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69 Cards in this Set
- Front
- Back
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Beneficiaries of a Business Plan |
Mangement, employees, Banks/creditors, rating agencies, and investors |
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Business plan |
A document that provides a complete and detailed picture of a proposed business. A road map that includes FINANCIAL ANALYSIS, MARKETING, and OPERATING COMPONENTS |
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Purpose of a business plan |
Steer company, provide guidance, critically analyze scenarios and solutions, drive decisions |
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Who does business planning |
EVERYONE, Event, facility, team, league, manufactures, concessions |
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Characteristics of business plan |
Clear and concise, killer summary, realistic financial projections, product differentiation, market research |
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Elements of Business Plan |
Up to you what to put in yours. Examples: financial projections, marketing plan, Analysis of product, Capital, Industry, and management |
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Assumptions of Business Plan |
Drive revenue, think through dates, times, & schedule, competitive team, risk/rewards, weather, economy, players, costs, pricing, community, etc.. |
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3 different types of financial statements |
Balance Sheet, Profits & Loss, Cash flow |
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Balance Sheet |
Statement of financial position at a point in time. A =b+c A=assets b=liability c= equity GAAP |
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Profits & Loss (P&L, or income statements) |
Financial results over a defined period of time. GAAP As earned and As incurred i.e. don't get put on paper until game day or season starts. |
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Assets |
What you own: cash, property, investments, account receivable (some one owes you $), intangibles (patents, intellectual property) |
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Liability |
Debt, rent (accounts payable) |
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Equity |
What the owner owns C=A-B For example, if someone owns a car worth $15,000 but owes $5,000 on that car, the car represents $10,000 equity. |
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Revenue |
Admissions, F&B, merch, sponsor, broadcast, parking, other |
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Expenses |
Stadium, utilities, compensation, team, entertainment, F&B, mercy, marketing, insurance, supplies, legal, maintenance, travel&entertainment |
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How to budget? |
By responsibility: The who & what they incur The who: stadium, team, coaches, trainers, grounds, mangers, F&B, sponsors, marketing What they incur: Salaries, Rent, travel& entertainment, advertising, consultant, talent, tech, |
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Budgeting exempt employees |
Manager position: base salary + 32% of base for burden of insurances and taxes |
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Budgetting non-exempt emloyees |
Full time: Hourly + 32% for burdens Part time: Hourly + 10% for burdens |
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Employee Burden |
What the employer has to pay to have employees. Full time: benefits (health & welfare), taxes, FICA, 401k & pension, insurance Part time: taxes & FICA |
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Cash Flow |
A source and use of cash (think it of as your check book). Wrote as reciepts (think as received) and disbursements (as spent) |
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Difference between Cash flow and P&L |
Cash Flow - As received and As spent (immediately report everything) P&L - As received and As incurred (not reported until used so game day or season) example: F&B is the same on both because you buy a hot dog during the game. Deferred compensation is an example of when they would be different. Also paying for season tickets. |
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GAAP |
Generally accepted accounting principles |
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Who gets the rights or revenue streams from a stadium? |
Who financed and who has the risk is the person/business that gets all the rights Rights: parking, merch, F&B, sponsorship, broadcast/tv, and other event |
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Different types of leaseas |
single, operating, or master |
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Debt service |
principle + interest |
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Operations of venue leases |
Complimentary tickets need to be determined ahead of time because rent is determined off of ticket sales. Biggest issue is always ongoing maintenance |
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Ticketing |
largest source of revenue. the largest direct contributor to per capita revenues |
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Per capita revenues |
aka per head. per capita = revenue/attendance (drop count) Per capita of f&b = (revenue of f&b - sales tax) /drop count |
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How to take out sales tax |
Tickets cost $20.00 with 8% sales tax. 20.00/1.08 = 18.52 So the ticket cost was $18.52 |
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Cost of attending sports event: hard & soft |
hard cost: travel, parking, tickets, concessions, mercy soft cost: time, experience, entertainment, inconvenience |
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Pricing strategy |
Don't give it away because you will never get it back (rocket ship theory) revenue oriented or demand oriented |
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Why difficult to sell out |
night games, weather, economy, length of schedule, days of week game played on, opponent, team performance, traffic, length of game time |
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Revenue oriented ticket |
geared toward the needs of the organization i.e. how much revenue do we need |
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Demand oriented ticket |
what the market will bear i.e. higher pricers for "better" games and lower price for games that are harder to sell |
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threshold pricing |
not too high and not too low. You want to be as high as you can with out going into the too high territory. |
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Initial pricing |
can do it for anything new i.e. new player, new team, new coach. It will set the benchmark or standard so never want to start out too low ALWAYS BETTER TO INCREASE WITH SMALL INCREMENTS THAN ONE LARGE HIT |
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Discount tickets |
NEVER compromise your season ticket base (they must always be perceived as getting the best deal) Always camouflage or isolate discounts (worst seat locations, poor opponent, day of the week, do it to support a cause, underwritten by a 3rd party) |
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Differential/variable pricing |
charge more for higher demand events/games. Multiple price points, already seen with hotels, airlines, and ski resorts maximize ticket revenue and push demand to less attractive games not application to season season tickets |
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Flexible ticket packaging |
mini/partial ticketing plans to accommodate demand Allows for unique and specialized marketing ex. west coast, east coast, weekender, family, opponent, or event a pick em' option |
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Buyer Assistance Programs |
Team helps season ticket holders sell tickets, allow teams into the secondary market, teams share in revenue. Bypass scrapers and lets other people have really good seats. |
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Complimentary Tickets |
Some are contractual (team, players, broadcast) don't want to just fill the house (people won't come or don't come back) Can use it effectively for example sell 2 for 1 tickets (uses comp) or give CIF champions 2 free tickets because family will probably buy more. |
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Consignment Tickets |
A printed ticket allotment that is provided to a group who pays for what is sold. Unsold tickets are returned at a certain time to be put back on the market Effective sales strategy, requires planning, and eliminates one on one selling |
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Attendance Measures/counts |
Paid attendance (tickets sold) complimentary (tickets issued for no value) Attendance(can babes on tickets sold, issued or turnstile) Drop count(tickets sold + comps - no shows) |
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Ticket Manifest |
A fancy seating chart that gives seat inventory, ranked by location (best seating location X1, X2,....) Identifies sales by ticket type |
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Kill Seats |
salable seats that are used for other purposes ex more press box seats for play offs |
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House/Hold Seats |
ticket office retains for emergency or unexpected circumstance i.e. VIP & owner ALWAS have them just in case |
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Dress the Building |
The art of selling tickets to make it look like there are more people than there actually are. Sell every other row, leave small gaps |
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Parking |
85% of revenue goes to profit/bottom line Self-operate vs 3rd party Must have a regular/reliable staff (so they don't steal your money) Can uncharge for other one time events but never share revenue |
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Gross revenue & taxes |
Gross revenue MUST exclude taxes |
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Type of Tickets |
Season, partial, comp, group, single game |
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Rainouts/cancelled games |
State Law applies(cali is pro-consumer). Must have a proactive, accurate and consistent with your message. If ticket not used you can get a refund normally with in a certain amount of time. |
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Hawking |
Person who goes up and down the aisle at games selling f & b. they work on commission (make more than the concessionaire) |
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Self operate or 3rd party for F&B |
3rd party because they have more buying power, more expertise, can blame them when food issues come up, they already are licensed for alcohol, can also leverage the different companies to compete against each other |
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Turnkey operations |
Venue buys all equipment, cookware, and small wares. Concessionaire buys food, materials, and cookie supplies. Venue gets highest royalty possible because they finance all capital. This also gives the venue leverage to negotiate short term deals. royalty can be as high as 48% |
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Gross Deal (% of revenue) |
Concessionaire pays all costs (food, supplies, labor , taxes) and venue just gets a % of the gross. Concessionaire finance all the capital so royalty can be as low as 15-20%. Concessionaire have a tendency to cut labor costs and reduce portion servings to cut cost. This is the lowest risk for venue but they give up a lot of their control to the concessionaire. Good deal for venue because little risk |
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Profit split |
Venue and concessionaire share in the net profit. All costs are split with the same percentage. Example if it is 80-20 then venue gets 80% of profit but pays for 80% of costs. Good deal for concessionaire because risk is shared. |
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Revenue Sharing Incentive |
Concessionaire pays venue additional fees when defined revenue thresholds are achieved. It is normally part of a gross deal. Effective royalty rate is lowest during initial revenue and then increases as revenue increases. Allows concessionaire to recover their costs early and gives them incentive to sell long term. 2 types: incremental and retroactive. |
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Effective royalty rate |
Measures the ultimate % of total revenue earned by the venue. royalties paid to venue/gross revenue(means no tax) from all sources |
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Staple items |
ex. soda, beer, popcorn, ice cream, candy Non-perishable, pur profit, low cost items and logistically easy |
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Make Whole provision |
Venue will pay the concessionaire for it DEMONSTRATING a loss resulting from the venue requiring the concessionaire to sell a sponsor product. i.e. (nestle instead of normal ice cream) |
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How to priceF&B |
Concessionaire usually sets their own prices but venue has the right to deny (most try to stay similar to average) |
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Sponsorships in F&B |
A contractual relationship between Team, sponsor, and concessionaire for things like: product placement, brand awareness/marketing, exclusivity, advertising, and bartering. |
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Franchising in F&B |
There is a separate royalty fee paid be venue to franchisor(i.e. burger king). But follow all the look and feel of the franchise also pricing must stay similar. Franchise royalty average 13% |
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Who has pouring rights? |
ABC does not allow sponsorships to dictate pouring rights. It is the concessionaire because they own the liquor license. |
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How to reduce costs in F&B |
smaller portions (smaller cups, smaller hot dogs) |
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Jewel Events (F&B) |
ex olympics. the venue will let that event do whatever they want for F &B even if they have a 3rd party operating |
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Only barter with F & B if... |
Product necessity, best cost (whole sale), and excess inventory |
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Incremental revenue sharing incentive |
% is applied to each increment of recent (as you go) example: 0-10 million 20% 10-20 million 30% |
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retroactive revenue sharing incentive |
% is applied to the cumulative amount of revenue. Better for the team as were you land at the end of the season is your cumulative royalty rate so you get a higher rate. |
