Egara Football Club: Looking For A Front Player From A Financial Prism Case Solution
Francesc Antonia Salvador created Egara Football Club in 1974. The club is located in Terrassa, Catalonia’s fifth-largest city by population. It is barely twenty kilometres north of Barcelona, and while it may appear to be a dormitory town for Barcelona, this is not the case.The city has an industrial structure, a strong trademark, and a long-standing client base; in fact, the club has the name of one of the Roman towns that gave birth to the city over two millennia ago.
Egara Football Club has been drifting from the Second Division to the Third Division over the past five years. There were two key reasons behind this. On the one hand, one of the top clubs in the world, with a long history of producing an exquisite game, is only ten minutes away by automobile. As a result, despite being members and subscribers, many people in Terrassa did not support the club. They were both members of a larger club in town. Terrassa, on the other hand, has a long hockey tradition. The tournament at the 1992 Olympic Games in Barcelona was held solely in this city.The city also has three strong hockey clubs, one of which has won multiple European championships. As a result, only a small number of people visited the stadium, which had been refurbished before to the Olympics.
Ans no. 1
It is seen from the different alternatives provided and considering contract cost that Cristino Rimado is less viable than other players from an economic perspective. The signing fees of Alberto Roviroso are very low as compared to Cristino Rimado i.e. 500,000 vs 10,000. This will help a company to focus on other options to reward the players for additional motivation.
As per the NPV, IRR, and payback period, among other alternatives highest-ranking, “A” is given to Xavier Merchans. Additionally, the company can choose Albert Roviroso because he is giving ranking “B” among other alternatives.
Considering the risk factor, Cristino Rimado should be signed because the player is an international level player and has a good fan following which is seen from his cash flow analysis. This discloses the fact that the winning chances and not getting demoted to the Second Division are high. Though the player is self-interested or his demand is high, the probability of winning is, however, high. To resolve the existing issue, the company should negotiate with the player to lower his signing fees or the salary which makes the deal productive from both perspectives.
Ans no. 4
According to qualitative analysis, Cristino Rimado should be hired because he can save the team in case of injury of important players. On the other hand, quantitative analysis shows the opposite results. As per the quantitative analysis, Xavior Merchans and Albert Roviroso is a good option. I would recommend opting for Xavior Merchans because his NPV and payback are better than Albert.
The viability could only be achieved when its future cash flows could generate positive NPV or atleast zero NPV. To make Cristina Rimado viable, the price of his signing should be lowered to around 9 million Euros because at this amount NPV of Cristina Rimado will become positive and IRR will also become greater than 30% which is the company’s required rate of return……………………….
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