1. Copyright © 2014 by Sports Career Consulting, LLC Lesson 5.5 - Financing

2. 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

3. 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

4. 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.

5. 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

6. 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.

7. 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

8. 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

9. The balance sheet indicates the current value of the company Copyright © 2014 by Sports Career Consulting, LLC LESSON 5.5 Marketing Applications Financing

10. 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

11. 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

12. 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:

13. 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

14. 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:

15. 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:

16. 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

17. 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

18. LESSON 5.5 The Marketing Plan Blank Slide Available for Teacher Edits Copyright © 2014 by Sports Career Consulting, LLC

19. The Marketing Plan 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.