FINANCIAL APPRAISAL REPORT

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EXECUTIVE SUMMARY The financial appraisal report focuses on the assessment of a high profile football club, Liverpool football club in the soccer industry. The purpose is to evaluate the financial status and performance of the club. Inclusive club financial policies were considered and examined to bring forth suitable recommendations for investment. The aim of this study is to provide a brief history of the Liverpool club. This financial appraisal focused on the clubs numerous financial record fractions such as capital structure and liquidity, market shares and asset utilization, investment returns and operating performance citing financial implications for the last five years. A document expression approximating the club's financial performance was generated (Williams & Hopkins 2011, pp. 160-174). The assumptions were explored in order to derive the correct financial information for the pro forma. From the appraisal, appropriate conclusions were made, and recommendations highlighted for potential investors in the football club. Liverpool is a well-known club competing in an ever dynamic, developing and expanding soccer industry. Liverpool is a mature club having been founded in 1892 and has been on the rising ladder in terms of financial management and operations. Since its conception, the club has managed to surpass financial constraints that come with evolution and expansion of assets and liabilities. This quite steady trend has strengthened the club. Currently, Liverpool is on the list of the most lucrative businesses, and the most sought after by investors.

TABLE OF CONTENT

EXECUTIVE SUMMARY 2 TABLE OF CONTENT 3 INTRODUCTION 4 The soccer industry 4 Liverpool strategies 4 Objectives 5 FINANCIAL ANALYSIS 5 Financial ratio analysis 6 Equity and debts ratios 7 Investment returns 7 Profit margin 7 Cash turnover. 7 Inventory turnover 8 Total assets 8 Summary 8 RECOMMENDATIONS 9 CONCLUSION 9 Reference list 10

INTRODUCTION The soccer industry The soccer industry is one of the fastest and steadily growing industries across the globe. With a fan base of hundreds of millions, it is the most celebrated and Liverpool is a key player . The average growth of the industry at large is approximated at over 400 billion Euros. Liverpool football club is an England based proficient club located in the city of Liverpool. It participates in the English Premier league (Wahlen 2010). Liverpool is among the famous football clubs across the globe and has an excellent fan support. Formed in 1892, Liverpool football club has shown a constant rising trend in the soccer world. Their revenue has also been on an escalating trend with the current value estimated at over £250 million. This impressive trend has worked to strengthen the club financially and hence improving their overall performance. Liverpool's mission is to be the greatest soccer club globally. Farred (2002, pp. 6-24) once stated that Liverpool runs and manages their operations independently and assesses their revenue in relation to the broadcasting, match day and commercial segments of their organization. Broadcasting yields them high revenues from worldwide television services on the Champions League, UEFA, and Premier League matches. Live matches are broadcasted from their stadium in Anfield that has a capacity of 45276 seats. Liverpool strategies Liverpool plays in a competitive market to increase its market share. Therefore, the club has to work out measures to maintain their status in the market. The club has designed more marketing strategies to increase their fan and support base. The club has the potential for growth given the current financial status (Tight 2000, pp. 22-42).

Objectives This financial appraisal is aimed at assessing the financial status, the business potential of Liverpool football club. It will also focus on the socio-economic factors within its structure as well as the fan base and the impacts on the financial stability of the club. Furthermore, the appropriate recommendations will be made to guide future investors (Hamil & Walters 2010, pp. 354-372). FINANCIAL ANALYSIS The common level income report for Liverpool reveals that there were some deficiencies in revenues collected by the club with 87 percent in 2007 compared to 79 percent in 2010. Liverpool's five years revenue increased with the club registering 89.9 percent revenue in 2012. This gave Liverpool high gross income compared to other clubs. 2010 through to 2015 have increased. The management of the club is also paramount in the financial health of the club. Marketing methods, through technological platforms, advertisements and sale of the clubs jerseys have worked to stabilize the financial status of the club. Liverpool is the seventh most affluent football clubs in the world, with average annual revenues of over 400 million Euros. In 2009, the club was estimated at 218.9 million Euros in total assets. The total debts of the club were at 44.8 million Euros. This was minimal in comparison to the assets, and the club was considered to be doing well financially. However, the year 2010 marked a major downfall for the club. It registered a 350 million Euros debt with 55million Euros accounted for in losses investors (Hamil & Walters 2010, pp. 354-372). This crisis, however, did not last long as the club was sold later that year for 300 million Euros. Reports for that year revealed that the clubs intellectual properties as well as trademarks were at 142million Euros, and this was an improvement from previous years. Since then, the club has been increasing their asset values and has even been perceived as a global brand. In 2010, the club was ranked at position six in the list of most valuable soccer teams by the business magazine, Forbes. The club was valued at $822m exclusive of the debts. In the Deloitte Football Money League, Liverpool was ranked eighth in terms of its revenue. In 2011, the club experienced a gross annual loss of £49.4m. The following years have been quite favorable for the club. Although the trend has been impressive in terms of assets, the club has been experiencing challenging in managing their debts. For instance, the club registered £35.4m in losses in two seasons that exceeded the Uefa Financial Fair Play limits (Markovits & Rensmann 2010).

https://www.google.co.in/images/nav_logo225.png During the commencing of 2006, Liverpool F.C. declared that the venture team DIC was considering purchasing out the club. They finished their due-perseverance of the club, and the offer of £450 million was persuading to general society that this was about a done-bargain. Therefore, Gillett and Hicks presented an enhanced offer which saw Dubai Investment Capital haul out totally very quickly a short time later (Hamil & Walters 2010, pp. 354-372). In 2007, George Gillett, proprietor of the Montreal Canadiens, and Hicks, proprietor of the Dallas Stars and the Texas Rangers individually, took control of Liverpool F.C. in an agreement worth a reported £470 million. The Liverpool governing bodies were consistent and exhorted shareholders and Chairman David Moores to acknowledge the offer of £175 million (Wahlen 2010. The contract additionally included £45 million of club obligation and £215 million for the new stadium proposed for Stanley Park, with building anticipated that would start in of sixty days. In the same question and answer session, the new proprietors remarked that the new stadium could offer naming rights if it permits them added trusts to get "one incredible player" a season. Liverpool is an incredible club with an astounding history and an enthusiastic fan base. We completely recognize and welcome the one of a kind legacy and rich history of Liverpool and mean to regard this legacy later on. After the procurement, Liverpool purchased Fernando Torres, Babel, and various prominent players. In November 2007, open debate emerged between Liverpool chief, Benítez and club proprietors, Gillett and Hicks over exchange arrangement for the January 2008 transfer window. Ensuing authority club articulations later affirmed that Tom and George were hesitant to focus on future exchange action until later in the year, when the status of Liverpool's contribution to the UEFA Champions League had been determined, and had in this manner advised Benítez to focus on drilling and enhancing his current pool of players (Vöpel 2011, pp. 54-60). On 22 January 2008 Liverpool fans, at the amusement in the middle of Liverpool and Aston Villa, challenged against Gillett and Hicks' running of the club, and encouraged the pair to offer their shares in Liverpool F.C. to DIC. Neither proprietor nor their delegate Foster Gillett was available at the diversion. In this way, resistance to Hicks' proprietorship has begun to wind up more organized, with gatherings rising to battle against them. At first, Hicks expressed that the whole occurrence was "an unfortunate mix-up extinguished of all extent" and that his association with Benítez couldn't be any better (Elliott & Smith1993, pp. 205-229). The truth, however, is that Liverpool haven't been a main club in the exchange market subsequent to the mid-1990s, and I think this mirrors the genuine move period. You could say that the late 90s or mid-2000s saw the move from huge club to not a popular club. The wages paid by the greater Premier League clubs recommends.

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In 2000-01 United, Chelsea and Liverpool all had a yearly wage bill of around £50m with Arsenal paying just shy of £41m. In 2001-02, we were overwhelmed by Arsenal and after that once the Abramovich impact grabs hold in 2003-04 Chelsea stay far from everybody (Grundy & Brown 2002). Top of Fo Liverpool venture out in front of Arsenal in 2008-09 and draw near to United in 2009-10, but we now realize that this was because of an RBS advance. As FSG takeover and get the funds under control our wages plunge impressively in 2011-12, and we're currently fifth on the compensation table. http://www.thisisanfield.com/wp-content/uploads/Screen-Shot-2014-11-16-at-16.35.43.png

These aggregate income figures are up to 2012-13 where we are fifth. It will be fascinating to see where we are at one time our late business arrangements are incorporated in the records (Elliott & Smith1993, pp. 205-229). To return to where we need to be and stay there will oblige another move as I would like to think. That red line in the above chart will need to begin guiding north as fast as could reasonably be expected so we can pay top wages and exchange charges once more. Financial ratio analysis
Liquidity
The average present ratio for Liverpool is at 1.98 compared to the acid test ratio of 1.90. This shows that the club is doing well and has enough current assets to cater for its liabilities. Therefore, Liverpool comes out as a financially strong club and much a safer one to invest in (Vöpel 2011, pp. 54-60).
Equity and debts ratios
Liverpool's total average debt for five years stands at 4.45 whereas the equity ratio is 2.65.this means that most of their financiers are creditors as opposed to shareholders. Although the interest on the borrowed credit is high, the creditors once paid are written off on the payroll. Equity financing incorporates many shareholders of the club thus reducing dividends per shareholder, and the earnings are inadequate (Vöpel 2011, pp. 54-60).
Investment returns
The clubs earnings from the assets against the dollar were compared using the ratio of asset returns. The overall asset returns on the club for five years was at 15.09 percent. The high level shows that the assets are used efficiently.

Profit margin The clubs gross profit was 19.05 percent, making it position four in the English clubs. The club had low profit margins in their operations, as a result of management expenditure (Elliott & Smith1993, pp. 205-229).

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Cash Turnover
The cash turnover illustrates the efficiency of the club to utilize currency and currency equivalents for creation of sales revenue. Liverpool averaged 6.20 percent. This is a relatively fair way of building revenue.
Inventory turnover
This is a representation of the rate of turning inventories to sales. Liverpool's inventory turnover was high at 10.00. This increase in Liverpool's inventories combined with the five years growth has resulted in this high rate. In terms of the inventories, Liverpool is at the top of the list
(Markovits & Rensmann 2010).
Total assets This turnover is a measure of the efficiency of the club in utilizing total assets in the creation of sales revenue. Averagely, Liverpool was able to create many proceeds from the assets (Grundy & Brown 2002). Top of Form
Summary
Liverpool's financial records reveal that it is a robust competitor in the expanding soccer world. The club gets revenue from its fan base as well as other assets. The success of the club depends on the proper administration and management of financial operations (Grundy & Brown 2002). It would be important for the club to improve on management which would in turn assure them of a much greater fan base (Vöpel 2011, pp. 54-60).. This would eventually lead to increased revenue. Investors are looking for opportunities for growth, and implementing these measures into the club would attract more investors. The club should also plan on ways to minimize if not eliminate their debts. Investors avoid companies with heavy debts, as this would mean a decline in their revenue as they first have to clear the debts (Martin 2015).
RECOMMENDATIONS
The club had its setbacks in financial stability resulting from the numerous takeover of the club. From the trends in total assets, liabilities as well as debts management, the club needs to incorporate the following recommendations to attract more investors (Vöpel 2011, pp. 54-60).

1) That the club implements strategies to eliminate their debts. This will attract more investors looking for a debt free club to invest in. 2) That the club conducts proper management of the clubs finances. This will minimize the losses in transactions. 3) That the club conducts thorough marketing activities to increase their fan base. Investors are looking for a club that is popular and has a wide range of supporters.
CONCLUSION
Liverpool is among the top football clubs in the world. Having overcome financial challenges since its conception is an indication that the club is growing to financial stability. The research revealed the ratios in assets, inventory turnover, cash turnover as well as the current liabilities of the club. From the trend discussed above, it is concluded that Liverpool is a club worth investing in. It is a healthy and strong venture in favor of potential investors.

Reference listTop of Form

Wahlen J, et al., 2010, ‘Financial Reporting, Financial Stateme Analysis and Valuation: A Strategic Perspective. 7th ed., South-Western College Pub
Martin Roll, 2015, ‘Asian Brand Strategy (Revised and Updated): Building and Sustaining Strong Global Brands in Asia’, Palgrave Macmillan, Basingstoke, GB.
Grundy, T. & Brown, L. 2002. ‘Strategic project management: creating organizational breakthroughs’, London, Thomson Learning.
Markovits, A. S., & Rensmann, L. 2010, ‘Gaming the world how sports are reshaping global politics and culture’, Princeton, Princeton University Press.
Elliott, D., & Smith, 1993, ‘Football stadia disasters in the United Kingdom: learning from tragedy?’, Organization & Environment, 7(3), 205-229.
Vöpel, 2011, ‘Do we really need financial fair play in european club football? an economic Analysis’, CESifo DICE Report, 9(3), 54-60.
Hamil, S., & Walters 2010, ‘Financial performance in English professional football:‘an inconvenient truth’,Soccer & Society, 11(4), 354-372.
Tight, 2000,’Do league tables contribute to the development of a quality culture? Football and higher education compared’, Higher Education Quarterly, 54(1), 22-42.
Farred, 2002, ‘Long Distance Love Growing Up a Liverpool Football Club Fan’, Journal of Sport & Social Issues, 26(1), 6-24.
Williams, J., & Hopkins, 2011, ‘Over here’:‘Americanization’and the new politics of football club ownership–the case of Liverpool FC’, Sport in Society, 14(02), 160-174.