College Football

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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.

Possible solutions:

• Use stadium for advertising.
• Work with uniform/apparel companies to get free uniforms.
• Sell television/broadcasting rights.
• Indirect increase of student enrolment
• Negotiate for higher guarantees.
• Introduce coaching compensation based on performance.
• If a stadium is built, it could be rented out for other events.
• Reduce the number of staff/employees.

More questions to be added by you, interviewer!

At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).