Finance Question

You are to create on paper your own one-time sporting event (e.g., basketball tournament, flag football tournament, golf tournament). A final one-page paper, with an attached spreadsheet/Word doc with table is to be submitted:

• Describe the event in a paragraph or two, identifying the who, what, when, where, how components:
  • Who is the event for (who will participate) and who will staff it?
  • What is the nature (type) of the event, the purpose of the event (marketing, fundraising, social, etc.)?
  • When will the event be held (not just date, but the ideal time of year spring, summer, etc., day/night, and is this an annual recurring event)?
  • Where will the event be held (city, state, plus the actual facility itself, describe that for us)?
  • How includes what resources are needed (from tables and chairs, to scoreboards and other equipment) for the execution of the event? This is your main budgeting consideration question. Concessions, trash, set-up equipment (field striping, lines, bases, etc.), event equipment, communication equipment (PA, brackets, scoreboards, etc.) must all be considered.
• Develop a mission statement for the event and provide that in the write-up
• In a couple of paragraphs, discuss the results of a break even analysis on the cost of running your event. Using the event as your product and the entry fee (per person or per team) as your units to be sold, you will run your break-even analysis.
  • Basically, once you have budgeted the cost of the event, and identified the revenue stream (price per team/individual), you can provide us with a simple break-even estimate on the number of individuals/teams you must have at your event in order to break even. One paragraph should discuss costs, and the revenue and identify this number
  • In 2-3 paragraphs, considering the break-even number, students should evaluate whether it’s feasible to hold the event given that analysis, and also discuss ways in which the event costs might be reduced and profits maximized (i.e., how they might in the future be able to do a little better than the current break-even number). For example, can you really get that many teams/individuals to participate (is the entry fee too steep?), or is the cost of running the event too high?
• In a concluding paragraph, indicate your thoughts on running this type of even from a break-even standpoint, considering the original purpose of the event (i.e., one of the financial intangibles is that sometimes an event is worth it for publicity/marketing purpose, despite its break even point, whereas that same event with a fundraising purpose, would not be worth it)
• Finally, on a separate page (you may create this in Excel and then paste into Word), students should include a spreadsheet of their itemized event budget detailing all expenses, along with a revenue projection line showing the entry fee and number of teams/individuals that results in an auto-totalling of the revenue expected. The total expenses and the total revenue should then indicate the break point (i.e., number of teams/individuals listed is calculated so that the revenues-expenses = 0).

In conducting your analysis above, students will use and define the break-even equation (EBIT = PQ – VQ – F = 0) to examine the number of individuals or teams necessary in order for the event to break even. The key is accurately predicting all the running costs involved, both variable and fixed. Some examples include site or equipment rental fees, advertising, and staffing. These must be included on a second page (created in Excel and pasted into Word).

Students, you may, in order to shift your break-even point, utilize supplemental revenue-generating options at your event, such as concessions. In this way, students would need to project the revenues from concessions, based on a per-unit average. Supplemental revenues such as these can help sports events and other functions meet the break-even point, utilizing lower selling prices per unit or through fewer units sold. This part is optional, but would be one of those inclusions that would reduce the cost of entry per team/individual and possibly help achieve a lower break-even point.

This is essentially a mini-budget and mini-revenue projection similar to what we have done in Sport Economics (for those having participated in that course already). Note that your final assignment, is to only be two-pages, a one-page write up, and a one-page spreadsheet documenting your costs. If you are able to get facilities for other items (that normally have a cost) for free, you must detail this in your write up. You may also wish to still add a line for them in your spreadsheet, so they don’t appear “forgotten” in your calculations, but simply list their cost as 0.

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