1. Lesson 5.5 - Financing

2. The forecast predicts the costs and expenses as well as anticipated revenue LESSON 5.5 Marketing Applications Financing A forecast simply provides a target figure and is not expected to be 100% accurate

3. LESSON 5.5 The Marketing Plan 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.

4. LESSON 5.5 The Marketing Plan 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

5. 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 LESSON 5.5 Marketing Applications FINANCING

6. LESSON 5.5 The Marketing Plan 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.

7. The balance sheet indicates the current value of the company. Shows current assets (cash, property, equipment, receivables) and current liabilities (debts owed and loans) LESSON 5.5 Marketing Applications Financing

8. The income statement is a record of profit and loss Identifies all revenues received and expenses paid LESSON 5.5 Marketing Applications Financing

9. LESSON 5.5 The Marketing Plan 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

10. LESSON 5.5 The Marketing Plan Primary revenues: 1) Corporate sponsorship 2) NCAA revenue distribution 3) Ticket sales 4) “Guarantee games” Financing Example Revenues could include:

11. LESSON 5.5 The Marketing Plan 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:

12. LESSON 5.5 The Marketing Plan 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:

13. LESSON 5.5 The Marketing Plan 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

14. LESSON 5.5 The Marketing Plan 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

15. The Marketing Plan LESSON 5.5 REVIEW (ANSWERS) 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.