Egara Football Club: Looking for a front player from a financial prism Case solution
- What are viable signings in economic terms?
In order to consider the different alternatives as provided in the case and focusing on their signing of contract cost, it can be seen that the players other than Cristino Rimado are viable signings from an economic perspective. A huge difference can be found from Cristino Rimado with the one whose signing fees is very low, which is Albert Rovirosa, i.e. approximately 9500000 (10,000,000 – 500,000), through which the company could potentially focus on other strategic alternatives in order to promote the team or reward the players for additional motivation.
- What is the signing that creates more value?
The signing, which creates more value, can be seen from their results of net present value. It can be seen that the highest ranking “A” is given to Xavier Marchans among the other alternatives, which available to the team. Moreover, as the second option, the company can choose Albert Rovirosa since he is giving the ranking “B” in the overall alternatives.
- Suppose we consider solely the risk factor, that is, Egara Football Club descending to Second Division. Based on this single criterion, which player do you think should be signed?
Considering the scenario from the perspective of risk from getting relegated to Second Division, the only player that should be signed in order maintain its strong historical position is Cristino Rimado for the significant reason that the player is an international level player and has a huge fan following, which can also be seen from his cash flow analysis. This simply reveals the fact that the chances of winning and not getting demoted to the Second Division are high. Although the player is somewhat selfish or his demand is high, the probability of winning is however, high. The way out in order to resolve the existing issue could negotiating with the player to lower the signing fees or the salary to simultaneously increase the result and make the deal viable from both the perspectives.
- Make your recommendation on which player should be contracted, bearing in mind all the given information.
In order to make some recommendation based on the qualitative as well as the quantitative analysis of the case. The results could be confusing since the qualitative assessment could favor the one with the highest chances of winning and not moving towards the Second Division, which could negatively affect the strong brand position of the company. This factor strongly favors Cristino Rimado because he can yield positive results and save the team in the period when a an important player is injured. On the other hand, a quantitative assessment could reveal just the opposite because the values of net present value together with the values of internal rate of return do not favor Cristino Rimado and Xavier Marchans could be recommended on the other hand. However, as a final recommendation, by considering all the issues as well as risk facing the company, it is recommended from the significant fame of the player that Cristino Rimado should be selected, which can be only done by having some negotiation with the player to lower his existing signing fees or his salary. In the other case, the company can go with Xavier Marchans........................
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