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Copyright © 2014 by Sports Career Consulting, LLC
Lesson 5.5 - Financing
The forecast predicts the costs and expenses as well as anticipated revenue
Copyright © 2014 by Sports Career Consulting, LLC
LESSON 5.5
Marketing Applications
Financing
A forecast simply provides a target figure and is not expected to be 100% accurate
Copyright © 2014 by Sports Career Consulting, LLC
LESSON 5.5
Marketing Applications
Financing
LESSON 5.5
The Marketing Plan
Financing Example
Copyright © 2014 by Sports Career Consulting, LLC
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.
LESSON 5.5
The Marketing Plan
Financing Example
Copyright © 2014 by Sports Career Consulting, LLC
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
LESSON 5.5
The Marketing Plan
Financing Example
Copyright © 2014 by Sports Career Consulting, LLC
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.
The budget details the financial impact of each part of the marketing plan
Copyright © 2014 by Sports Career Consulting, LLC
LESSON 5.5
Marketing Applications
Financing
LESSON 5.5
The Marketing Plan
Financing Example
Copyright © 2014 by Sports Career Consulting, LLC
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
The balance sheet indicates the current value of the company
Copyright © 2014 by Sports Career Consulting, LLC
LESSON 5.5
Marketing Applications
Financing
The income statement is a record of profit and loss that identifies all revenues and expenses
Copyright © 2014 by Sports Career Consulting, LLC
LESSON 5.5
Marketing Applications
Financing
LESSON 5.5
The Marketing Plan
Financing Example
Copyright © 2014 by Sports Career Consulting, LLC
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
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
Primary revenues:
1) Corporate sponsorship
2) NCAA revenue distribution
3) Ticket sales
4) “Guarantee games”
Financing Example
Revenues could include:
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
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, Louisiana-Monroe and Ohio University
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
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
Financing Example
Primary Expenses:
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
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
Financing Example
Primary Expenses:
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
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
LESSON 5.5
The Marketing Plan
Copyright © 2014 by Sports Career Consulting, LLC
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
The Marketing Plan
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Copyright © 2014 by Sports Career Consulting, LLC
The Marketing Plan
LESSON 5.5 REVIEW (ANSWERS)LESSON 5.5 REVIEW (ANSWERS)
Copyright © 2014 by Sports Career Consulting, LLC
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.