1. Copyright © 2015 by Sports Career Consulting, LLC Lesson 5.5 - Financing

2. The forecast predicts the costs and expenses as well as anticipated revenue Copyright © 2015 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

3. A forecast simply provides a target figure and is not expected to be 100% accurate Copyright © 2015 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

4. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 by Sports Career Consulting, LLC For example, South Carolina’s athletics program projected that it would make over $94 million in athletics revenue in 2014- 15, nearly $5 million more than was projected for fiscal year 2013-14. However, the program managed to generate $98.6 million when the final numbers were tallied for the 2014-15 season. The Gamecocks increased their forecast for the 2015-16 season, projecting $100 million in revenue for the first time in South Carolina athletics history.projected2015-16

5. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 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.

6. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 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

7. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 by Sports Career Consulting, LLC According to oregonlive.com, in 2015, the Ducks’ men's basketball program had its worst home attendance in more than 20 years and decided to slash ticket prices for the 2015-16 season by an average of 34 percent.oregonlive.com

8. The budget details the financial impact of each part of the marketing plan Copyright © 2015 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

9. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 by Sports Career Consulting, LLC Florida's athletic budget for the 2016-16 school provides increased by nearly $8 million over last year to $112.8 million with specific plans to add an estimated $3.5 million in additional funds to “enhance the student-athlete experience”

10. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 by Sports Career Consulting, LLC When an organization is either losing money or hoping to generate larger profits, often times they re-evaluate budgets in an effort to save money. In 2015, five NCAA conferences agreed to give student-athletes a “raise” by covering their "full cost of attendance" (instead of just tuition, room and board). According to a story published on rivals.com, Florida State’s scholarship expenses will rise by about $2 million per year as a result, prompting the Seminole’s Athletics Director to impose a 2 percent budget cut in an effort to balance out the increase in program expenses.rivals.com

11. The balance sheet indicates the current value of the company Copyright © 2015 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

12. The income statement is a record of profit and loss that identifies all revenues and expenses Copyright © 2015 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

13. LESSON 5.5 The Marketing Plan Financing Example Copyright © 2015 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

14. LESSON 5.5 The Marketing Plan Copyright © 2015 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:

15. LESSON 5.5 The Marketing Plan Copyright © 2015 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 2017, the Nebraska football program will pay Arkansas State University a whopping $1.65 million for a game in Lincoln, Nebraska.

16. LESSON 5.5 The Marketing Plan Copyright © 2015 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:

17. LESSON 5.5 The Marketing Plan Copyright © 2015 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:

18. LESSON 5.5 The Marketing Plan Copyright © 2015 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

19. LESSON 5.5 The Marketing Plan Copyright © 2015 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

20. LESSON 5.5 The Marketing Plan Blank Slide Available for Teacher Edits Copyright © 2015 by Sports Career Consulting, LLC

21. The Marketing Plan LESSON 5.5 REVIEW (ANSWERS) Copyright © 2015 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.