The following framework/structure provides an overview of the case:

Information that should be shared with the interviewee:

• 10,000 students are at the university.
• Currently, there are 16 men’s and women’s sports available at the college.
• Short term goal is to break even.
• Long term goal is to finance a new stadium and subsidize other sports programs.
• Sources of revenue:
  • Tickets: 5,000 paying visitors per home game, 6 home games
  • The game guarantees: 6 away games
  • Student fees
  • Concessions
  • Other (possible) sources: Apparel/Licensing, TV/Radio broadcasting rights, alumni support

Information that should be shared with the interviewee. Here the focus should be on the operational costs (not capital):

• Costs:
  • Coaching costs: Head coach ($500,000 per year), 8 assistants ($125,000 per assistant and year)
  • Staff: 25 new employees ($60,000 per employee and year)
  • Equipment: $1,000 per player and year (80 players)
  • Travel: $70,000 per game
  • Stadium costs: rent a stadium for $200,000 per game
  • Recruiting: $150,000 per year
  • Scholarships: includes tuition ($14,000 per student per year), books ($2,000 per st. per yr.) and other ($12,000 per st. per yr.)
• 40 scholarship players / 80 players in total.

Preliminary conclusion

The program is able to break even under the given assumptions.

Information that should be shared with the interviewee:

• The football team is very successful.
• It would be possible to become a member in a powerful league, but joining requires a bigger stadium.

• Potential costs drivers:
  • Location
  • Local labor availability and costs
  • Size of stadium
  • Features (playing surface, VIP seats, press box, etc.)
  • Overall quality
• Strategies to evaluate costs:
  • Investigate what other schools paid
  • Contact contractors
  • Contact professional teams (if a big stadium is built)
• A 25,000 seat stadium will be built.
• No other uses so far.

Preliminary conclusion

There would be an incremental revenue of $0.4m.

Therefore the new stadium needed to enter the better league seems feasible.

• Our client should introduce its own football team.
• The college should only build a stadium.
• The program can break even/increase revenue and will also increase the visibility of the university and enhance the college experience of its students.
• Possible risks:
  • Attendance may be lower than estimated. This could be overcome by selling the tickets already before starting the team.
  • The cost of the stadium could be higher than estimated. Other possibilities could be explored (continue to rent/partner with the city to build a multi-purpose stadium).

Next tasks:

• Verify assumptions
• Start recruiting
• Start increasing student fees
• Start talks with the city to rent a stadium.