The Analysis of Feasibility of Sale of Public Sports Center in Korea

Abstract

The purpose of this study is to analyze the feasibility of selling the public sports center and to verify the feasibility of selling the public sports center. We analyze the feasibility of the wholesale including management rights and the feasibility of the stake sale method to maintain management rights. Based on the financial data collected through the National Sports Promotion Corporation, we estimated the average cash flows of the Bundang and Ilsan Public Sports Centers by the year 2020 and the past five years (2016–2020). The present value is calculated through the cash flow, and the NPV (net present value) is used as the method. In conclusion, firstly, the wholesale (bidding) method is expected to lose some of the national treasury costs due to the difference between the appraisal value and the sale price. Although the public sports center has set options for sustainable operation, it is difficult to guarantee continued operation, and the program can be expected to be changed and increased. Because of this, it is difficult to maintain its function as a public sports center, and the loss of the national treasury is expected. As a result, the private sale (bidding) method is unlikely and is considered inappropriate. Secondly, in the case of stake disposal, it is unlikely that private investors will be able to sell their stakes considering the profitability and cash flow of the two centers, as stable profitability and dividend payout is an important criterion for private investors. Therefore, it is more realistic to sell to a structure that can fully reflect private business techniques through in-kind investment, and it is desirable to pursue a share transfer or additional stake disposal after securing a certain portion of profitability through the issuance of convertible bonds.