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Category Archives: Property Valuation


There was a report recently published outlining the top 40/top 50
most valuable sports brands, by a high-profile business magazine.
Well, Real Analytics is about to burst that (incorrectly published) bubble…

We’re sorry that we have to disappoint all the Yankee fanatics and
the stick & ball sport fans, but alas there is more to the sporting world
than the United States. Much more.

According to the high-profile business publication that put the report
out they utilized their OWN proprietary formula to arrive at their
conclusions- (albeit, flawed conclusions)

The reporter who covered the story is a regular on a TV show with the
program initials SM, on the promineant cable network MSG and who has
his own web column as well. The publication is usually reliable, but in this
case we think they have not considered a variety of factors and methods.

The most likely scenario is that the publication employed an in-house
intangible or ‘name’ only valuation or third-party appraisal, as well their
use of a model of correlation between Value and Revenue. Unfortunately,
we don’t know the credibility of those methods and sources.

So, in order to ‘correct’ the somewhat questionable methods,
Real Analytics has put together the Top 5 Most Valuable Sports
Brands/Teams in the sports world, based on the reaserch mostly
derived from a high profile Auditing/Accounting firm.

Before we get to the list, a little tid-bit; The most valuable sporting events– (multiple series events) hands down is Formula One. Oh, we know your
boo-hoo’ing that fact…but it’s a stone cold lead pipe lock folks.
(our homage to the entertaining  and awesome Mike & Mike)

Without further adieu here is the list. (note: exact values are nearly
impossible to attain so approx values within +-1% are utilized)

Top Five Most Valuable Sports Brands/Teams

1. Manchester United: £1.5 Billion (British Pounds)
2. Real Madrid: £1.4 Billion (British Pounds)
3. Scuderia Ferrari: $1.81 Billion (U.S. Dollars)
4. Dallas Cowboys: $1.79 Billion (U.S. Dollars)
5. New York Yankees: $1.7 Billion (U.S. Dollars)


Footnotes:

The published dollar figures consider both the intangible (theoretical)
and tangible (asset based) values of each entity. Furthermore, each value is based upon an “Arm’s Length Transaction” (A-L-T)

Obviously, it would be extremely difficult to parse out pieces of these teams. One could argue for the ‘value’ of just the teams “name” which would
be an entirely intangible valuation.

But then the Yankees would be worth significantly lower than the estimated $1.7 B. That figure includes the Yes network, the stadium, and all other subsidiaries. Same goes for all the top 5 teams/brands.

To separate out the property from the name brand would be very difficult
and not paint a true picture of the entire worth of these organizations.
Therefore a mixed valuation is the correct method. A fractional valuation
would not be practical. One has to take into account both enterprise and
equity values.

Conversely, the figures do not consider any Debt-To-Loan Ratios (D-T-L)
or outstanding debts. Strictly A-L-T Sale Values based on the entire
‘property’ -both intellectual and asset based properties.

The methods and metrics that go into a sports business valuation are very
complicated and very detailed. Some methods employed are DCF
(Discounted Cash Flow- future earnings) Capitalized Earnings, Value Added Analysis, Valuation Multiples, Weighted Averages, Broadcast Rights, Merchandising, etc.

Partial data and figures were sourced from:
Deloitte Touche LTD and FormulaMoney

One last side note, valuations are usually reliable from quarter to quarter.
So during a business cycle year, the top 3 can flip flop. But it is safe to say that the top 3 are all within a few hundred thousand dollars at any given time.

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Anchoring Effect.


 -NJ Industrial Market Report

During the first Quarter, Northern New Jersey Industrial Real Estate data shows the overall leasing and absorbtion of 921,766 square feet. Mainly in the Hudson and Bergen corridors- along the Hudson waterfront and centered around the Route 46/23 areas.

In the Central region, the New Jersey industrial market ended the quarter with 1.14 million sq ft of leased out space. The most activity was in the 287/Exit 10, Exit 8A and Somerset submarkets, which had a combined total of 873,496 sq ft of leased space.

‘Asking’ net lease rates in Q1 stood at $5.90 per sq ft- which represented only $0.26 less or a 4.66% decrease from the mean asking rents posted just a year ago. While the asking rents in Central New Jersey stayed basically stable, with the Trenton/295 submarket yielding the highest asking rate increase, which was up $0.18 per sq ft.

ask rents ind njOverall, gross absorbtion remains negative- around 9 million square feet of space and the overall vacancy rate stood at 9.2%- up from 8.7% Q4. Subletting activity has and continues to increase, a sign that companies are reducing their real estate holdings in this deeply troubled economy.

  • Negative Gross Absorbtion:                  9(+\-) million
  • Overall vacancy rate:                         9.2%
  • Northern NJ space leased:                   921,766 SF
  • Central NJ space leased:                     1.14 m SF

Recovery in the industrial market is expected to lag behind retail and office space which will ultimately prolong the efforts of investors and corporate holders to normalize vacancy and absorbtion rates.

Of course industrial/flex space is directly affected by retail sales and the entire retail sector, so the sooner retail rebounds- the sooner the industrial market will see recovery as well.

All of NJ real estate, commercial and residential recovery is resting on the states and the national economic climate. Depending on how quickly the country can dig itself out this current deep recession/mild depresion.


The New Jersey housing market showed that it still has a pulse as contract-sales increased by 23% in March despite the continuing stream of grim economic news. The March increase, which is the 3rd consecutive monthly sales increase, is largely due to seasonality as home sale activity typically rises in anticipation of the Spring selling season. That this year’s increase was 23%, compared with a 9% rise last March.

contract sales

A major reason behind the rise in home sales is lower home prices and lower mortgage interest rates that have raised housing affordability in New Jersey from a low of 81% in 2006 to 111% today.

The bottom line is that the current sales pace remains the lowest of the past 5 years. This is directly due to the challenges posed by a weak economy, tightened credit standards, rising food and energy costs and a high amount of unsold inventory, which presently reflects an 11-month supply.

While New Jersey is faring a bit better than most of the country, it remains to be seen if this short-term positive news can become a positive trend.


Milleville NJ,

New Jersey Motorsports Park, or Thunderbolt Raceway as it is better known by, will play host again this weekend for the second year to the Grand American Road Racing Series.

ga

Daytona Prototypes (pictured above) and GT cars are showcased in the Grand-Am Rolex Series. The series will feature both classes on Thunderbolt’s course simultaneously. The Rolex Series features some of the top teams in motorsports, including Chip Ganassi Racing Brumos Porsche and Penske Racing.

The 700+ acre sprawling, country-club type raceway opened in 2008 and has hosted the ARCA series along with the Grand-Am Series. This season the track will add the AMA Superbike Series as well.

The $150 million world class Motorsports complex is considered one of the more premier tracks in the country. The track contains an exclusive motorsports country club known as the Drivers Club, unique trackside Villa homes and the Shade Tree Garages which are secure garage suites.

Later this year a world-class driving school will open their head quarters at NJMP. The track broke ground in 2007 and was partially designed by Harvey Siegel and legendary racer, Caroll Shelby.

The facility provides about 180 jobs for the local area and has 60 corporate partnerships for the 2009 season. The positive impact on the travel and leisure industry is a plus for the south Jersey area.  The track is expected to bring in a host of other related businesses in the near and long term future.


Here is the latest Cost of Living report from the Council for Community and Economic Research.

The following are the top 5 cities where the cost of living is the highest. The respective  unemployment rates for February and most current median income data were utilized in the analysis.

1. Providence, R.I.
(Providence-Fall River-
Warwick, R.I.-Mass., metro area)

Population: 1.6 million
Cost of Living Index: 122
Median Income: $54,064
February Unemployment Rate: 11.6%

2. Los Angeles, Calif.
(Los Angeles-
Long Beach-Santa Ana, Calif., metro area)

Population: 12.9 million
Cost of Living Index: 148
Median Income: $56,680
February Unemployment Rate: 10.2%

3. Riverside, Calif.
(
RiversideSan Bernardino-Ontario, Calif., metro area)

Population: 4.1 million
Cost of Living Index: 120
Median Income: $54,991
February Unemployment Rate: 12.2%

4. Tampa, Fla.
(
TampaSt. Petersburg-Clearwater, Fla., metro area)

Population: 2.7 million
Cost of Living Index: 96
Median Income: $45,243
February Unemployment Rate: 10.2%

5. Buffalo, N.Y.
(
Buffalo-Niagara Falls, N.Y., metro area)

Population: 1.1 million
Cost of Living Index: 96
Median Income: $44,747
February Unemployment Rate: 9.6%

Four of the five top cities have double digit unemployment as of February. March figures came in slightly higher and April is expected to be higher still. While the jobless rate expands wages remain relatively flat.

In addition, the top five states as of March with the most unemployment are:

NC – 10.8%

CA – 11.2%

SC – 11.4%

OR – 12.1%

MI – 12.6%

The complete list of unemployment rates by state: http://www.bls.gov/web/laumstrk.htm


According to RealtyTrac residential foreclosures in New Jersey jumped 1.96% during the first quarter of 2009, y-o-y and rose a colossal 40% from February 2009.

nj-foreclosures

Q1 official auctions in NJ included 2,293 residential properties as Essex County lead the way with 296. Passaic followed with 217,  as well as Ocean- 217 and Union with 215. These were the top four counties with foreclosures during Q1.

The four top cities with foreclosures were Newark, Paterson, Elizabeth and Dover NJ. Currently NJ ranks 24th in the nation with foreclosure filings.

This latest report clearly shows that the housing  collapse continues to undermine the New Jersey economy.

State economists predict the jobless rate will continue to climb throughout the year which will render more homeowners unable to make mortgage payments and in turn face further foreclosures.


Central New Jersey class A office space is showing signs of life. With a lack of spec building in the overall market, class A vacancy rates have gone from about an appalling 20% to around  5.5%.

Recent data shows most class A units are currently leasing between $24 psf to $28 psf. Although on the flip-side, class B vacancy rates have risen to approximately 13% with lease rates around $18 to $20 psf.

Nationally, office vacancy rates have ticked upward to a four year high in the first quarter of 2009- clocking in at 15.2%. The decline in the amount of occupied space was 24.9 million square feet, the most since September 2001.

office-index-chart

Overall vacancy rates are predicted to reach nearly 20% by years end, while effective rents in Q1 fell approximately 2% with the average rent psf at 24.16. Nearly 50 million square feet of office space is expected to be empty in 2009, but is also expected to begin to fill up in early 2010 as the economy starts its slow, but certain recovery.


Economic Real Estate Trends – By PMI

After several years of unsustainable gains, house prices are now declining in many parts of the country as well as for the country as a whole. According to the Office of Federal Housing Enterprise Oversight (OFHEO), national house prices dropped for the first time since its price series began in 1991. Prices in the seasonally adjusted purchase-only index fell by 0.3 percent in the fourth quarter of 2007 from the previous year. Even worse, when annualized, the decline in prices between the third quarter and the fourth quarter was 5.1 percent, suggesting
that the downturn in prices was intensifying as 2007 came to a close. Broader measures of house prices, such as that from S&P/Case-Shiller, show four-quarter prices down by a record 8.9 percent in the last quarter of the year, and by 19.8 percent at annual rates in that quarter. Given these large, and intensifying, price declines, how far will house prices fall before they start to recover?

Our models indicate that the decline in house prices is only about one-third to one-half over, due primarily to the magnitude of the supply/demand imbalance in the housing market. This assumes that the current economic downturn is both short and modest, and that the disarray in financial markets ends soon. Given the drop in prices already seen, the broad S&P/Case-Shiller house price index could decline by roughly 15-25 percent. The narrower OFHEO index could decline by a lesser 5-10 percent, because it excludes jumbo loans and the large portion of subprime and Alt-A loans that Fannie Mae and Freddie Mac don’t participate in. The difference between these measures is a rough estimate of how much worse the price decline is likely to be for houses using subprime, Alt-A, or jumbo mortgage financing.

Read more at: http://www.pmi-us.com/media/pdf/products_services/eret/pmi_eret08v2s.pdf

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