhere in Africa, the enormous popularity of football and its transformation globally has revolutionised the economics, culture, and politics of the game. Numerous Football Associations and football clubs integral to the continent’s heritage are on the rise. Some with huge fanbases are said to be uniquely valuable. However, endemic corruption, maladministration, and lack of accountability has negatively impacted the progress of others.

The point could thus be legitimate that Africa’s problem stems from systematic and institutionalized issues with its football administration structures. No doubt, watching Kylian Mbappe in Ligue 1 or the UEFA Champions League is more appealing than watching some of the domestic competition in Africa. Yet today, the game is encouraging new investors and stakeholders interested in investing in the game, and with a club  – to the one  important fact – that the continent is making progress! With countries like Ghana presenting promising opportunities.

Football has turned into a billionaire dollar industry, and asset valuation is the raison d’etre for the fascination around the sport. This value is derived from club’s business and assets, by analyzing market efficiency to ascertain, with lots of financial due diligence and reconciliation, patterns of dominance, and distress. The dominant and/or distressed tendency is characterized by various relationships, helping to meet the underlying aim for all potential investors – to maximise their profit on their investments. This is based on a “proprietary algorithm”. But how can this be done, especially within emerging soccer markets like Ghana?

The Applicable Model

Given the social and collective relevance of soccer clubs, a vast array of compilation models and methodologies can be used to establish their value. One such compilation by analyst Saddik Obama Adams, aka “Sports Obama” of Angel Broadcasting Network, ranked WAFA (West African Football Academy) in front of Kumasi Asante Kotoko and Accra Hearts of Oak as the most valuable football club in Ghana. All three clubs play in the Ghana Premiere League (GPL), and the metric for ranking them was focused on the totality of assets (training pitches, stadiums, club buses, clubhouses, secretariat, etc.) attributed to each club, including those provided to Angel Broadcasting Network and registered in the club’s name. The location of the assets was equally pivotal in the overall valuation e.g. an asset in Accra or Kumasi would be valued more than anywhere else in the country.

The technique of valuation used by Sports Obama is known as economic valuation, says Roger Bell, the co-founder of a British consultancy firm Vysyble. While sounding promising, the analysis presents significant problems, because, according to financial expert Riccardo Tiscini, Professor of Business Administration, Universitas Mercatorum, Rome, Italy, “the soccer market expresses an appreciation – that is not found in other sectors, in presence of unsatisfactory, though not infrequently negative, profitability – and vice versa.” As a result, the market values are not explained solely by assets possessed or profitability.

If undervalued assets exist, the author stresses, they risk not being taken into consideration. Considering everything, have a complied a list of the most valuable Ghanaian clubs for the season just-ended. The said survey ranked Asante Kotoko SC first with a valuation of $2.48 million, followed by Accra Lions FC with $2.25 million, and third, Hearts of Oak with $1.98 million valuation, with the Multivariate Model developed by Tom Markham in 2013.

A multivariable model can be thought of as a model used to assess the relationship between several variables. It is statistical tool that uses multiple variables to forecast possible outcomes. In this case, multiple variables are found on the right side of the model equation, with the main components being revenues, transaction fees cost, and assets (both tangible and intangible) owned by clubs. The fundamental revenue variable is multiplied by certain other variables (Whetstone, 2021) as follows.

Club value = (Revenue + Net Assets) * [(Net Profit + Revenue) / Revenue] * (% stadium filled) / (%wage ratio); where:

  • Revenue + Net Assets: Within the domain of finance, revenue includes the cash generated in a financial year via different methods. Adding net assets to revenues helps determine the club’s current and future cash generation capability; it is, thus, the backbone of this valuation model.
  • (Net Profit + Revenue) / Revenue: Academics and professionals agree that this ratio examines a club’s profitability in comparison to its revenue. Thus, for profitable clubs, the Revenue + Net Assets will be multiplied by a number greater than one, enhancing the valuation.
  • (% stadium filled) / (% wage ratio): The numerator in this ratio, i.e. the average utilization percentage, illustrates how effectively a club is using the stadium, its core differentiating asset. The higher the stadium’s utilization, the higher the valuation. The wage ratio denotes the club’s ability to control its major expenditure, player costs. Higher player wages mean lower ratios and vice versa.

How Soccer Clubs in Ghana Generate Revenue

Football has a large fan following in Ghana which clubs depend on to raise revenue. Beyond matchday ticket sales to fans at home games, and stadium leasing fees, football clubs get their income from varying channels. This includes kit sales, sponsorship deals, merchandise sales, TV broadcasting deals, prize money, and player transfer fees. Today, social media platforms also help football clubs in Ghana get the needed exposure to club sponsors, offering another possibility of raising revenue.

The Question of Sustainability

Ghanaian football clubs are faced with an imbalance between revenue and expenditure, which inevitably results in debt accumulation and renders the existing income streams unsustainable. The reason for this disparity in Europe is attributed to the growth income – in TV, sponsorship, player transfer fees, and more. In contrast, although Ghanaian clubs have not witnessed major revenue increases, costs have continued to rise due to higher salary demands, inflation, and the nation’s rising cost of credit.

The obstacles generating income are significant. One is related to the on-field performance. In 2012, Ghana was ranked first in Africa for international transfers. The league may have been less appealing to spectators as a result of the departure of its best players to Europe, which in earnest, began in the early 1980s, and has progressively led to lower attendances and profits.

The decline in attendance might have prevented clubs from raising the minimum ticket costs. The average cost in May 2009 was GHC2.00, equivalent to £1. Four years later, the average cost was still GHC 2, now equivalent to £0.65. As a result, earnings have decreased. Even with low ticket prices, attendances have decreased due to competition broadcasted from Europe. For many fans, it is more economical, or a better option to watch these games (on a large screen) as opposed to paying more, including travel expenses to attend a domestic league match.

This article will be followed by a podcast episode to discuss some of the key areas raised, and there are many. So look out for this via our podcast, and update on this article.

As with our podcast – like, comment, share and subscribe/follow. We’ll posting as usual vía social media keeping up with the stories as they unfold in the coming weeks. As always if you have any questions or queries. Email us at or tweet or DM us at @teamghanaeu on IG or Twitter.

Written by James Orien


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