In a sport management role, you may find yourself in a position where you will need to analyze financial data and make important decisions based on that information. Imagine that you are in such a position, and that you need to present to stakeholders and explain the impact of a proposed project from a financial perspective. Having a solid foundation in financial and economic concepts will help you communicate financial information and its impacts in a meaningful way.
For Milestone Two, you will submit a draft of the budget proposal spreadsheet portion of the final project. You must use the Final Project Budget Spreadsheet template. This assignment is due in Module Five.
Prompt
Specifically, the following critical elements must be addressed:
Executive Summary
Determine the sport organization’s financial health based on what you discovered, and support your response with information from the most recent balance sheet.
Estimate the costs that the sport organization will need to cover as a result of the proposed project, and explain how the estimate was reached.
Identify potential sources of revenue that the project will bring to the organization to fund the project, supported by specific examples.
Discuss economic impacts across departments for the additional costs incurred as a result of the proposed project.
Financial Health Assessment
Based on the most recent balance sheet for City United Football Club (hypothetical), the organization is in a financially healthy and stable position. We have a strong ability to cover short-term obligations and a manageable level of debt.
Balance Sheet Snapshot:
Total Current Assets: $850,000 (includes $500,000 in cash and $350,000 in accounts receivable)
Total Current Liabilities: $400,000 (primarily accounts payable and short-term debt)
Total Long-Term Liabilities: $2,500,000
Total Equity: $5,100,000
The current ratio, a key measure of liquidity, is 2.13 ($850,000 / $400,000). This ratio indicates that for every dollar of current liabilities, the organization has $2.13 in current assets, demonstrating a strong ability to meet our short-term financial obligations. Furthermore, our debt-to-equity ratio is approximately 0.49 ($2,900,000 / $5,100,000). This low ratio suggests that the organization is conservatively financed, with a healthy reliance on equity rather than debt, giving us the capacity to finance new projects without excessive risk.
Project Cost Estimation
The total estimated cost for the "City United Fan Experience Upgrade" is $1.2 million. This estimate was reached using a bottom-up approach, breaking down the project into its core components and obtaining preliminary quotes and market-based pricing.
New High-Tech Scoreboard: The estimated cost is $600,000. This figure is based on three recent quotes from leading stadium technology vendors for a full-color LED board, including the purchase price, installation, and a two-year service contract.
Interactive Fan Zone Construction: We have allocated $450,000 for the design and build-out of the fan zone. This estimate is based on preliminary architectural drawings and cost per square foot analysis for similar projects, accounting for construction materials, specialized lighting, and interactive displays.
Fan Zone Technology and Equipment: We have budgeted $100,000 for digital kiosks, gaming systems, and other interactive elements within the zone. This is based on a survey of market prices for commercial-grade technology.
Marketing and Launch Campaign: A budget of $50,000 has been set aside for a comprehensive campaign to announce the new features, including digital advertising, promotional events, and print materials. This is based on historical marketing spend for similar club initiatives.