Sports economy

Economics

The social science that analyzes the production, distribution, and consumption of goods and services

Several Core Principles

Opportunity Cost

Cost

Benefit

Decision

Internal Factors

A statement of financial position based on estimates of expenditures and suggested proposals for financing them; in other words, a management plan for revenue and expenses of an organization for a period of time

Budget Process

10 Step Process

1. Know the organization’s mission, goals, and objectives2. Research the organization’s strength and resources relative to the future needs3. Include important people in the budget process4. Review information and data gathered (past, present, and future)5. Prepare budget using proper budget type set forth by the organization’s executives6. Examine the budget for accuracy, feasibility, and reality7. Get other key people to look over and critique budget8. Prepare presentation9. Implement the budget10. Audit the budget (should be done before next budget is made)

Important Factors

Past revenues generated

Changes in prices or fees;Marketing research predictions;The current promotion and advertising strategies;The economic environment of the general public and the institution.

Types of Budgets

Object Classification Budget

Line Item Budget

Increment-Decrement Budgeting

Program Budget

Performance Budget

Planning Programming

Budget System

Zero-Based Budget

Capital Budget

Selecting a Budget

System

Financial Statements

Income Statement

Why care about budgets

& financial statements

An effective sport manager, especially now and in the future, must be familiar with accounting, budgeting, investing, and managing organization’s funds

Even though sport managers usually hire fincanial advisors, a successful sport manager must be able to accomplish many of the same tasks as a financial advisor to help them with decision making and leading a successful organization in the future

Supply

&

Demand

External Factors

What Makes

Economics work

Trading

Goods or Service

for Goods or Service

Currency for goods

or service

Cach Flow

& Finacing

Reqires Knowlge of

• Finacing
• Accounting
• Business pricples

Needed for

• Expantion
• Maintainence
• New Construction
• Business & Tech development

Types of Finacial

Instroments

• General Obligation Bonds
• Revenue Bonds
• COPS
• TIF
• Private Sector Rev. Streams

Funds are important to

every business

How to produce Cash

Flow in Sports

Ticket Sales

Advertising

Perfered Seating

Consessions

Broacasiting &

Media Coverage

Parking

Cash Flow means

money out too

Plant, Property, and Equiment

Inventory/Merchandise

Player Slaries

Utilities/Operating Costs

Proper Utilization in Sport

• Managing and accounting is essensial because of seasonal aspect of sports
• Some Billion $ Budgets
• Cost of simple tasks are huge because they are usually large scale

Comparative Advantage

The law of comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another

Specialization

Effeciant Companies have comarative advatages and them by specializing in good or service industy. This is how cash flow is established

Jobs in Sport Economics

Question 1.

What are the 3 Factors

opportunity costs?

Answer: Cost, Benefit, Decision

Question 2.

What are 3 important finacial

documents for all sport managers?

Answer: Income statment, Balance Sheet

Cash flow Statment

Question 3.

Where is equilibrium on a

supply & demand curve?

Answer: Where ever the two

curves meet

Question 4.

The law of comparative advantage refers to the ability of a party to produce a particular good or service at a lower ______________ and ____________________ cost over another.

Answer: Marginal, Opportunity

Question 5.

What is the most important core

principle of economics?

Answer: All actions involve Costs

and Benefits

Sports Economy

Russ Fornea

Johnny Braud

Michael Dupre

Most importantly

All actions involve

costs and benefits

Involves 3 main factors

Budget

Supply and Demand

an economic model of price determination in a market

Cash Flow Analysis

Balance Sheet

This Creates Cash Flow

Supply

Equilibrium

Detailed accounting of receipts (revenue) and dispersments (expenses)Shows the managers “cash in” and “cash out”

Money being exchanged over

and over agian help build businesses

become more knowledegable and

effecient

Four main uses: shows changes in the business over time; shows growth or decline in various phases of the business; shows the business’s abilityto pay debts; shows fincancial position

Why?

Demand

Budget should fit

organization and

its goals first and

foremost!

Every thing else

should fall into place

Starting from Sratch

By far the largest expence

Anaylize the success of the business (profit/loss)

Managment

Financial Accounting

Sports Economist

Accountant

$84,000

General Management

Facility and event Managment

CFO

$333,000

Pro/Simi Pro GM

$116,000

Facility Director

$250,000

$113,000

$94,900

Budget Manager

Collegeate AD

Event Director

$100,700

$100,292

Recreation Director

Equipment

Manager

$62,000

$94,300