Expectations and Business Valuation | Valtrend
George Steinbrenner (and his partners) purchased the Yankees in 1973 for $10 million. In 2009, Forbes estimated the Yankees value at $1.6 billion. If one does the math, George (ignoring what he paid to buy out his partners later) earned a little more than a 15% compound rate of return on his investment for 36 years.
My hunch is that George probably required (or hoped for) at least this rate of return. However, even he might have been surprised if you told him in 1973 that this investment would be worth $1.6 billion in 2009. (That is the beauty of compound interest) My hunch is that, with the benefit of hindsight, CBS would not have sold the Yankees to him at all or would have sold the team for much for than $10 million in 1973.
This entry was posted on Friday, July 30th, 2010 at 4:17 pm and is filed under Uncategorized.
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