How do you value players?

  • I thought I'd get the views of the forum on how you determine a players true value.

    I've been trying to find the right formula to value players and I'm currently working on the following:

    1. expected 3 year MB div returns (using the past 12 months as a benchmark +/- an annual factor depending on age).
    2. expected 3 year PB div returns (using the past 12 months as a benchmark +/- an annual factor depending on age).
    3. assumed sale price in 3 years time (based on today's price +/- a factor based on age).

    So to use Neymar as an example:

    1. Last 12 months MB = £1.06. I've assumed his MB over the next 3 years will total 150% of last 12 months, so £1.59
    2. Last 12 months PB (assuming new div structure) = £0.82. I've assumed his PB over the next 3 years will total 200% of the last 12 months, so £1.64 over 3 years.
    3. Based on his age, I've factored that in 3 years he will be worth 60% of his current price of £7.19 = £4.31

    Add them together to get his value = £7.54

    I think these assumptions are very conservative but give a good indication of real value of a player.

    Using this method, I value the following players as such:

    Bruno - £10.61
    Kimmich - £9.45
    Sancho - £11.57
    Robertson - £2.40
    KDB - £3.40
    Salah - £3.01
    Greenwood - £4.23
    Teji - £2.69
    Rashford - £6.78
    Kane - £6.42
    Hakan - £3.59

    Would love to hear your valuations of these players and your rational...

  • @Neil-S
    Have you taken into account dividends have doubled?

  • Yes, the last 12 months PB divs in the calcs are based on new structure so give true reflection going forwards

    Edit looks like you have for pb but need to bump up mb.

    Seems pretty rational. You want to be conservative if possible which you have that way you build in risk factor meaning if your calcs are right anyone under that price is a good buy.

    It probably will work much better for your kanes and Messi of this world, will be incredibly hard to calculate for youngsters.

  • Love this! Helpful for a noob! Wish there was an app that did these calcs for you haha

  • @SDOAFIT The model values Messi at £3.80 but TBH Messi is a bit of an enigma so very difficult to apply the standard formula to him

  • Very interesting exercise cheers man!

    I still have blind faith in the product and in my opinion your 3rd element (age/capital appreciation) is the most difficult one to factor in considering only a very few players are deliver divd on the other 2.

    I also factor in the league they play in, whether they compete in CL/EL, Euros/WC... Because IPD can have a massive impact on the the potential divs of a player, specially on those cheaper ones (at the moment I consider those any one below £1.5 to be honest).

  • @Ikusitaikasi I thought about adding a factor for the competitions the players play in, but the players divs reflect the fact they are in these competitions so it's already covered.

    Agreed that trying to estimate a players value 3 years in the future is almost non-sensicle at the moment, but somehow it has to be factored in because the player will have a price when you sell him. I've been pretty conservative in how this is calculated and haven't factored that any player, independent of age, will be worth more than they are today - this should build in some contingency.

  • @Neil-S said in How do you value players?:

    @SDOAFIT The model values Messi at £3.80 but TBH Messi is a bit of an enigma so very difficult to apply the standard formula to him

    Messi should be easier to calculate.

    Are you sure about that. What have you got his divs for over 12 months. Unadjusted for new structure.

    I would have thought it would be more than 1.90 a year new payouts. So he would be more than 3.80 regardless of sell on.

  • Big unknown is whether he leaves Barca and joins City next Summer. If he does, he price will go crazy and all valuations will be meaningless.

  • @SDOAFIT Youngsters are tricky because they can get very valuable very quickly (like Sancho did) or can be a flash in the pan and disappear. As such, I've been conservative on their div factors and value factor.

  • I'm not sure that your valuation makes sense, based on the terms represented. If you imagine that Neymar earns £1.07 a year, then it would take him pretty much seven seasons to earn your attributed value £7.54, and that assumes three things 1) that he doesn’t regress 2) retire 3) that he stays in a major league. Taking seven years for a 28 year to reach an attributed value is bad value, when the risk element is added in, commission, and the potential interest rates from other investments.

    And, why would anyone pay more for a 31-year-old than they’ve earnt in the previous three seasons, assuming no dividend increases?

    Personally I agree, as you state, that your valuation is conservative. Neymar will, barring serious injury problems, earn comfortably more than £1.07 a year. I don’t think your valuation number is off just the way you’ve come to it.

    Another potential problem for me is the variability of MB. For example, your Sancho valuation is principally based around media circumstances that could shift considerably. I.e if Sancho moves to Real Madrid, his media value drops considerably. If he moves to United then it’s golden but that’s a big if.

    Any value for me must be built entirely upon dividend earning from matches and media from the past year, with age and potential factored in. And we need to aim for any and all players to comfortably outstrip their assigned value. I.e I buy Messi at £4.50 because I believe he can earn £7.25+ before he retires. Neymar, under your expectation of earnings, is worth much less than your figure for me. For him to be worth 7.54, I would want projected career earnings of £11.50 or more to account for risk, especially for an injury prone player. Ideally, I buy players who I think can earn twice their market value.

    Risk is the big thing for me. When we buy anyone, we run the risk that they 1) may get injured or otherwise be unable to play 2) may regress 3) tactics might change 4) media sentiment, if they are relevant media holds, may change 5) they may move to a non-pb league and the unlikely even that 6) FI fail to increase its dividends, decrease them, or even go bust.

    We can of course, as some will claim, always sell a player later. But that is also shrouded in risk, as illustrated by current market difficulties.

    I got into a disagreement on here recently because someone said they, under an imaginary system of compulsory valuation, saw Inter’s Martinez as a £5 player. It seemed strange to me because the history of earnings didn’t get close to that (it represented 18 times his previous seasons earning, when calculated using the current dividend structure). It looked to me like extreme overvaluation tenuously based upon a best-case scenario there was little evidence for. I think we need to factor in the worse-case, especially because in a market without IS we hold all the risk.

    One final point – more expensive players, relatively speaking, are a lot less relevant for IPDs. This is also something to factor in. Thomas Muller will likely hit 30+ plus IPDs this season, and each IPD currently accounts for over 2% of his current value. Whilst these require the flipping of players, it is also something to factor in for very expensive players who 1) cannot be flipped so freely 2) proportionally earn much less per goal or assist.

    In summary – I value players on their ability to comfortably exceed said value, because future potential comes with a significant risk in which we hold all the liability. It means, at present, that almost all of my holds are aged 25 or above.

  • @ocs123 agreed....but at his current price I don't see him as good value...or at least there are plenty of other players that are better value

  • @Timmy Good to get a different view point. My model anticipates you sell the player in 3 years and that you need to estimate what that is (primarily based on age and as such future potential div earnings). As such you don't need to recover his full value in divs alone. Using this philosophy it doesn't value older players that high. Highest value players in the model tend to be aged 22-25.

    Totally agree that there is a big risk with assuming what you can sell a player for in 3 years (given we've no idea what we will be able to sell players for in 3 days right now!).

    I like the fact that you aim to recover the full value of the player through divs and as such don't need to worry about resale values. I may try and add a holding time to my model and see if I can find more value / less risk.

    Agree with your analysis of Sancho. His MB primarily dictates his value and that MB could significantly change over the next 3 years. I don't hold him on that basis. I think that whilst we can come up with values based on some sort of maths, there has to be an element of common sense and consideration of player circumstances factored in before buying

  • A simple mechanism I use is to look at last year's returns & then times it by 3.

    But if you want a more detailed view:-

    PB is a solid base score which is likely to remain the same as long as the players circumstances haven't changed.

    MB is a little more difficult to predict as a move may have happened or equally a move could have fallen through. This should be taken into consideration for future MB returns.

    If someone hasn't had a move such as a Kane, a Messi, Neymar or a Ronaldo then it's safe to assure the press just like to write about them & these players are easier to judge.

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