Transcript Lesson 5.5 - Financing

Lesson 5.5 - Financing
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© 2014 by Sports Career Consulting, LLC
Marketing Applications
LESSON 5.5
Financing
The forecast predicts the costs and
expenses as well as anticipated revenue
Copyright
© 2014 by Sports Career Consulting, LLC
Marketing Applications
LESSON 5.5
Financing
A forecast simply provides a target
figure and is not expected to be 100%
accurate
Copyright
© 2014 by Sports Career Consulting, LLC
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.
Copyright
© 2014 by Sports Career Consulting, LLC
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
Copyright
© 2014 by Sports Career Consulting, LLC
The Marketing Plan
LESSON 5.5
Financing Example
South Carolina is projecting that it will make over
$94 million in athletics revenue in 2014-15,
nearly $5 million more than was is projected
for fiscal year 2013-14.
Copyright
© 2014 by Sports Career Consulting, LLC
Marketing Applications
LESSON 5.5
Financing
The budget details the financial impact
of each part of the marketing plan
Copyright
© 2014 by Sports Career Consulting, LLC
The Marketing Plan
LESSON 5.5
Financing Example
Florida's athletic budget for
the 2014-15 school provides an increase of more than $3
million over last year to
$103,310,001 - includes plans
for a $50 million renovation of
the O'Connell Center to
include a new "hard'' roof,
multiple levels of premium
spaces with a new central
entry and concourse
Copyright
© 2014 by Sports Career Consulting, LLC
Marketing Applications
LESSON 5.5
Financing
The balance sheet indicates the
current value of the company
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© 2014 by Sports Career Consulting, LLC
Marketing Applications
LESSON 5.5
Financing
The income statement is a record of
profit and loss that identifies all
revenues and expenses
Copyright
© 2014 by Sports Career Consulting, LLC
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
Copyright
Let’s say your favorite
college football team’s
operating budget for the
upcoming season is
$450,000
© 2014 by Sports Career Consulting, LLC
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”
Copyright
© 2014 by Sports Career Consulting, LLC
The Marketing Plan
LESSON 5.5
Financing Example
Guarantee Game:
A guarantee game is a game where a Division1-A
program’s football team will pay a smaller school
opponent to go to its campus for a game.
For example, in 2014 the Kentucky
football program will pay out more than
$2 million in guaranteed monies for
three non-conference home games
against Tennessee-Martin, LouisianaMonroe and Ohio University
Copyright
© 2014 by Sports Career Consulting, LLC
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
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© 2014 by Sports Career Consulting, LLC
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
Copyright
© 2014 by Sports Career Consulting, LLC
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
Copyright
© 2014 by Sports Career Consulting, LLC
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
Copyright
© 2014 by Sports Career Consulting, LLC
The Marketing Plan
LESSON 5.5
Blank Slide Available
for Teacher Edits
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© 2014 by Sports Career Consulting, LLC
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.
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© 2014 by Sports Career Consulting, LLC