* Sports Management

Presenter: Michael B. Johnson, MBA, BBA, Dip Ed

* Sports Management

Financial Management

Financial Management
Role of Treasurer or Accountant
Safe-keeping of organization's funds
Record income & expenditures
Report on financial position of the organization
Record financial transactions
Control expenditure in the organization
Preparation of financial statements
Prepare budget

* Financial Management
Treasurer Roles

Bank balance with statement recon

List accruals & payment
Detail of investments & bank loans
Prepare Budget
- Identify income/trends over previous 3 yrs.
- Identify financial needs of the organization
- Estimate income/expenditure for incoming year
- Initiate fundraising schemes
- Set financial target for organization

* Financial Management
Basic Accounting

Monthly & Annual Financial Reports

Balance Sheet
Asset = Liabilities + Equity
- Assets: current & fixed
- Liabilities: current & Fixed
- Equity: income earned/profit

* Financial Management
Basic Accounting

Monthly & Annual Financial Reports

Profit & Loss Statement
Revenue
Expenses

* Financial Management
Basic Accounting

Use of Financial Statements

To inform decision
Expand stadium
Tour
Employ additional staff

Managing contracts
- increase salary
- Renew current contracts
- Seek additional contracts

* Financial Management
Basic Accounting

Financial Planning

Budgets
Type of budget
Operating budget daily expenses, income
Programme budget separate programme expenses
Capital budget infrastrcture

Budget Process
Examine organizations mission, goals & objectives
Review information gather
Present budget to BOD for approval

* Financial Management
Basic Accounting

Break Even Analysis

Valuable budgeting tool:
- Fixed costs building, bus, chairs, equipment etc.
- Variable costs cost that changes proportionately,
spectators, food, personal equipment
- Revenue income, investment
Break Even Point = fixed costs/contribution margin
EBIT = revenue variable costs fixed of production = 0

* Financial Management
Basic Accounting

Break Even Analysis: Example Determining cost per

person
Break Even Point = fixed costs/contribution margin
FC = $1,000

VC = $60 (per person)

R = $80 (per person) then CM = $80-$60 =$20

BEP = (FC) $1,000/(CM)$20 = 50
To break-even we need 50 persons to register

* Financial Management
Budgeting

Income & Expenditure

Income for 2015
Source of Income
- Gate receipts
- Membership
- Commercial income
- Grants received
- Fundraising
- Financial income
-

Prev

Current

* Financial Management
Financing Sports Organizations

Financing Sporting Organizations can be done in many

ways such as:

Sponsorship
Endorsements
Branding
Image rights
Rental

*Sponsorship
*What is sponsorship?
*Cash and/or in-kind fee paid to a property
in return for access to the exploitable
commercial potential associated with that
property
*One of most prolific forms of sport
marketing
*Sponsorship fees often exceed $10,000,000
per year and are structured as multiyear
deals
*Provides a company with association, value,
exposure, and opportunities to leverage
their affiliation to achieve marketing
objectives

*Increasing commercialization of sports has led

to tremendous growth in sport sponsorship.
*$11.3 billion spent on sport sponsorships in
2009
*1984 Los Angeles Olympic Games
*Watershed year in the evolution of sport
sponsorship

*World Cup 2014

- top-tier sponsors paid $25-

$50M
Adidas, Coca Cola, Hyundai, Sony & Visa
Second-tier $10=$25M
https://www.youtube.com/watch?v=Iy1rumvo9xc

Reasons for Sponsorship

Growth

*Increased media interest in sports.

*Companies can break through the
clutter of traditional advertising.
*Sponsorship can reach its target
consumer through consumers
lifestyles

* Reasons for Sponsorship

Growth

*Enable corporate marketers to reach

specific segments, such as the

following:
*Heavy users, shareholders, and
investors; or specific groups that have
similar demographics, psychographics,
or geographic commonalities
*Today sport sponsorship has become a
discipline involving serious research,
large investments, and strategic
planning

Sales Promotion: In-Venue

Promotion

*Increase the amount of value-added benefits

that teams provide their paying customers
*Traditional giveaways: Sponsor underwrites the
cost of a premium item in exchange for its
logo on the item and advertising support that
pre-promotes the event
*Continuity promotions: Require fans to attend
multiple games to obtain giveaways
*Success of promotion varies widely based on
time of season, teams winloss record, day of
promotion, opponent, and perceived quality of
the item
*Incremental increase in fans

Sales Promotion: In-Store Promotion

*Companies often leverage sponsorships at retail level
*Premiums
*Merchandise offered free or at a reduced price as an

inducement to buy a different item or items

*Contests/sweepstakes
*Sampling
*One of the most effective sales promotion tools to
induce consumers to try a product
*Point-of-sale or point-of-purchase materials
*Used by marketers to attract consumers attention to
their product/service and their promotional campaign
at the retail level
*Coupons

* Cross-Promotion
*Joining together of two or more companies

to capitalize on a sponsorship is becoming

increasingly popular and effective
*Creates more bang for their buck under
the premise that two sponsors working
together can generate more interest and
awareness among targeted sport consumers
*Used to gain exposure in nontraditional and
unexpected retail settings
*It has become increasingly important to
think outside the box as to how sponsors can
be joined to increase the overall
effectiveness of sponsorship investments

* Sponsorship Packages: Sponsor Benefits

*Exclusivity in ones product or service

category
*Official designations

* Leagues and teams offer multiple designations tied to the

sport and to the sponsors product or service category

*Rights to utilize the sport organizations

intellectual property in advertising and

promotion campaigns
*Advertising support
*In-stadium signage and promotional
announcements
*Access to tickets
*Potential new business through access and
opportunity

* Sponsorship Packages: League/Team Benefits

*Rights fee
*Multiyear commitment
*Advertising commitment
*Commitment to team-oriented
promotions

* Sponsorship Platforms

*Governing body sponsorship

*Entails securing official sponsor

status
*Team sponsorship
*Appropriate platform for
local/regional companies or
companies with smaller marketing
budgets
*Athlete sponsorship
*Involves some type of endorsement
of the sponsors product or service

* Sponsorship Platforms

*Media channel sponsorship

*Companies that purchase advertising or

programming during sport-related

broadcasts
*Facility sponsorship
*Enables companies to tie directly to the
event atmosphere
*Event sponsorship
*Tie directly to event atmosphere
*Sport-specific sponsorship
*Enables company to direct its
sponsorship efforts to a specific sport

* Evaluating Sport Sponsorship

*Vital due to growing financial

commitments necessary to effectively

activate sport sponsorship programs
*No one exact formula for measuring
ROI
*For ROI, companies use the following:
*Internal feedback, sales/promotion
bounceback measures, print media
exposure, television media exposure,
primary consumer research,
dealer/trade response, and
syndicated consumer research

* Sponsorship Agencies

*Many companies engaged in sport

sponsorship outsource the

negotiation and/or implementation
of their sponsorship programs
*Rely on agencies because they do
not possess the expertise, the
experience, or the resources to
negotiate and implement
sponsorship programs

* Current Issues

*Ethnic marketing
*Sport organizations have begun to

adopt strategies to target ethnic

groups more effectively.
*Overcommercialization
*Do consumers have an emotional
threshold for accepting a constant
bombardment of corporate names,
logos, and messages?
*Gambling
*Sport organizations have embraced
gambling as a growing source of
sponsorship revenue

* Current Issues

*Ethnic marketing
*Sport organizations have begun to

adopt strategies to target ethnic

groups more effectively.
*Overcommercialization
*Do consumers have an emotional
threshold for accepting a constant
bombardment of corporate names,
logos, and messages?
*Gambling
*Sport organizations have embraced
gambling as a growing source of
sponsorship revenue

*Endorsement
* A form of brand or advertising campaign that involves a
well known person using their fame to help promote a
product or service. Manufacturers of sporting gear or
drink and clothing are some of the most common
business users of classic celebrity endorsement
techniques, such as television ads and launch event
appearances, in the marketing of their products.
* NBA Star Kevin Durant signed a $100M deal with Under
Armour ($265-$285 over 10 yrs)

* Branding
*The process involved in creating a

unique name and image for a product

in the consumers' mind, mainly
through advertising campaigns with a
consistent theme. Branding aims to
establish a significant and
differentiated presence in the market
that attracts and retains loyal
customers.

* Sporting Organization Brands