Transcript Lesson 5.5 - Financing

Lesson 5.5 - Financing
Marketing Applications
LESSON 5.5
Financing
The forecast predicts the costs and
expenses as well as anticipated revenue
A forecast simply provides a target
figure and is not expected to be 100%
accurate
The Marketing Plan
LESSON 5.5
Financing Example
In the Seattle Sounders' original business plan, the
goal was to sell 12,000 tickets per game in its
inaugural MLS season. However, the team averaged
nearly 30,000 in its first year and has maintained
that pace throughout their existence.
The Marketing Plan
LESSON 5.5
Financing Example
Sometimes an organization can fall
short of projected revenues as the
University of Oregon did just one
year after opening Matthew Knight
Arena, the Ducks’ luxurious new
basketball facility, when they fell
$275,000 short of what it projected
to generate in revenue through
ticket sales, meaning the U of O
athletic department would be
responsible for absorbing the
$400,000 hit
Marketing Applications
LESSON 5.5
FINANCING
The budget details the financial impact
of each part of the marketing plan.
The budget also requires careful review of
other financial statements, including the
income statement and projected expenses
The Marketing Plan
LESSON 5.5
Financing Example
In fiscal year 2011, the National Guard reported
that it spent $32,775,000 in its total NASCAR
sponsorship fees. That represented 8.6% of its total
recruiting budget.
Marketing Applications
LESSON 5.5
Financing
The balance sheet indicates the
current value of the company.
Shows current assets (cash, property,
equipment, receivables) and current liabilities
(debts owed and loans)
Marketing Applications
LESSON 5.5
Financing
The income statement is a record of
profit and loss
Identifies all revenues received and
expenses paid
The Marketing Plan
LESSON 5.5
Financing Example
One of the key
challenges facing any
athletic department
from a financial
perspective is the fact
that away football
games create a
significant expense and
can place a severe
strain on the budget
Let’s say your favorite
college football team’s
operating budget for the
upcoming season is
$450,000
The Marketing Plan
LESSON 5.5
Financing Example
Revenues could include:
Primary revenues:
1) Corporate sponsorship
2) NCAA revenue distribution
3) Ticket sales
4) “Guarantee games”
The Marketing Plan
LESSON 5.5
Financing Example
Primary Expenses:
1) The football team’s travel to an away game might
cost the program $16,000
2) Costs are lower when the team plays opponents
in a closer proximity because overnight stay
wouldn’t be required
The Marketing Plan
LESSON 5.5
Financing Example
Primary Expenses:
Travel also becomes much more expensive when the
team is required to fly rather than drive, so playing a
team further away might require a $65,000 travel
expense
1) Air travel = $48,000
2) Food = $7,000
3) Lodging = $6,000
4) Bus transportation = $4,600
The Marketing Plan
LESSON 5.5
Financing Example
Budget Evaluation
In the future, the athletics program might look for
ways to minimize travel expenses to stay as close to
budgeted travel costs as possible
1) Programs may have some control over the schedule,
so each road trip is evaluated on whether it fits the
budget, ease of reaching the destination, game times
and availability of commercial flights
The Marketing Plan
LESSON 5.5
Financing
Budget Evaluation
In the future, athletics will look for ways to minimize
travel expenses to stay as close to budgeted travel
costs as possible
2) The program might also look to partners such as
Nike and different hotel chains as a means for
minimizing expenses through discounts to try to
remain within the budget
LESSON 5.5 REVIEW (ANSWERS)
The Marketing
Plan
1) Recognize the importance of
understanding the financials within the
marketing plan
The key financials included in a marketing
plan are the forecast, budget, balance
sheet and income statement.
Organizations use that financial
information to make important marketing
decisions.