Sport Management Sport Finance, Overview slides. February 27, 2007. Basics of Sport Finance. Financial issues in sport -Mega-dollars -Stocks -Merger -Sport Apparel Industry -Sponsorship -Arenas and stadiums. Basic Financial Concepts. Revenues and expenses Budgets Documentation
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February 27, 2007
-Sport Apparel Industry
-Arenas and stadiums
-Budgeting future expenses
February 27, 2007
Slides derived in part from Sport Finance by Fried, et al., 2003
-look at where the money is, or how to get it.
-in most cases exist solely to make money
-all businesses need to focus on the bottom-line, what comes in and what goes out.
Sell the team!
-the owing of money to others
-Thinking about buying a business?
-earnings per share
-stock price appreciation or total earnings
…of financial information associated with various critical events in the business.
…the financial consequences of various activities within the business and analyzing the need for additional funds to meet current and future demands.
-documents what happened, not what should have happened
-note the glowing terms: “linchpin” (p. ix)
-recognizes revenue when earned, recognizes expenses when incurred
-key is record income when you perform the service whether it is paid for or not at the time
-allowed to use when receiving and paying cash
-does not recognize sales made on credit or bills owed until they are paid
-”mechanisms that allow anything of value to be exchanged between different parties” (Fried, p. 36)
-constant exchange occurring, receiving and paying out money
-Tangible -Financial asset -Spot
-Futures -Money -Capital
-Mortgage -International -Primary
-shorter maturity period (CD)
-ability to sell on a daily basis (stock)
-relatively risk free (gov’t. securities)
-T-bills -Treasury notes
-Government agency securities
-CD’s -Commercial paper
-can influence markets
-finite amount of cash in system
-capital, think of as money on hand
-capital reserve, prevent run (A Wonderful Life?)
-borrowing, banks borrow, too
-The Fed, raise or lower bank reserves
-Not Alan Greenspan
-Ben Bernanke, 1st anniversary
-financial state at given point
-profit/loss over a given time
-change in cash position over given time
-cash, short-term assets
-listed in the order they must be paid
-current, pay in one year or less
-long-term, time period?
-reflection of decisions like debt vs. equity
-income sheet, performance between the snapshots
-from operating activities
-from investing activities
-from financing activities
Difference between brought in and paid out
-ability to meet short-term $$$ obligations
-effectiveness in managing assets
-extent to which company relies on loans
-ability to make enough to grow, also keep shareholders happy
-Price per share of common stock X the average number of outstanding shares
-Total Assets – Total Liabilities
-Owner’s equity / Total outstanding shares
-Price per share / Earnings per share
-CD more secure, needs to outpace inflation
-such return would exceed the time value of $
-former discussion of FDIC, $$$ protection
-consols are something Nike, Microsoft might consider
-problem with pensions, don’t know term
-more commonly used in U.S.
-Internal (sound familiar?), primary
-External (sound familiar?), secondary
-past balance sheets
-past income statements
-audited financial records
-research and development reports
-analyzing industry trends
-tracking the rate of inflation, the cpi
-tracking benchmark businesses
-forecasting potential revenues
-budgeting for future expenses (budgeting)
-who is most likely to use what funding?
-who uses commercial paper?
-who uses the various types of long-term borrowing?
-who uses mezzanine financing?
-who uses venture capital?