Business Plan Evaluation and Development

While thousands of companies and start-ups develop new products to market, many are unaware of who their market actually is. As such, they incorrectly utilize their product development model as the road map for building their company and business plan. Issues surrounding the product need to be defined: what is the product or service concept? What research is needed to ensure the product can be built cost-effectively and with the desired features? What are the product’s differentiating features and benefits? Who are the customers and where will they be found? What price will they pay for the product? How will the product ultimately reach the customer and through what distribution channel?

SportsEconomics has undertaken qualitative and quantitative business research projects for dozens of clients in sports. Our expertise in sports business research, and experience in working with seed-stage companies to large professional leagues has imbued us with the ability to analyze the products and services being positioned towards the sports industry. Accordingly, we have developed and evaluated an abundance of business plans for companies seeking to improve their positioning, their business models, or in search of funding.

Click here to link to our case study:

• Business Plan Evaluation and Development

Financial Audit

Many sports organizations lease the facilities in which they play and operate. Considering these lease agreements represent a large percentage of these organizations operating costs, and given the extended duration of these leases and the obligations they create for both the Landlord and Tenant, each party needs a mechanism through which to periodically verify compliance with the provisions of the Lease during the lease term.

Click here to link to our case study:

• Financial Audit

Financial Valuation of Facilities

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

Click here to link to our case study:

• Financial Valuation of Facilities

Financial Valuation of a Team

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

Click here to link to our case study:

• Financial Valuation of a Team

Financial Valuations of a Professional Sports League

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

Click here to link to our case study:

• Financial Valuation of a Professional Sports League

League Level Decision Making: Revenue Sharing

Sports leagues are very unique, complex entities. More than any other industry, sports leagues exhibit aspects of joint ventures, single entities, cartels, monopolies, competitive markets, etc. Due to these diverse structures and characteristics, even the courts have found it unclear how to view and treat sports leagues.

Competitive balance is unique to sports and is the reason for many of the extraordinary rules that sports leagues adhere to. These rules, such as revenue sharing, salary caps, and player drafts, can have unintended consequences. Moreover, because franchises must collaborate to reach agreements, some League decisions may run afoul of antitrust laws.

An analysis of league structure, strategies, tactics, team conduct, and incentives are an important aspect of league management. We specialize in understanding how to optimally structure a league, what rules to use and to what extent, and the impacts of the rules and expected outcomes.

Click here to link to our case study:

• League Level Decision Making: Revenue Sharing

Luxury Suite Pricing

A key objective of all professional sport marketers is to increase game attendance. The perishable nature of the spectator sport product places a premium on sales and marketing in this industry. Unsold seats result not only in reduced gate receipts, but also forfeit potential auxiliary revenue from parking, concessions, and merchandise sales.

Variable ticket pricing refers to changing the price of a ticket to a sporting event based on the expected demand for that event. Given the high costs of operating a sports program or team, numerous sport organizations have implemented or are considering variable ticket pricing in an effort to maximize revenues. While many teams inappropriately raise prices with team success or due to financial constraints, nearly all of these organizations do not have an existing methodology in place for predicting demand or for examining the effectiveness of their current pricing scheme, which can often result in lower attendance and profits.

In addition to understanding how to set pricing, many organizations overlook the importance of modifying their marketing strategies in conjunction with their pricing changes. Segmenting potential single-game ticket purchasers based on consumer motivation towards these same game characteristics and targeting those identified segments accordingly can result in increased revenues.

Click here to link to our case study:

• Luxury Suite Pricing

Optimal Salary Cap Structure

Sports leagues are very unique, complex entities. More than any other industry, sports leagues exhibit aspects of joint ventures, single entities, cartels, monopolies, competitive markets, etc. Due to these diverse structures and characteristics, even the courts have found it unclear how to view and treat sports leagues.

Competitive balance is unique to sports and is the reason for many of the extraordinary rules that sports leagues adhere to. These rules, such as revenue sharing, salary caps, and player drafts, can have unintended consequences. Moreover, because franchises must collaborate to reach agreements, some League decisions may run afoul of antitrust laws.

An analysis of league structure, strategies, tactics, team conduct, and incentives are an important aspect of league management. We specialize in understanding how to optimally structure a league, what rules to use and to what extent, and the impacts of the rules and expected outcomes.

Click here to link to our case study:

• Optimal Cap Structure Case Study

Policy Development

Sports leagues and entities often have their own policies and rules under which they operate. Due to these diverse structures and characteristics, even the courts and regulatory bodies have found it unclear how to view and treat the rules and policies of sports entities.

We specialize in understanding how to optimally structure a league or sports-related entity, what rules to use and to what extent, and the impacts of the policies and expected outcomes. SportsEconomics analyzes the entire range of policy development issues, including market definition, structure and entry conditions, pricing and other competitive concerns. We identify key issues, apply appropriate economic and financial theories, and use empirical techniques to develop independent and objective analyses and opinions.

Click here to link to our case study:

• Policy Development

Sponsorship & Endorsement Valuation

Given the proliferation of sports and the media outlets in which they are viewed, sponsorship evaluation has emerged as a popular need within the sports industry. Corporations often employ our services to assess the return on investment of their sponsorship initiatives, while properties often seek to gauge their true market value. Often, both corporations and properties/individuals will utilize these analyses to better their position in contract negotiations. Moreover, such analyses can help corporations find ways to strategically enhance the value of the sponsorship or endorsement they are considering, and to determine whether the opportunity aligns with its sales, marketing and public relations objectives.

Click here to link to our case study:

• Sponsorship & Endorsement Valuation

Ticket Holder Retention

A key objective of all professional sport marketers is to increase game attendance. The perishable nature of the spectator sport product places a premium on sales and marketing in this industry. Unsold seats result not only in reduced gate receipts, but also forfeit potential auxiliary revenue from parking, concessions, and merchandise sales.

Many organizations overlook the importance of target marketing when setting their marketing and sales strategies. Fans have varying motivations that influence their decision to purchase tickets, and targeting these identified segments based on these motivations can accordingly increase ticket purchases, marketing efficiency and effectiveness, and revenues.

Click here to link to our case study:

• Ticket Holder Retention

Ticket Pricing

A key objective of all professional sport marketers is to increase game attendance. The perishable nature of the spectator sport product places a premium on sales and marketing in this industry. Unsold seats result not only in reduced gate receipts, but also forfeit potential auxiliary revenue from parking, concessions, and merchandise sales.

Variable ticket pricing refers to changing the price of a ticket to a sporting event based on the expected demand for that event. Given the high costs of operating a sports program or team, numerous sport organizations have implemented or are considering variable ticket pricing in an effort to maximize revenues. While many teams inappropriately raise prices with team success or due to financial constraints, nearly all of these organizations do not have an existing methodology in place for predicting demand or for examining the effectiveness of their current pricing scheme, which can often result in lower attendance and profits.

In addition to understanding how to set pricing, many organizations overlook the importance of modifying their marketing strategies in conjunction with their pricing changes. Segmenting potential single-game ticket purchasers based on consumer motivation towards these same game characteristics and targeting those identified segments accordingly can result in increased revenues.

Click here to link to our case study:

• Luxury Suite Pricing