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The Chicago Cubs haven’t won a World Series in 100 years. So, why does their value increase, relative to their stagnant/declining performance? Ah, yes, the value of intangibles.
I am intrigued by the discussion of valuing intangibles, and enjoy reading about different approaches. Because intangibles are, in fact, intangible, professionals have varying opinions on how to perform related valuations. Anderson Economic Group recently accepted the challenge of valuing the Cubs.
According to Anderson, the Cubs’ valuation begins with base value according to a multiple of sales, adds the probability of World Series contention, and adds the value of intangibles associated with owning a team (such as boosting the buyer’s celebrity status).
While I would disagree with valuing a company, a team, a brand or other using a top line approach, the bottom line is, when valuing intangibles, traceability must exceed that of subjectivity. Yes, valuing intangibles is an inherently subjective process. However, if your assumptions are sound, your credibility increases substantially.
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