Hammek Holdings Case Competition Facts: Hammek Holdings purchases beverage operations of Sharko Mexicos largest food and

d beverage company Sharko received 25% of shares in Hammek Holdings becoming largest shareholder behind the Hammek family Sharko plans to build new stadium that would take up a significant portion of La Prepano Park - currently made up of a large forest, a lake, ponds, a zoo, and an amusement park the biggest recreational green area in the city (in Monterrey-second largest city) that would be the largest in Mexico The current stadium is old and cannot capitalize on potential revenue because of its limited capacity and aging equipment wasnt maintained well due to lack of manpower The start date is to be October 2013 Stadium will host Monterrey Seagulls Soccer Club (currently National Champions) owned by Sharko since 1999 Hammek is a sponsor Hammek has exclusive rights to every beverage sale in the new stadium Mexico will invest $48 million in infrastructure and roads surrounding, and another $23 million to the park itself ($71 million total) Sharko will invest $315 million into the new stadium Stadium will host all home games of Seagulls and over 100 concerts/events per year Background September 2012 Stadium announced announcement of creation of La Prepano New Ecological Park was also made public declaring it a natural reserve Monterrey is most contaminated city of Mexico summer temperatures can reach as 110 degrees is a cash cow due to tourism and cash incentives from environmentalist groups most modern and prosperous city in mexico hit hard by recession resulting in a declining economy and residents beginning to move out over past years economy has been increasing Newly founded La Prepano Management oversees management and usage of park President: Kevin Roverson CEO of Sharko and Vice Chairman of Hammek Holdings Seagulls are heart and soul of city city morale goes up when they win/down when they lose 2006 had worst record in history success began to climb right when recession hit

Benefits Seagull success spurred tremendous growth in city morale all time high when they won championship sports analysts say they will have soccer dynasty Local economy boomed as a job creation skyrocketed twice as many jobs have been created that were lost during recession La Prepano Park gained exposure and saw a dramatic increase in foot traffic Monterrey is experiencing record tourism New stadium will be cornerstone of city represent newfound life and wealth in Monterrey Roverson wants to capitalize on allurement of La Prepano Park by building new stadium - increase ticket sales, gain media exposure, and make Seagulls it team of Mexico Revenue of Hammek and Sharko soared because of influx of people moving back into Monterrey Controversies Environmental impact assessment by Hammek recognizes a deterioration in the quality of the surface waters of the park, the composition and topography of the land, the livelihoods of different plant and animal species in the park and socioeconomic effects like noise and public health concerns 49 types of flora and the 107 animal species in danger would also require cutting down considerable amount of forest which functions as the natural lungs of the city Sharko will own stadium for 60 years cost plus substantial profits for building/maintaining stadium should be recovered in time expected to have $600-$800 million in revenues. Hammek is projected to gain more than $15 million annually from beverage sales and advertisements must cover decommissioning and deconstructing costs of stadium after its 60 years would also be responsible for replanting the area A third-party Environmental impact assessment commissioned by the Citizens Collective in Defense of La Prepano pointed out that the stadium is not being planned in right location no adequate transportation near the park (metro) would have to travel by car Several big name customers, constituting half of Hammeks revenues, have threatened to discontinue their relations with Hammek if stadium is constructed Hammek not legally responsible for building of the stadium stakeholder with high commercial interests

Problem Hammek must decide to: o Support the building of the new stadium PROFIT Pros: $15 million annual profit, Monterrey economy skyrocket Cons: must pay for deconstruction of stadium and replanting area (very expensive) lose several big name customers that constitute half of Hammeks revenues negative environmental impact, deforestation contribution to more pollution Support renovation of old stadium - ENVIRONMENT Pros: Keep big name customers, La Prepano park stays as a natural reserve, do not have to pay for deconstruction Cons: Less profit, potential problems with Sharko (loss of sharesholding, discontinuation of Hammek owning beverage operations), potential miss in huge economy boost Do nothing (Back out) LESS DRAMA Pros: Dont have to give two shits about what happens, positive impact on environment Cons: No profit, loss of beverage ownership, loss of shareholding, potential loss of big name customers, potential miss in economy boost