Like any business, generating income is a constant preoccupation for sport administrators. However, unlike businesses in other industries, the need to generate income is NOT primarily motivated by a desire for profit but rather a greater desire to improve sporting performance. Greater income allows clubs/teams to attract better coaches and players, improve sporting facilities and/or purchase better equipment to improve results.

Sports differ greatly in their ability to generate income despite there being little difference in the level of passion of the consumer for their preferred sport product.

The main factors that determine how well a sport can generate income include:

· The entertainment value of the sport

· The extent of national and international participation

· The cultural status attached to the sport

· The prominence of the sport in the school sport system

The first of these factors, entertainment value, is the main determinant of income generation. All sports are pursued passionately by their own participants but some sports have a mass appeal and are avidly followed by people who do not participate at all. This gives the sport an extra dimension that attracts the media and results in a level of consumption (as spectators) that is far greater than the actual number of participants.

Income from Sport at the Top Level

At different levels within the sport industry there are significant differences in the way that organisations generate income. Indeed, there is also a great disparity in the income generation capacity of different sports.

At the highest level, sports with high entertainment value will generate a high proportion of income from:

· television broadcasting rights

· commercial sponsorships and endorsements

· spectator fees at events

· transfer fees of professional sport players e.g. sale of players to other teams

At the highest level, sports with lesser entertainment value will tend to generate a high proportion of income from:

· government funding

· registration/capitation/affiliation fees

· commercial sponsorship

· services provided to registered participants e.g. coach education programs, merchandising

High entertainment value sports that are able to generate substantial income at the top level are often able to channel funds downwards to organisations at the grass roots level. This improves the recruitment and development of players and enables grass roots programs to flourish. But sports that have lower entertainment value generally need money to flow from the grass roots upwards to assist in the funding of the national body.

Income from Grass Roots Sport

At the grass roots level, sport bodies tend to generate income from:

· user fees e.g. membership, game fees, facility usage fees

· food and drink sales e.g. running a canteen, running a bar in the clubhouse

· clothing and equipment sales

· fundraising

· government funding of facility creation projects

Typically, the generation of income by grass roots organisations is tied to the 'throughput' of participants. At times when the number of participants is increasing, the organisation will enjoy relative prosperity and improvement in the quality of sport delivery. However, grass roots organisations can suffer a change in local demographics over time that will threaten its existence.

Irrespective of periods of growth or decline, the amount of income generated by grass roots organisations is often insufficient to meet all costs of the desired quality of sports delivery. There are always reasons for management committees of sport organisations to be very reluctant to increase fees and charges for organisation members. As a result, some aspects of good sport delivery management go unfunded such as the maintenance of sport facilities and the training of volunteers and staff.

Small Business Income from Sport

There are also small businesses in the sport industry to be considered. Such businesses include privately owned sports facilities that employ multiple employees and micro businesses that provide a small income to owner/operators who work on a part-time basis to provide service to the sport industry.

In general, small businesses in the sport industry earn income through:

· facility usage fees

· equipment hire

· coaching and other athlete development services

· event management services

· management of travel tours

· other consultancy fees e.g. sponsorship finding

Sport Organisation Bankruptcy

Sport bodies, at both ends of the spectrum, can and do fall into insolvency and bankruptcy. There are plenty of pitfalls to snare sport owners and administrators particularly when there is a tendency to believe only good things will happen. One of the most typical causes of financial problems occurs when administrators are over optimistic in their assessment of future income. The was the case with Leeds United Football Club in England. In the latter half of the 20th century, the club had three times won the title of English Football League Champions and maintained a top 5 position in many other years. But a series of business decisions, particularly the taking out of large loans hedged against future income from the UEFA Champions League that never eventuated, saw the club go into administration.

Chapter 5 Financing Sports Venues

Part I – concepts

ppt

How Much Does It Cost to Build A Sports Complex? (youtube)

6 Tips for financing and fundraising for sports facilities

https://sportsvenuecalculator.com/knowledge/sports-facility-financing/financing-sports-facilities/

Tip #1 – Leverage private funding opportunities

If the money for the construction of the floodlighting system or the artificial turf pitch cannot be raised in advance, it is possible to apply for sports facility financing.

Banks and credit unions obviously offer this option. But manufacturers and suppliers in the sports field construction industry sometimes have financing offers. They enable you to pay off the purchase and installations in monthly, quarterly or annual installments. Ask about such options as part of the bid solicitation process, as well as for their recommendations for appropriate financing providers.

Tip #2 – Financing through public-private partnership

Because of the large amount of sports space needed and the variety of sports fields used every day, it may make sense for public and private entities to partner for a sports facility. For example, perhaps a public school has large acreage but few financial resources, while a private university may have the opposite situation. In this case, the goal can be achieved for both together. Such projects are also possible with companies that are looking for corporate wellness opportunities.

Tip #3 – Setting up a fundraising campaign for a sports facility project

A fundraising campaign for the new construction, renovation or equipping of the sports facility requires time and the cooperation of many committed people. A committee should be formed for this purpose, comprised of people who are passionate about the project and have the necessary expertise. For example, someone with a close connection to sports or sports management, a lawyer, a financial expert and a person from the field of marketing/communications.

Get help from professional fundraisers

A fundraising campaign, especially when it involves high-priced projects such as the construction of an artificial turf pitch or the purchase of a floodlighting system, requires a dedicated team, good contacts, staying power and professionalism. Professional fundraising consultants may be a worthwhile option. You can search for providers, for example, at The Giving Institute (link: https://www.givinginstitute.org/) and at the Association of Professional Fundraisers ( https://afpglobal.org/).

Tip #4 – Selling sports facility sponsorships

Another option for raising revenue is selling sponsorships, such as the naming rights for the sports ground. You can sell these for a fixed period of time to generate one-time or regular income. In addition to the name of the facility, it is also possible to sell sponsorship packages that include perimeter advertising. An attractive option for individual donors who contribute a larger sum would be a plaque with their name and an acknowledgement at the entrance to the sports field or in the stands.

Tip #5 – Subletting the sports facility

If the number of hours the sports facility is used increases due to an artificial turf field or the installation of a floodlighting system, it could be rented out to other clubs, company teams or any other group willing to pay the rental fee you set. This revenue will go towards paying down the costs of construction.

Tip #6 – Collecting donations

It’s not just professional sports that excite the masses. Most sports fields are built for mass sports: small clubs, schools and universities. When it comes to securing sports facility funding through donations, they should not only define the exact goals before launching the campaign, but also be able to clearly communicate why many people will benefit.

Baylor regents OK $27.6 million bump in cost of basketball arena

Rhiannon Saegert Feb 18, 2022

https://wacotrib.com/news/local/education/baylor-regents-ok-27-6-million-bump-in-cost-of-basketball-arena/article_d29656d4-910f-11ec-bdb8-6f2d6aff543e.html

Baylor, city of Waco plan downtown partnership with $185 basketball, concert venue in Foster (video)

A rendering shows the Foster Pavilion and plaza off University Parks Drive. The new $212.6 million price tag for the facility is up from an initial estimate of $185 million.

Baylor University regents voted Friday to increase spending by $27.6 million for the school’s new basketball arena to keep up with rising construction costs.

The board approved a $212.6 million price tag for construction of the Paul and Alejandra Foster Pavilion along the Brazos River on the downtown side of Interstate 35. The project initially was projected to cost $185 million when it was announced in December. Board Chair Mark Rountree and Baylor President Linda Livingstone said the pandemic-related nationwide increase in costs for building materials and labor is to blame, and the project is still on track for a June groundbreaking.

“Labor is an issue,” Livingstone said. “It’s really tight in Waco to get labor, particularly for a project that large … but also some of the raw material. Steel, wood and roofs are really hard to get and expensive. It’s multiple aspects of the construction project that have added cost over time.”

Rountree said the board also spent a “considerable amount of time” discussing recommendations from the Commission on Historic Campus Representations, first with Sasaki, the campus design firm charged with creating a master plan to implement the recommendations, and then with Baylor’s Campus Experience Team.

“It was really more discussion of possibilities, vision for some of the main spaces on campus, exploring ways (to) make them more welcoming, inviting and then frankly, just more frequently used by our students,” Rountree said.

In 2020 the commission submitted a report on the university’s historic connections to slavery and racism, and recommended changing, moving or adapting monuments, memorials and artifacts tied to that history and adding more context and displays to tell the university’s full racial history.

“We had great discussions in visioning possibilities along those lines,” Rountree said.

He said the board will consider adopting a master plan for those changes during its next meeting, in May.

Livingstone said the academic affairs and student life committees spent time during Friday’s meeting discussing support programs and the student experience at Baylor.

“We’ve looked at the progress we have in place for our students that are really looking for kind of the above and beyond experience, whether that’s … the national and international scholarship opportunities that we have,” Livingstone said.

Students of color also met with the regents to discuss their experiences on campus.

“We are also continuing to focus on some of the populations of our students on our campus that we need to understand better and ensure that we’re supporting in the right way,” Livingstone said.

The board also passed a resolution thanking Baylor’s faculty for their role in the university’s designation as a top-tier research university.

“We wanted to say that thank you publicly,” Rountree said.

“We wanted to reward and acknowledge that extraordinary work and we hope that we can partner with Dr. Livingstone and her team and all of our faculty to provide support in ways in which that great work can continue as we continue to aspire to even greater heights as a research university, while at the same time enhancing and deepening our transformative undergraduate teaching experience for our students,” he said.

The regents also took time to celebrate reaching and surpassing the Give Light campaign’s $1.1 billion fundraising goal and the university’s athletic success. Livingstone said hopeful candidates have submitted more than 40,000 applications for next year so far.

“It’s just a sign of the tremendous interest there is in Baylor and really a testament to the great work that our faculty and staff are doing to support our students,” Livingstone said.

Part II - Time value of Money

ppt

The time value of money - German Nande (video)

Tutoring of Time Value of Money calculation in Excel （video）

Chapter 5 in class exercise

NPV NFV calculator

www.jufinance.com/nfv

Time Value of Money Calculator

https://www.jufinance.com/tvm/

Chapter 5 Homework (due with the first mid term)

Homework video #1 on 1/20/2023

Homework video #2 on 1/27/2023

1. You deposit $5,000 in a saving account at 10% compounded annually. How much is your first year interest? How much is your second year interest? (500, 550)

2. What is the future value of $5,000 invested for 3 years at 10% compounded annually? ( 6,655)

3. You just bought a TV for $518.4 on credit card. You plan to pay back of $50 a month for this credit card debt. The credit card charges you 12% of interest rate on the monthly basis. So how long does it take to pay back your credit card debt? (11 months)

4. You are going to deposit certain amount in the next four years. Your saving account offers 5% of annual interest rate.

First year: $800

Second year: $900

Third year: $1000

Fourth year: $1200.

How much you can withdraw four years later? (4168.35)

5. You are going to deposit certain amount in the next four years. Your saving account offers 5% of annual interest rate.

First year: $800

Second year: $900

Third year: $1000

Fourth year: $1200.

How much is the lump sum value as of today (NPV)? (3429.31)

6. Ten years ago, you invested $1,000. Today it is worth $2,000. What rate of interest did you earn? (7.18%)

7. What is the effective annual rate if a bank charges you 12 percent compounded monthly? (12.68%)

8. Your father invested a lump sum 16 years ago at 8% interest for your education. Today, that account worth $50,000.00. How much did your father deposit 16 years ago? ($14594.52)

9. You are borrowing $300,000 to buy a house. The terms of the mortgage call for monthly payments for 30 years at 3% interest. What is the amount of each payment? ($1264.81)

10. What is the future value of weekly payments of $25 for six years at 10 percent? ($10,673.90)

Summary of math and excel equations

Math Formula

FV = PV *(1+r)^n

PV = FV / ((1+r)^n)

N = ln(FV/PV) / ln(1+r)

Rate = (FV/PV)^1/n -1

Annuity:

N = ln(FV/C*r+1)/(ln(1+r))

N = ln(1/(1-(PV/C)*r)))/ (ln(1+r))

Excel Formulas

To get FV, use FV function.

=abs(fv(rate, nper, pmt, pv))

To get PV, use PV function

= abs(pv(rate, nper, pmt, fv))

To get r, use rate function

= rate(nper, pmt, pv, -fv)

To get number of years, use nper function

= nper(rate, pmt, pv, -fv)

To get annuity payment, use PMT function

= pmt(rate, nper, pv, -fv)

To get Effective rate (EAR), use Effect function

= effect(nominal_rate, npery)

To get annual percentage rate (APR), use nominal function

= nominal(effective rate, npery)

Chapter 2: Ownership and the Emergence of Team Sports

Ppt

Key points:

· The socializing aspect of sport to reduce labor unrest was at the heart of the interest in creating factory and community teams in North America and Europe.

· These teams created diversions from the dreariness of manufacturing jobs.

· The role of sport in maintaining and advancing social stability meant that governments were often eager to ensure that teams enjoyed a special status or were treated differently than other businesses.

· The three most common forms of business ownership structures are sole proprietorships, partnerships, and corporations.

Sole Proprietorship

Video: Business Organizations: Sole Proprietorship

· A single owner has the opportunity to utilize the team as he or she envisions and can fit the team into a long-term strategic plan for a conglomerate of firms.

· A sole proprietor has unlimited liability, meaning the owner’s total wealth is at risk to pay off creditors.

Partenrships

Video: Business Organizations: Partnerships

· With several investors involved, any needs for operating cash are spread across more individuals.

· In addition, the extraordinary cost of acquiring a team sometimes requires a group of investors to pool their resources.

· One of the members of the syndicate is designated as the managing partner who essentially is the “owner” for all matters involving the team and its relationship with the league.

· The most obvious drawback to having a team owned by two or more people is that there might be disagreements among the owners.

· The advantage of a partnership is that any risks are shared.

Business Organizations: Corporations

Video: Business Organizations: Corporations

· A board of directors oversees the work of a corporation.

· Shareholders – those who own stock in the corporation – each own a portion of the corporation (measured by the proportion of a firm’s total shares that they own).

· Stockholders benefit by receiving profits in the form of dividends from the corporation.

· The benefit of a corporation over other ownership structures is that it limits owner liability.

For discussion: Which is the above is the major ownership structure of NFL?

https://www.sportico.com/leagues/football/2022/what-does-it-take-to-be-an-nfl-owner-franchise-value-succession-1234688286/

For discussion:

· Green Bay Packers Ownership Explained

· Why Is There An NFL Team In... Green Bay?

What is the ownership structure of Green Bay Packers?

College Sports Ownership

The Role of Intercollegiate Athletics in the Mission of the University (video)

· The university’s athletic director (AD) oversees each team’s finances, even though the college or university is ultimately responsible.

o The AD is the chief operating officer of each of the university’s athletic teams and reports to the university’s president.

· A university’s athletic budget is typically around 5–10 percent of the university’s total budget

o This means that any financial decisions made by the athletic department should consider the impact on the rest of the institution, which may be substantial.

· The importance of college sport to different stakeholders makes its governance and oversight a challenging administrative task.

§ Students, alumni, faculty, coaches, and boosters each have their own visions of the role and importance of collegiate sport.

· The unique “ownership” and stakeholder groups of college sport do allow for different types of financing.

· alumni and other friends of the university and its athletic department can frequently be counted upon to make donations to support teams and their operations.

· This revenue stream complements the traditional sources of income that include ticket sales, media rights etc.

Why would universities make the decision to spend money for intercollegiate sport?

· Proponents point to the benefits athletics provide for campus life and the college experience.

· games create an opportunity to “pitch” donors.

· there will be far more students applying for admission if a university has a great campus life and sport programs.

Those who are opposed to a subsidy for university athletics

· focus on the problems generated when coaches seek to win and attract athletes regardless of their academic prowess.

· universities were originally created to provide educational opportunities, and athletic programs do not contribute to schools’ pursuit of the true objective of higher education.

· universities use the excess revenue produced by football and basketball to fund teams that attract far fewer fans

Homework of chapter 2 (due with the first mid term exam)

· What are the three major formats of ownership structure?

· Why would universities make the decision to spend money for intercollegiate sport? What is your opinion?

WHAT DOES IT TAKE TO BECOME AN NFL OWNER?

Eric Jackson September 13, 2022 4:55am

https://www.sportico.com/leagues/football/2022/what-does-it-take-to-be-an-nfl-owner-franchise-value-succession-1234688286/

As valuations steadily increase, interested prospective buyers not only face steep financial requirements but need deep pockets to enter the NFL collective.

There may not be a greater luxury for a football fan than owning an NFL franchise.

For some controlling owners, an NFL team is just another asset in a vast portfolio. But for other owners, it’s a family affair, attached for generations.

NFL team valuations continue to soar because the average NFL ownership tenure lasts 40 years, and a franchise only comes on the market about every four years. So when they do hit the market, the sale always garners attention, with the nation’s wealthiest usually among the bidders.

Walmart heir Rob Walton bought the Denver Broncos for a record $4.65 billion in June. His addition to the group of NFL owners has driven the combined net worth of all 31 principal owners to roughly $200 billion, according to multiple reports. As valuations steadily increase, interested prospective buyers not only face steep financial requirements but need deep pockets to enter the NFL collective. Very deep.

So what does it take to be an NFL owner?

Requirements:

The NFL requires an incoming principal owner or general partner to hold at least 30% of the equity. However, that minimum alone is unlikely to score a team, because it would put more pressure on limited partners. If you can’t write the check for 50%, then you might want to try to purchase another asset.

The league now allows up to $1 billion in debt for a team acquisition, up from $500 million, but a new owner must meet certain terms and stipulations in order to be offered a higher ceiling.

For teams that have been owned by the same owner for at least 10 years, the threshold in the team that a controlling owner needs is 1%, and families must still own 30% of equity. NFL owners voted to lower this threshold from 5% to 1% this past spring. This benefits teams such as the New York Giants and Chicago Bears, with longtime family ownership.

No more than 25 people, including the general partner, can be in one franchise ownership group.

A succession plan is required to purchase an NFL team and is typically updated on an annual basis. And of course, there’s an extensive background check, so no skeletons can be left in the closet.

Twenty-four of the 32 NFL owners must approve the transaction. A buyer and a seller may agree on a final price, but the deal can’t be finalized until approved by other members.

Restrictions:

The NFL doesn’t allow nonprofit organizations, corporations or private institutions, such as private equity firms, to purchase minority or majority stakes in franchises. The Green Bay Packers are the league’s lone nonprofit, publicly owned team as they were grandfathered in before the current ownership structure was in place. This list also includes crypto collectives; a decentralized autonomous organization (DAO), which had the support of Colorado Gov. Jared Polis, was interested in purchasing the Broncos before they were bought by Walton’s ownership group.

The NFL scrapped a rule in 2018 that prevented controlling owners from owning non-NFL teams in markets containing other NFL teams. This presumably was meant to avoid competition with other major sports leagues but also for NFL owners not to compete with each other for local ticket sales, sponsorships and other revenue streams, which they ultimately share under NFL rules. That option is now on the table, a move that widens the pool for potential wealthy buyers as valuations continue to skyrocket.

The NFL, after all, isn’t a private company. It’s a glamorized trade association, financially supported by its 32 members. It’s an exclusive club that even the world’s richest don’t get the chance to be part of. So, if you build the relationships and understand the process, you can join too. Just don’t forget the cheddar.

Who Owns The NFL? (2023 Updated)

August 26, 2022 By William Butterworth

https://www.thecoldwire.com/who-owns-the-nfl/

The NFL is a professional football league that’s made up of two different conferences.

It’s in charge of setting the rules of the game, enforcing them, and ensuring that fans get to experience incredible games from their favorite teams.

Considering that the NFL is in charge of important decisions that dictate the game of football, you may wonder who is actually making those decisions

Here’s a guide on who owns the NFL and how you can join the organization’s ranks.

· No one person owns the NFL.

· Instead, the owners are all the owners of the teams.

· Some teams have the same owner.

· As in, one person owns several teams.

· Other teams, like the Green Bay Packers, are owned by the public.

Here’s a list of the team owners who comprise the ownership of the NFL:

Shahid Khan of the Jacksonville Jaguars

Jimmy and Dee Haslam of the Cleveland Browns

Malcolm Glazer of the Tampa Bay Buccaneers

Virginia Marion Halas McCaskey of the Chicago Bears

Gayle Benson of the New Orleans Saints

Sheila Ford Hamp of the Detroit Lions

Denise York of the San Francisco 49ers

Amy Adams Strunk of the Tennessee Titans

Stan Kroenke of the St. Louis Rams ((Now Los Angeles Rams)

Zygi Wilf of the Minnesota Vikings

Roger Goodell of the Pittsburgh Steelers

Dan Rooney of the Pittsburgh Steelers

Art Rooney II of the Pittsburgh Steelers

Dean Spanos of the San Diego Chargers

Kim Pegula of the Buffalo Bills

David Tepper of the Carolina Panthers

Jody Allen of the Seattle Seahawks

Robert Kraft of the New England Patriots

Steven Bisciotti of the Baltimore Ravens

Clark Hunt of the Kansas City Chiefs

Jerry Jones of the Dallas Cowboys

Jim Irsay of the Indianapolis Colts

Arthur Blank of the Atlanta Falcons

Jeffrey Lurie of the Philadelphia Eagles

Mike Brown of the Cincinnati Bengals

John Mara of the New York Giants

Green Bay Packers, Inc of the Green Bay Packers

Stephen Ross of the Miami Dolphins

Walton-Penner Group of the Denver Broncos

Woody Johnson of the New York Jets

Janice McNair of the Houston Texans

Daniel Snyder of the Washington Commanders

Mark Davis of the Oakland Raiders

Michael Bidwell of the Arizona Cardinals

Chapter 3

Ppt

Explaining 4 Financial Statements (youtube)

· Financial statements provide the raw data that is vital to understanding the financial health and growth of a firm.

· It is understandably difficult to obtain financial data on teams.

· Publicly traded companies, like those on the New York Stock Exchange or the NASDAQ, are required to periodically file with public agencies four different financial statements:

o balance sheets

o income statements

o statements of cash flow

o statements of retained earnings

· Financial statements should be used to examine the health of a company, identify its financial shortcomings, and focus its leaders’ attention on remedial steps

· In the case of collegiate sport, the athletic departments of public universities must disclose their financial documents.

· In professional sport, however, it is far more difficult to determine the strength of a team’s finances.

· Although teams do give those financial statements to their league, privately held teams are not required to file these documents with regulatory agencies.

Balance Sheet

Income Statements

Statement of Cash Flows

Cash flow animation (video)

Here is the cash flow statement of home depot as of 2/2/2014.

In Millions of USD (except for per share items)	52 weeks ending 2014-02-02
Net Income/Starting Line	5,385.00
Depreciation/Depletion	1,757.00
Amortization	-
Deferred Taxes	-31
Non-Cash Items	228
Changes in Working Capital	289
Cash from Operating Activities	7,628.00
Capital Expenditures	-1,389.00
Other Investing Cash Flow Items, Total	-118
Cash from Investing Activities	-1,507.00
Financing Cash Flow Items	-37
Total Cash Dividends Paid	-2,243.00
Issuance (Retirement) of Stock, Net	-8,305.00
Issuance (Retirement) of Debt, Net	3,933.00
Cash from Financing Activities	-6,652.00
Foreign Exchange Effects	-34
Net Change in Cash	-565
Cash Interest Paid, Supplemental	639
Cash Taxes Paid, Supplemental	2,839.00

Discussion:

1. What are the three components of cash flow statement?

2. What does net change in cash mean?

Ratio Analysis

We will focus on the following several ratios:

P/E (price per share/earning per share, P/E < 15, a bargain)

PEG (PE ratio / growth rate. PEG<1, undervalued stock) (optional)

EPS (earning per share)

ROA (Return on Asset = NI/TA, ROA>10% should be a nice benchmark)

ROE (return on equity = NI/TE, ROE>15% should be good)

Current ratio (liquidity measure. = CA/CL, has to be greater than one)

Quick ratio (liquidity measure. = (CA-Inventory)/CL, has to be greater than one)

Debt Ratio (Leverage measure. = TD/TA, need to be optimal, usually between 30% and 40%)

Gross margin (profit measure. = EBITDA/sales, or = Gross margin/sales, has to be positive)

Operating margin (profit measure. = EBIT/sales, or = operating income/sales, has to be positive)

Net profit margin (profit measure. = NI/sales, has to be positive)

Payout ratio (= dividend / NI, measures distribution to shareholders. No preferences. Usually value stocks have high payout ratio; Growth stocks have low payout ratio).

Total assets turnover = Sales/TA

Inventory turnover ratio = Sales/Inventory

Fixed assets turnover ratio = Cost of goods sold / Fixed assets

Chapter 3 HW (due with the second mid-term exam)

Homework plus first term project video (2/24/2023)

1. Firm AAA just showed how it operated in the prior year.

Sales = $2,000; Cost of Goods Sold = $1,000; Depreciation Expense = $200; Administrative Expenses = $180; Interest Expense = $30; Marketing Expenses = $50; and Taxes = $200. Prepare income statement

2. A firm has $2000 in current assets, $3000 in fixed assets, $300 in accounts receivables, $300 accounts payable, and $800 in cash. Sales=$10,000. Net income = $1,000. Total debt = 2,000. Dividend = $500.

· What is the amount of the inventory? (hint: 900)

· What is the amount of total assets? (hint: $5,000).

· Total equity?

· Long term debt?

· Retained earning?

· Current ratio?

· Quick Ratio?

· How much is the asset turnover ratio?

· Inventory turnover ratio?

· Profit margin?

· Debt ratio?

· ROA?

· ROE?

· Dividend payout ratio?

3. Andre's Bakery has sales of $100,000 with costs of $50,000. Interest expense is $20,000 and depreciation is $10,000. The tax rate is 35 percent. What is the amount of tax paid? (hint: 7000)(hint: tax = taxable income * tax rate and taxable income = EBT)

4. Andre's Bakery has sales of $100,000 with costs of $50,000. Interest expense is $20,000 and depreciation is $10,000. The tax rate is 35 percent. The company also paid $3,000 for dividend. What is the retained earning? (hint: retained earning = net income - dividend)(hint: 10,000)

5. A firm has $500 in inventory, $1,860 in fixed assets, $190 in accounts receivables, $210 in accounts payable, and $70 in cash. What is the amount of the current assets? (760)

Balance Sheet Template

http://www.jufinance.com/10k/bs

Income Statement Template

http://www.jufinance.com/10k/is

Cash flow template

http://www.jufinance.com/10k/cf

Ratio Analysis (plus balance sheet, income statement)

https://www.jufinance.com/ratio

In class Exercise

******* Part I: Balance Sheet and Income Statement **************

Home Depot (Ticker in the market: HD) reported the following information for the year ended January 30^th, 2011 (expressed in millions).

Sales: $67,977

Cost of goods sold: $44,693

Marketing, general and administrative expenses: $15,885

Depreciation expenses: $1,616

Interest expense: $530

Tax rate: 36.70%

Number of shares outstanding: 1,623

Dividends paid to stockholders: $1,569.

1) Use the above information to try to prepare the income statement of Home Depot for the year ended January 30^th, 2011

Home Depot (Ticker in the market: HD) reported the following information for the year ended January 30^th, 2011 (expressed in millions).

Cash: $545

Accounts receivables: $1,085

Inventories: $10625

Other current assets: $1,224

Gross fixed assets: $38,471

Accumulated depreciation: $13,411

Other fixed assets: $1,586

Accounts payable: $9,080

Short term notes payable: $1,042

Long term debt: $11,114

Total common stock: $3,894

Retained earnings: $14,995

2) Use the above information to try to prepare the balance sheet of Home Depot for the year ended January 30^th, 2011

3) Calculate the following ratios:

· ROA (Return on Asset = NI/TA, ROA>10% should be a nice benchmark)

· ROE (return on equity = NI/TE, ROE>15% should be good)

· Current ratio (liquidity measure. = CA/CL, has to be greater than one)

· Quick ratio (liquidity measure. = (CA-Inventory)/CL, has to be greater than one)

· Debt Ratio (Leverage measure. = TD/TA, need to be optimal, usually between 30% and 40%)

· Gross margin (profit measure. = EBITDA/sales, or = Gross margin/sales, has to be positive)

· Operating margin (profit measure. = EBIT/sales, or = operating income/sales, has to be positive)

· Net profit margin (profit measure. = NI/sales, has to be positive)

· Payout ratio (= dividend / NI, measures distribution to shareholders. No preferences. Usually value stocks have high payout ratio; Growth stocks have low payout ratio).

· Total assets turnover = Sales/TA

· Inventory turnover ratio = Sales/Inventory

· Fixed assets turnover ratio = Cost of goods sold / Fixed assets

Class video 2/8/2023

First Midterm Exam – 2/17/2023 (Friday, in class)

First Midterm Exam Study Guide

· Close book close notes.

· A calculator is not necessary.

Multiple Choice Questions (40*2.5=100; Five questions will not receive a grade.)

1. the 6 tips for financing and fundraising for sports facilities

2. What are the FV, PV, PMT? (Conceptual questions)

3. What are NPV? NFV?

4. What is sole proprietor? Partner? Corporation?

5. The ownership of NFL teams

6. How do college sports get funded?

7. What are the four basic financial statements?

8. What is balance sheet? Income statement? Cash flow statement?

9. What is EBIT? EBITDA?

10. What is PE ratio?

11. What is profit margin? Operating margin? Debt ratio? ROE? ROA?

12. What is current ratio? Quick ratio?

Chapter 5-3 Bond FINANCING

Ppt

Yield Curve http://finra-markets.morningstar.com/BondCenter/Default.jsp 2/17/2023

Understanding the yield curve (youtube)

Balance Sheet of WalMart https://www.nasdaq.com/market-activity/stocks/wmt/financials

For discussion:

· What is this “long term debt”?

· Who is the lender of this “long term debt”?

So this long term debt is called bond in the financial market. Where can you find the pricing information and other specifications of the bond issued by WMT?

Investing Basics: Bonds(video)

FINRA – Bond market information

http://finra-markets.morningstar.com/BondCenter/Default.jsp

Chapter 7 Study guide

1. Go to http://finra-markets.morningstar.com/BondCenter/Default.jsp , the bond market data website of FINRA to find bond information. For example, find bond sponsored by Wal-mart

Or, just go to www.finra.org, è Investor center è market data è bond è corporate bond

Corporate Bond

§ Understand what is coupon, coupon rate, yield, yield to maturity, market price, par value, maturity, annual bond, semi-annual bond, current yield.

Refer to the following bond at http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C104227&symbol=WMT.GP

3. 3. Understand how to price bond

Bond price = abs(pv(yield, maturity, coupon, 1000)) ------- annual coupon

Bond price = abs(pv(yield/2, maturity*2, coupon/2, 1000)) ------- semi-annual coupon

Also change the yield and observe the price changes. Summarize the price change pattern and draw a graph to demonstrate your findings.

Again, when yield to maturity of this semi_annual coupon bond is 3%, how should this WMT bond sell for?

4. Understand how to calculate bond returns

Yield to maturity = rate(maturity, coupon, -market price, 1000) – annual coupon

Yield to maturity = rate(maturity*2, coupon/2, -market price, 1000)*2 – semi-annual coupon

For example, when the annual coupon bond is selling for $1,200, what is its return to investors?

For example, when the semi-annual coupon bond is selling for $1,200, what is its return to investors?

5. Current yield: For the above bond, calculate current yield.

6. Zero coupon bond: coupon=0 and treat it as semi-annual coupon bond.

Example: A ten year zero coupon bond is selling for $400. How much is its yield to maturity?

A ten year zero coupon bond’s yield to maturity is 10%. How much is its price?

7. Understand what is bond rating and how to read those ratings. (based on z score. What is z score?)

a. Who are Moody, S&P and Fitch?

b. What is IBM’s rating?

c. Is the rating for IBM the highest?

d. Who earned the highest rating?

8. Understand the cash flows from a bond as a bond investor

For example, a five year, annual coupon bond, with 5% coupon rate. Its cash flows are as follows.

Chapter 5-3 (bond pricing) Home Work (due with the second mid-term)

Homework Video on 3/3/2023

1) IBM 5 year 2% annual coupon bond is selling for $950. How much this IBM bond’s YTM? 3.09%

2) IBM 10 year 5% annual coupon bond offers 8% of return. How much is the price of this bond? 798.7

3) Collingwood Homes has a bond issue outstanding that pays an 8 percent coupon and matures in 18 years. The bonds have a par value of $1,000 and a market price of $940. Interest is paid annually. What is the yield to maturity? (8.67%)

4) Collingwood Homes has a bond issue outstanding that pays an 8 percent coupon and matures in 18 years. The bonds have a par value of $1,000 and a yield of maturity of 5%. Interest is paid annually. What is the market price of this bond? (1,350.69)

Bond Pricing Formula (FYI)

Bond Pricing Excel Formula

To calculate bond price in EXCEL (annual coupon bond):

Price=abs(pv(yield to maturity, years left to maturity, coupon rate*1000, 1000)

To calculate yield to maturity (annual coupon bond)::

Yield to maturity = rate(years left to maturity, coupon rate *1000, -price, 1000)

To calculate bond price (semi-annual coupon bond):

Price=abs(pv(yield to maturity/2, years left to maturity*2, coupon rate*1000/2, 1000)

To calculate yield to maturity (semi-annual coupon bond):

Yield to maturity = rate(years left to maturity*2, coupon rate *1000/2, -price, 1000)*2

Bond Calculator

The Basics of Bonds

By TIM PARKER Updated July 31, 2022 Reviewed by KHADIJA KHARTIT

https://www.investopedia.com/financial-edge/0312/the-basics-of-bonds.aspx#:~:text=Bonds%20are%20debt%20securities%20issued,also%20be%20used%20as%20collateral.

Bonds represent the debts of issuers, such as companies or governments. These debts are sliced up and sold to investors in smaller units. For example, a $1 million debt issue may be allocated to one-thousand $1,000 bonds. In general, bonds are considered to be more conservative investments than stocks, and are more senior to stocks if an issuer declares bankruptcy. Bonds also typically pay regular interest payments to investors, and return the full principal loaned when the bond matures. As a result, bond prices vary inversely with interest rates, falling when rates go up and vice-versa.

The bond markets are a very liquid and active, but can take second seat to stocks for many retail or part-time investors. The bond markets are often reserved for professional investors, pension and hedge funds, and financial advisors, but that doesn't mean that part-time investors should steer clear of bonds. In fact, bonds play an increasingly important part in your portfolio as you age and, because of that, learning about them now makes good financial sense. In fact having a diversified portfolio of stocks and bonds is advisable for investors of all ages and risk tolerance.

KEY TAKEAWAYS

· Bonds are debt securities issued by corporations, governments, or other organizations and sold to investors.

· Backing for bonds is typically the payment ability of the issuer to generate revenue, although physical assets may also be used as collateral.

· Because corporate bonds are typically seen as riskier than government bonds, they usually have higher interest rates.

· Bonds have different features than stocks and their prices tend to be less correlated, making bonds a good diversifier for investment portfolios.

· Bonds also tend to pay regular and stable interest, making them well-suited for those on a fixed-income.

What Is a Bond?

When you purchase a stock, you're buying a microscopic stake in the company. It's yours and you get to share in the growth and also in the loss. On the other hand, a bond is a type of loan. When a company needs funds for any number of reasons, they may issue a bond to finance that loan. Much like a home mortgage, they ask for a certain amount of money for a fixed period of time. When that time is up, the company repays the bond in full. During that time the company pays the investor a set amount of interest, called the coupon, on set dates (often quarterly).

The main types of bonds are:

Government

Corporate

Municipal

Mortgage

Treasury

Government bonds are generally the safest, while some corporate bonds are considered the most risky of the commonly known bond types.

For investors, the biggest risks are credit risk and interest rate risk. Since bonds are debts, if the issuer fails to pay back their debt, the bond can default. As a result, the riskier the issuer, the higher the interest rate will be demanded on the bond (and the greater the cost to the borrower). Also, since bonds vary in price opposite interest rates, if rates rise bond values fall.

Credit Ratings

Bonds are rated by popular agencies like Standard and Poor's, and Moody's. Each agency has slightly different ratings scales, but the highest rating is AAA and the lowest rating is C or D, depending on the agency. The top four ratings are considered safe or investment grade, while anything below BBB for S&P and Baa3 for Moody's is considered "high yield" or "junk" bonds.

Although larger institutions are often permitted to purchase only investment grade bonds, high yield or junk bonds have a place in an investor's portfolio as well, but may require more sophisticated guidance. Generally, governments have higher credit ratings than companies, and so government debts are less risky and carry lower interest rates.

Pricing Bonds

Bonds are generally priced at a face value (also called par) of $1,000 per bond, but once the bond hits the open market, the asking price can be priced lower than the face value, called a discount, or higher than the face value, called premium.

If a bond is priced at a premium, the investor will receive a lower coupon yield, because they paid more for the bond. If it's priced at a discount, the investor will receive a higher coupon yield, because they paid less than the face value.

Bond prices tend to be less volatile than stocks and they often responds more to interest rate changes than other market conditions. This is why investors looking for safety and income often prefer bonds over stocks as they get closer to retirement. A bond's duration is its price sensitivity to changes in interest rates—as interest rates rise bond prices fall, and vice-versa. Duration can be calculated on a single bond or for an entire portfolio of bonds.

Bonds and Taxes

Because bonds pay a steady interest stream, called the coupon, owners of bonds have to pay regular income taxes on the funds received. For this reason, bonds are best kept in a tax sheltered account, like an IRA, to gain tax advantages not present in a standard brokerage account.

If you purchased a bond at a discount, you'll be required to pay capital gains tax on the difference between the price you paid and the bond's par value, normally $1,000 per bond, but not until the bond matures and you receive the face value of the bond.

Issuers of bonds, on the other hand, such as corporations, often receive favorable tax treatment on interest, which they can deduct from their taxes owed.

Local governments and municipalities may issue debt too, known as municipal bonds. These bonds are attractive to some investors as the interest payments to investors can be tax-free at the local, state, and/or federal level.

Issuers of Bonds

There are four primary categories of bond issuers in the markets. However, you may also see foreign bonds issued by corporations and governments on some platforms.

Corporate bonds are issued by companies. Companies issue bonds—rather than seek bank loans for debt financing in many cases—because bond markets offer more favorable terms and lower interest rates.

Municipal bonds are issued by states and municipalities. Some municipal bonds offer tax-free coupon income for investors.

Government (sovereign) bonds such as those issued by the U.S. Treasury. Bonds (T-bonds) issued by the Treasury with a year or less to maturity are called “Bills”; bonds issued with 1 to 10 years to maturity are called “notes”; and bonds issued with more than 10 years to maturity are called “bonds”. The entire category of bonds issued by a government treasury is often collectively referred to as "treasuries." Government bonds issued by national governments may be referred to as sovereign debt. Governments may also offer inflation-protected bonds (e.g. TIPS) as well as small denomination savings bonds for ordinary investors,

Agency bonds are those issued by government-affiliated organizations such as Fannie Mae or Freddie Mac.

How to Buy Bonds

Most bonds are still traded over the counter (OTC) through electronic markets. For individual investors, many brokers charge larger commissions for bonds, since the market isn't as liquid and still requires calling bond desks in many buy and sell scenarios. Other times, a broker-dealer may have certain bonds in their inventory and may sell to their investors directly from their inventory.

You can often purchase bonds through your broker's website or call with the bond's unique ID number, called the CUSIP number, to get a quote and place a "buy" or "sell" order.

NFL increases debt limit for purchasing controlling interest in teams (FYI)

Posted by Mike Florio on July 28, 2021, 5:48 AM EDT

https://jacksonvilleu.instructure.com/

Franchise values are increasing, and they’ll continue to increase. That makes it harder to find persons who can afford to purchase NFL teams.

To make it a little easier, the league has relaxed its rules for borrowing when buying the controlling interest in a team.

As reported by Mike Ozanian of Forbes, and confirmed by PFT, the NFL has increased the debt limit from $500 million to $1 billion, for someone purchasing controlling interest in a franchise. (To get controlling interest, an owner must hold at least 30 percent of the team.)

A source with knowledge of the situation tells PFT that, in order to qualify for the higher debt ceiling, the purchaser must meet certain conditions and agree to certain timelines for getting the debt down to $500 million.

Franchise values are expected to skyrocket in the coming years, thanks to legalized sports betting. Some think the average, run of the mill teams will be worth $8 billion to $10 billion. This dynamic necessarily limits the universe of qualified buyers.

Jaguars’ $120 million football performance center approved

By Mike Mendenhall | 9:50 p.m. August 24, 2021

https://www.jaxdailyrecord.com/news/2021/aug/24/jaguars-dollar120-million-football-performance-center-approved/

The City Council unanimously approved a partnership with the Jacksonville Jaguars to build the team’s proposed $120 million football performance center.

Council approved a bill 17-0 on Aug. 24 to authorize Mayor Lenny Curry’s administration to borrow $60 million to help finance the NFL team’s proposed 127,087-square-foot practice and training facility and to amend the Jaguars’ stadium lease with the city.

The Jaguars would pay for the other $60 million, according to the city’s proposed economic development agreement for the project.

The Jaguars will lease the performance center from the city. It will be northwest of TIAA Bank Field.

According to Ordinance 2021-0495, the Jaguars will move team offices; an equipment room; weight training; and medical facilities from the stadium to the performance center.

The facility also will have an indoor practice field; two outdoor natural-grass fields with about 2,300 bleacher seats; a team store; and concession facilities.

A Council Auditor’s Office analysis of the deal shows the city will pay $3.5 million annually for 30 years on the $60 million in debt proposed to pay for the public portion of the project. That totals $105 million.

Finance Committee Chair Ron Salem said Aug. 17 that the city’s maintenance and facilities expenses will be reduced by about $1.317 million annually through 2030 because the team will be responsible for those costs.

The Jaguars agreed to a 30-year lease for the performance center with two 10-year extension options, but it does not extend the NFL team’s stadium lease past its expiration in 2030.

Jaguars President Mark Lamping said Aug. 17 that he expects construction on the performance center to be completed before the first game of the 2023 NFL season. The agreement says it must be completed by Dec. 31, 2025.

The deal also would allow the city Parks, Recreation and Community Services Department to use and program the Jaguars’ existing covered flex field and practice facility.

The committees amended the bill to require the Jaguars to pay for 75% of the flex field’s capital maintenance needs because the team intends to use it for game day activities and youth sports camps.

The city would contribute 25% of the cost, the amendment states.

The performance center design needs final approval from the Downtown Development Review Board before the Jaguars can break ground.

Council members Tommy Hazouri and LeAnna Cumber were absent for the vote.

Hazouri’s absence was due to hospitalization.

His executive council assistant issued a news release during the meeting.

“Long time beloved Councilman Tommy Hazouri has been hospitalized due to complications from his lung transplant surgery last year. While he is being treated at The Mayo Clinic, the Hazouri family asks that you keep Tommy in your prayers and that their privacy be respected during this time.”

Chapter 6: Teams, Venues, and Real Estate Development

Ppt

The Increasing Value of Downtown Locations for Sport Facilities

· First, arenas, ballparks, and stadia are often located at the nexus of many transit systems, meaning it is easy to get to and from the area from many parts of a region.

· Second, sport facilities now routinely include amenities that are available before, during, and after games and events, and in some areas on non-event days.

· Third, horizontal integration of sport with entertainment operations is now increasingly popular.

· Fourth, sport has sustained its popularity across several decades.

Jaguars pick design firm for stadium upgrades that will include shade roof, reduced seating (video)

https://www.news4jax.com/news/local/2023/01/04/jaguars-pick-design-firm-for-stadium-upgrades-will-include-shade-roof-reduced-seating-capacity-report/

The Jacksonville Jaguars have selected global design firm HOK as their consultant for the project, HOK confirmed to News4JAX.

On Thursday, the Jaguars published similar information in a post on the 1stDownTownJacksonville site. Among the information released on Thursday, the team said, “HOK’s initial concepts of the new home for the Jaguars and other world-class entertainment events embraced adaptive reuse and prioritized various features our fans and stakeholders requested, namely shade over all seats, improved airflow, wider concourses, unique fan amenities, flexible capacity and rain protection to help attract other major non-football events to Jacksonville.”

Jaguars president Mark Lamping said, “While much work remains to be done, we are pleased to have completed one more step in what remains a long but manageable journey.”

The post also stated:

“When we have a more definitive renovation plan, construction timelines and cost estimates can be determined. At that point, we will be better positioned to begin a productive dialogue about a partnership structure among the Jaguars and the City of Jacksonville. Consistent with NFL rules and regulations, any Jaguars stadium lease extension will require the approval of the National Football League and 75 percent of its teams.”

According to a recent report published by industry insider Venues Now, the preliminary concepts include a shade roof covering the seating bowl and downsizing from about 67,000 to roughly 57,500-60,000 fixed seats, but no contract had been signed as of last week.

HOK is the same firm behind the renovations at the Miami Dolphins stadium and the new Atlanta Falcons stadium. HOK was competing against seven other firms.

“We thought they did an exceptional job of understanding this building as it currently exists and addressing the many issues in a very creative way,” Lamping told Venues Now. “Everybody looked at the roof a little differently. All the submissions were really strong, but we felt HOK was a little bit better.”

HOK told News4JAX it has been selected as the architect for the project, but “could not provide additional details on the design at this time.”

A roof is something 81% of fans told the team they desperately wanted in a survey last year.

“Our fans want to see shade on the seats,” Lamping told News4JAX last year, referencing the survey. “Not surprising, they’d like it to be easier to get around the stadium in terms of the vertical transportation to get from level to level.”

Lamping told Venues Now it’s still not clear how much the project will cost.

News4JAX last checked in with Lamping in August, and he said the plans for a renovation were moving along after years of planning. News4JAX tried to talk to Lamping on Wednesday to confirm the details in the report, but the Jaguars said it would not be addressing stadium renovations at this time.

Lamping has said the plan is to form a public-private partnership to finance the upgrades. Some estimates put a stadium makeover at between $600 and $800 million, but that could change.

Major renovations for TIAA Bank Field aren’t exactly a new topic. The stadium has undergone improvements over the years, including the addition of upgraded club seats and videoboards, adding pools, and updating the South End Zone. Flex Field and Daily’s Place were also added.

But to keep the team in Jacksonville long term — the lease agreement between the team and the city expires in 2030 — significant improvements to TIAA Bank Field need to happen. And 75% of NFL owners (24 of 32) need to approve those changes before any lease agreement occurs.

New plans in development for Jags stadium renovations (youtube)

Jaguars pick design firm for stadium upgrades, will include shade roof, reduced seating capacity.. (youtube)

Homework of chapter 6:

1. Are you fond of the new renovation plan?

2. Who will be responsible for funding this project?

3. What is the reason for renovating Jaguars? Is maximizing revenue the primary objective of the owners of Jaguars?

Chapter 8: What Are Teams Worth? Team Valuation

PPT

First, Difficult to obtain accurate financial data for most teams

1) teams are under no legal obligation to share their financial records, so estimates are commonly used.

2) the full value may still be unclear as money and profits can be shifted between related businesses

3) Team owners have an incentive to show a financial loss or low levels of operating profits

§ to prepare for negotiations with the players’ unions.

§ Claiming a loss is one way owners can portray players as greedy or that greater support is needed from local governments.

§ It is often very difficult to estimate profits as teams can obscure costs and shift revenues to other entities.

Second, owners might view owning a team as consumption

§ the owner did not buy the team solely to maximize profits or for financial returns on the investment.

§ the buyer is seeking to maximize intangible but valuable gains.

Third, teams are becoming part of larger conglomerates

§ the team can have a different value depending on who buys the team.

§ the value accruing to a team’s majority owner could increase if he/she is involved in other businesses related to the team

§ because many teams have become anchors for entertainment complexes, much of the value of these teams can come from ensuring the success or value of other capital assets.

Fourth, given league structure, policies can dramatically affect team values.

§ Salary caps, luxury taxes, revenue sharing, and player drafts all have a large impact on team value.

§ Each of these policies is intended to help small-market teams, though some might increase franchise values of all teams.

Fifth, there are countless other benefits to team owners that do not show up on financial statements.

§ Tax shelters from owning a team are one such benefit.

Question 1: What is the worth of the Jacksonville Jaguars NFL team? (this is my question and the following is the answer from ChatGPT)

According to the latest Forbes valuation in 2021, the Jacksonville Jaguars NFL team is valued at $2.8 billion USD. This valuation takes into account several factors such as:

§ Revenue: Forbes estimated the Jaguars' revenue to be $464 million in 2020. This includes money generated from sources such as ticket sales, concessions, sponsorships, and merchandise.

§ Operating Income: The Jaguars' operating income, which is the team's earnings before interest, taxes, depreciation, and amortization (EBITDA), was estimated to be $73 million in 2020.

§ Market Size: Jacksonville is a smaller market compared to other NFL cities, which can impact the team's overall value.

§ Brand Value: The Jaguars' brand value, which includes factors such as popularity, marketability, and social media following, is also taken into account in the valuation.

It's important to note that the valuation of sports teams can fluctuate over time based on factors such as team performance, league revenue, and market trends. Additionally, the valuation is an estimate and the actual sale price of a team may be higher or lower than the estimated value.

Question 2: Is it worth it for the Jacksonville Jaguars to undergo a $600 million renovation? (this is my question and the following is the answer from ChatGPT)

Determining whether a $600 million renovation is worth it for the Jacksonville Jaguars would require careful analysis of various factors, including:

§ Return on Investment (ROI): The team would need to consider the potential financial returns from the renovation, such as increased revenue from ticket sales, sponsorships, and other sources.

§ Fan Experience: The renovation would need to be designed with the fan experience in mind, as this can impact the team's popularity and revenue.

§ Competitive Advantage: The renovation could potentially give the team a competitive advantage over other NFL teams, such as by providing better facilities for players and staff.

§ Financial Implications: The team would need to consider the financial implications of the renovation, such as the cost of financing the project and the impact on the team's profitability.

Ultimately, whether or not a $600 million renovation is worth it for the Jacksonville Jaguars depends on a range of factors, and a careful analysis of these factors would be needed to make an informed decision.

Question 3: What strategies could the owner of the Jacksonville Jaguars NFL team use to increase the team's value? (this is my question and the following is the answer from ChatGPT)

Here are some more detailed suggestions for a Jacksonville Jaguars NFL team owner to make the team worth more:

Invest in the team's performance:

§ Hire a strong coaching staff: A talented coaching staff can help improve the team's on-field performance by developing effective game plans, identifying and developing talent, and making strategic in-game decisions. Investing in top-tier coaches can be expensive, but it can also pay off in the long run by leading to more wins and increased revenue.

§ Build a strong roster: Building a roster of talented players is essential for a team's success. This can involve scouting and drafting young players with high potential, signing key free agents, and developing players already on the team.

§ Improve training facilities: State-of-the-art training facilities can help players develop their skills and stay healthy, leading to improved on-field performance. Investing in training facilities can also attract top-tier players who want to work with the best equipment and staff.

Build a strong brand:

§ Develop a distinctive team identity: A strong team identity can help fans identify with the team and generate more revenue through merchandise sales. This could involve creating a unique team logo, colors, and mascot, and developing a distinctive team culture.

§ Leverage social media: Social media can be a powerful tool for building a team's brand and engaging with fans. A team owner could invest in social media marketing campaigns, create engaging content, and use social media platforms to interact with fans.

§ Partner with local businesses: Partnering with local businesses can help a team build a strong presence in the community and generate additional revenue streams. This could involve working with local restaurants, bars, and retailers to create co-branded merchandise and promotional campaigns.

Enhance the fan experience:

§ Improve stadium facilities: Upgrading stadium facilities can improve the fan experience and generate more revenue from ticket sales and concessions. This could involve improving seating, adding amenities like luxury boxes and club seats, and upgrading food and beverage options.

§ Create engaging pre-game and halftime shows: Engaging pre-game and halftime shows can help build excitement and keep fans engaged throughout the game. This could involve hiring a top-notch entertainment team or partnering with local performers to create unique and engaging shows.

§ Embrace new technology: New technologies like virtual reality and augmented reality can enhance the fan experience by creating interactive experiences and immersive environments. A team owner could invest in these technologies to create new revenue streams and keep fans engaged.

Expand revenue streams:

§ Invest in sports media: Owning or investing in a sports media company can help a team generate additional revenue streams through advertising and sponsorship deals. A team owner could also use the platform to promote the team and build its brand.

§ Explore esports opportunities: Investing in an esports franchise or creating an esports team can help a team generate new revenue streams and reach a younger, tech-savvy audience.

§ Develop new merchandise lines: Creating new merchandise lines can help a team generate additional revenue streams and expand its brand. This could involve developing unique and creative merchandise options beyond the traditional jerseys and hats.

Foster community engagement:

§ Invest in local community initiatives: Supporting local community initiatives like youth sports programs and charitable causes can help a team build a strong presence in the community and generate goodwill among fans.

§ Host community events: Hosting community events like charity auctions, player meet-and-greets, and fan festivals can help a team engage with fans and generate additional revenue streams.

§ Partner with local charities: Partnering with local charities can help a team support important causes while also building goodwill among fans. A team owner could donate a portion of ticket sales or merchandise proceeds to a local charity, for example.

2022 Forbes NFLTeam Valuations

https://www.forbes.com/nfl-valuations/list/#tab:overall

u Financial World provided valuation estimates for franchises from 1991 to 1997.

u Forbes has produced these estimates since 1998.

§ The strength of the Financial World/Forbes data is that it estimates values for teams for each year.

§ Also, the authors of these estimates have some information on facility- based revenue and then input that data into their proprietary formulae.

u The drawback

· the methodology of Financial World/Forbes analyses is unknown.

· it is not clear that the revenue data that Financial World/Forbes uses are reliable.

· revenue data can be difficult to find.

· revenue data may not show all of the benefits of owning a team

Green Bay Packers’ Financial Statement of 2022

https://shareholder.broadridge.com/pdf/2022-packers-annual-report.pdf

Homework of chapter 8

What is your opinion on how to increase the value of a Jaguar for its owner?

Summary of Valuation Methodology

· where π is the team’s profit’s in year t and r is the required return.

· The required return represents the owner’s discount rate and can vary depending on the type of asset.

· the problem with this model is that an analyst does not know exactly what future profits will be.

Constant Growth Model

Zero Growth Model

Multiple Earnings

Value = Multiple * Revenue

· where Multiple simply represents some number.

Chapter 8-1 Team Valuation (Capital Budgeting)

ppt

Capital budgeting is the process of evaluating and selecting long-term investment projects that are expected to generate future cash flows. It involves identifying potential investment opportunities, estimating the expected cash inflows and outflows associated with each project, and using various financial metrics such as NPV, IRR, and payback period to assess their profitability and select the best investment options. Capital budgeting is an important decision-making process for businesses because it involves allocating scarce financial resources to investments that are expected to generate the highest return.

NPV stands for Net Present Value and is a financial metric used in capital budgeting to evaluate the profitability of an investment project. It represents the difference between the present value of all cash inflows generated by the project and the present value of all cash outflows required by the project. If the NPV is positive, it indicates that the project is expected to generate a profit and therefore is considered a viable investment.

IRR stands for Internal Rate of Return and is also used in capital budgeting to evaluate the profitability of an investment project. It is the discount rate that makes the NPV of the project equal to zero, which means that the present value of all cash inflows equals the present value of all cash outflows. In other words, it is the rate at which the project generates a return on the initial investment. If the IRR is greater than the required rate of return, the project is considered a viable investment.

Payback period is a financial metric used in capital budgeting to determine how long it will take for an investment project to recoup its initial investment. It represents the amount of time required for the cumulative cash inflows generated by the project to equal the initial cash outlay. Projects with shorter payback periods are generally preferred because they offer a quicker return on investment.

NPV, IRR, Payback Calculator

https://www.jufinance.com/capital/

NPV, IRR, Payback Excel Template

https://www.jufinance.com/npv_1/

Math Equation

Here’s what each symbol means:

Ct = net cash inflow for the period
CO = initial investment
r = discount rate
t = number of periods

NPV Excel syntax

Syntax

NPV(rate,value1,value2, ...)

Rate is the rate of discount over the length of one period.

Value1, value2, ... are 1 to 29 arguments representing the payments and income.

· Value1, value2, ... must be equally spaced in time and occur at the end of each period. NPV uses the order of value1, value2, ... to interpret the order of cash flows. Be sure to enter your payment and income values in the correct sequence.

IRR Excel syntax

Syntax

IRR(values, guess)

Values is an array or a reference to cells that contain numbers for which you want to calculate the internal rate of return.

Guess is a number that you guess is close to the result of IRR.

Net Present Value NPV Explained with

NPV Example for NPV Calculation (Cartoon, video)

https://www.youtube.com/watch?v=7FsGpi_W9XI

Using Excel for Net Present Values, IRR's and MIRR's

https://www.youtube.com/watch?v=YgVQvn51noc

In Class Exercise

Question 1: Project with an initial cash outlay of $20,000 with following free cash flows for 5 years.

Year Cash flows

1 $8,000

2 4,000

3 3,000

4 5,000

5 10,000

1) How much is the payback period (approach one)?

· Does this method consider time value of money?

· Easy to explain to outsiders?

2) If the firm has a 10% required rate of return. How much is NPV (approach 2)?

· What does NPV means? NPV>0 indicates what? Otherwise?

· Does this method consider time value of money?

· Easy to explain to outsiders?

3) If the firm has a 10% required rate of return. How much is IRR (approach 3)?

· What does IRR mean? IRR > 10% indicates what? Otherwise?

· Does this method consider time value of money?

· Easy to explain to outsiders?

Question 2: Project with an initial cash outlay of $60,000 with following free cash flows for 5 years.

Year FCF

Initial outlay –60,000

1 25,000

2 24,000

3 13,000

4 12,000

5 11,000

The firm has a 15% required rate of return.

Calculate payback period, NPV, IRR. Analyze your results.

Chapter 8-1 Homework (due with the second midterm exam)

Video on 3/24/2023 on homework

1. Consider the following two projects, calculate the NPVs of the two projects. (answer: NPVa: -8.67; NPVb: 12.65;)

Project

Year 0

Cash Flow

Year 1

Cash Flow

Year 2

Cash Flow

Year 3

Cash Flow

Year 4

Cash Flow

Discount Rate

-100

N/A

.15

-73

.15

2. You are considering an investment with the following cash flows. If the required rate of return for this investment is 15.5 percent, should you accept the investment based solely on the internal rate of return rule? Why? (answer: 17.53%; Yes, rate<IRR, accept)

3. It will cost $6,000 to acquire an ice cream cart. Cart sales are expected to be $3,600 a year for three years. After the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. What is the payback period? (answer: 1.67)

4. An investment project provides cash flows of $1,190 per year for 10 years. If the initial cost is $8,000, what is the payback period? (answer: 6.72)

5. A firm evaluates all of its projects by using the NPV decision rule. At a required return of 14 percent, the NPV for the following project is _____ and the firm should _____ the project. (answer: 7264.95, accept)

How the NFL Makes Money

TV is the NFL’s golden goose, but gambling and streaming show potential

https://www.investopedia.com/articles/personal-finance/062515/how-nfl-makes-money.asp

By JAKOB ECKSTEIN Updated January 31, 2023 Reviewed by JEFREDA R. BROWN

Fact checked by VIKKI VELASQUEZ

KEY TAKEAWAYS

· The National Football League (NFL) is one of the most successful sports leagues in the United States.

· The league gave up its tax-exempt status in 2015.

· NFL Commissioner Roger Goodell targeted $25 billion in revenue by 2027.

· TV deals are the main source of revenue for the NFL.

· Only one NFL team is run as a nonprofit corporation: the Green Bay Packers.

· The Business Model

· The NFL groups its revenue streams into two categories: national revenue and local revenue.

National revenue consists of TV deals along with merchandising and licensing contracts, which are negotiated at the national level by the league itself. This money is then divided evenly among the 32 teams regardless of individual performance.

The NFL earned about $9.8 billion in national revenue in the fiscal year (FY) ending March 31, 2021, with each team receiving $309 million, according to shareholder filings from the Green Bay Packers.

Local revenue—which consists of ticket sales, concessions, and corporate sponsors—is earned by the teams themselves. In its FY ending March 31, 2021, the Packers earned $61.8 million in local revenue, a 70.7% drop from the previous FY due to COVID-19.

Big revenues are needed to help manage the high costs of running a professional football team. In FY 2021, the Packers spent $410 million on expenses. A large chunk was used to pay players’ wages, with the rest allocated to stadium upkeep, marketing, and team and administrative costs.

According to Forbes, the Dallas Cowboys is the NFL’s richest team, with $1.1 billion in revenue and an operating income of $466 million in 2021.

Here is the basic structure of the NFL’s business and how it breaks down:

During the season, NFL games are broadcast live in the United States on Mondays, Thursdays, and Sundays.

These games are consistently the highest-rated shows on TV. Therefore, media companies have shelled out big bucks for the rights to broadcast them.

The NFL currently has TV deals in place with Amazon, CBS, ESPN/ABC, FOX, and NBC running through the 2033 season.

People familiar with these deals, announced in March 2021, told CNBC that they could be worth more than $100 billion.

The four TV broadcasters will annually rotate rights to the Super Bowl, while Amazon will get to exclusively stream “Thursday Night Football.”

In December 2022, the NFL announced a multi-year agreement with Google (GOOG), granting YouTube TV and YouTube Primetime Channels the right to exclusively distribute NFL Sunday Ticket to consumers in the United States starting with the 2023 NFL season.

YouTube TV is a subscription streaming service where viewers can watch live and on-demand TV from over 100 channels. YouTube Primetime Channels is a new way for users to subscribe and watch content on the YouTube app.

It is estimated that the contract with Google for the NFL Sunday Ticket package will pay the league about $2 billion annually, up from $1.5 billion a year under a previous deal with AT&T's DirecTV.

"YouTube has long been a home for football fans, whether they're streaming live games, keeping up with their home team, or watching the best plays in highlights," said Susan Wojcicki, CEO of YouTube. She added that viewers will also be able to experience the game through YouTube TV or YouTube Primetime Channels.

According to the NFL, as part of the agreement, YouTube and the NFL will facilitate exclusive access to official content and attendance opportunities for select YouTube Creators at key NFL tentpole events.

It is also estimated that for $200 million, the NFL will seek to license the commercial rights for bars and restaurants.

Football and the Time Value of Money (FYI)

July 25, 2019 Logan Nawrocki

https://www.gyf.com/2019/07/leveon-bell-football-and-the-time-value-of-money/

As the Steelers prepare for another football season with the opening of their 2019 pre-season camp, much of the drama of the recent past appears to be over, and the team’s focus can return to moving the ball downfield.

Interestingly, the 2019 season will begin without two of the team’s biggest offensive stars from the prior year. While the circumstances surrounding the departures of both Antonio Brown and Le’Veon Bell are unfortunate, the latter is even harder to swallow as the key issues appear to have been monetary-based, and the deal offered by the Steelers is said to have been more lucrative than the one he accepted with the New York Jets.

In the course of the dispute, which included sitting out the entire 2018 season, Bell turned down the Steelers’ 5-year offer, July of 2018, of $70,000,000, of which $45,000,000 represented guaranteed dollars. In addition, Bell also refused to sign a franchise tag worth $14,500,000 that would have let him play in Pittsburgh for the 2018-2019 season.

In negotiations with New York, Bell and the Jets agreed on a $52,500,000, 4-year deal with $26,000,000 in guaranteed money. Guaranteed money is important, especially in football, and essentially means that, even if the player gets hurt, underperforms, etc., he will receive that part of the contract designated as guaranteed.

Much has been made of this contract on the local and national sports shows. On the surface, it appears as though Bell took a much worse deal than that offered by the Steelers in going to the Jets. However, it is important to remember that many factors played into his ultimate decision. Therefore, a careful assessment of the contract terms might prove interesting and shed some light on the true economics of the two contracts using the time value of money concepts.

Before discussing both contracts in depth, it is important to understand the concept that is the time value of money. According to Investopdia, “the time value of money (TVM) is an economic concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity and its diminishment of purchasing power due to inflation. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.” Further, in an economic environment with rising prices, the use of a sum money in the future will buy less than it would at current-day prices.

With respect to a personal services contract like those noted above, this simply means that deals providing more guaranteed money at the beginning of the contract are essentially worth more than contracts that include deferred money, where funds are received in the future.

From an analytical perspective, we will begin by looking at the terms of the proposed contract offered by the Steelers. Under the terms of that offer, there were actually two options Bell could have taken: the $14,500,000 franchise tag for one season or the 5-year contract extension. If Bell would have signed his franchise tag, he would have received $14,500,000 for playing in 2018.

Before turning down the franchise tag prior to the 2018 season, Bell had the chance to sign a contract worth $70,000,000, with $45,000,000 of the money being paid in the first three years. This is a crucial consideration because, as the time value of money concept illustrates, monies earned today are more valuable than the same sums earned later. Given that basic premise, the present value of a contract would be higher if more money was made available to the service provider at the front of the contract, versus the contract being paid in equal sums each year or being paid via higher amounts at a later stage in the contract.

According to Ian Rapport of NFL Network, the Steelers offered Bell the following terms:

Year Amount ($)

2018 $20,500,000

2019 $12,500,000

2020 $12,000,000

2021 $12,500,000

2022 $12,500,000

Total $70,000,000

The numbers in bold represent the guaranteed money that the Steelers offered Bell. Using a discount rate of 2% to match the current expected inflation rate, the net present value of the $70,000,000 contract at the time was $66,290,219.94. This means that $70,000,000 paid out through 2022 is actually worth $66,290,219.94 in today’s dollars, considering a 2% growth for inflation.

As an alternative illustration, the following chart compares the net present value (NPV) of the deal had the total amounts offered were spread evenly through the 5-year contract term, versus the actual offer, which was frontloaded with the guaranteed money.

Actual Contract Equal Payments

Year Amount ($) Amount ($)

2018 $20,500,000 $14,000,000

2019 $12,500,000 $14,000,000

2020 $12,000,000 $14,000,000

2021 $12,500,000 $14,000,000

2022 $12,500,000 $14,000,000

Total $70,000,000 $70,000,000

Total NPV $66,290,219.94 $65,988,433.12

As you can see, because of the structure of the contract, the offer from the Steelers was actually worth more than if the money been equally divided by the number of years.

An important intangible benefit of the Steelers’ contract offer is that 64% of the total would have been paid, regardless. It is important to consider the short careers of NFL players and the physical stress and punishment on one’s body generated by a single season in professional football. Thus, the push for more guaranteed dollars in any contract. One need only to look at the unfortunate circumstances surrounding Ryan Shazier’s terrible injury to fully appreciate why the players are so adamant about guaranteed dollars in their contracts.

As for the Jets’ contract signed by Bell, CBS Sports reports that he will earn the following amounts over the next four years in New York:

Year Amount ($)

2019 $14,500,000

2020 $13,500,000*

2021 $12,500,000

2022 $12,500,000

Total $52,500,000

* Only $12,500,000 of the money due in 2020 is guaranteed

The contract comes with $27,000,000 in guaranteed money. Keeping the discount rate the same at 2%, the NPV of the deal totals to $50,646,287.89. This means that $52,500,000 earned over the next four years, and compounded at 2%, is actually worth $50,646,287.89 in today’s dollars.

The contract offered by the Steelers included a fifth year as it was offered prior to the 2018 season. That amount of money offered in 2018, was $20,500,000, and was guaranteed. Subtracting this first-year payment (for comparison purposes only) the total amount incorporated in the proposed Steelers’ contract was $49,500,000, compared to $53,000,000 in the 4-year deal offered and agreed with the Jets.

As the Jets’ deal pays higher dollars for the first two years of the contract, $2,000,000 in 2019 and $1,500,000 in 2020, the present value of the Jets’ contract offered for these four years is actually greater than that offered by the Steelers. However, such an analysis is flawed, as Bell lost the entire $20,500,000 offered by the Steelers for the 2018 season. At a minimum, by refusing to sign the franchise tag and take the franchise compensation at $14,500,000, he passed on $6,000,000 (the difference of the two numbers.) Add these amounts to the contract signed with Jets, and the numbers are not close.

From the perspective of guaranteed dollars, the Jets’ contract to which Bell agreed was 51% of total contract dollars, ($27,000,000/$53,000,000) as opposed to the Steelers’ offer, which provide for 64% of the contract money to be guaranteed.

Unfortunately, it appears obvious that Bell made a mistake, at least from a financial perspective, by going to the Jets. Not only did he pass up what was ultimately more total dollars in the end, but he also permanently lost the money he would have been paid under the 2018 franchise tag when he chose sit out the entire season.

Given the financial resources professional athletes have available for counsel and representation, it is difficult to understand the negotiating process in this particular instance and how Mr. Bell’s representatives did not come to understand the present value impact applicable to both deals. Interestingly, the discussion emphasizes the time value of money concept but does not include consideration of compounding, as the greater amounts of money that might have been available to Mr. Bell had he signed the Steelers’ offer, or at least taken the franchise tag money, would have led to greater future investment income which is now gone forever.

No one disputes that Le’Veon Bell is a great player. It is unfortunate, however, that he did not get paid at his real market value.

Let’s have some fun with ChatGPT – generate NPV Calculator by ChatGPT (FYI)

Here are step-by-step instructions:

1. Ask ChatGPT to generate a NPV calculator using JavaScript in HTML format. You can ask something like: "Hey ChatGPT, could you please generate a NPV calculator using JavaScript in HTML format to calculate the NPV, given cash flows and the discount rate?"

2. ChatGPT should respond with the code for the calculator. Copy the code to your clipboard.

3. Open Notepad or any other text editor and paste the code into a new document.

4. Save the file as an HTML file. You can name it anything you like, but make sure the file extension is ".html". For example, you can name it "npv_calculator.html".

5. Open the saved HTML file in your web browser (e.g. Chrome, Firefox, etc.) by double-clicking on the file or right-clicking and selecting "Open with". The NPV calculator should load and be ready to use.

6. Test the calculator by entering different values for the cash flows and the disount rate. Make sure the calculated NPV is correct and matches your expectations.

7. If you find any issues with the calculator, you can ask ChatGPT to generate it again with the desired changes.

Or use the code from my experiment with ChatGPT earlier this week to get both NPV and NFV

<!DOCTYPE html>

<html>

<head>

<title>Net Present and Future Value Calculator</title>

function calculateNPV() {

var initialInvestment = parseFloat(document.getElementById("initial-investment").value);

var discountRate = parseFloat(document.getElementById("discount-rate").value);

var cashFlows = document.getElementById("cash-flows").value.trim();

// check for empty input

if (cashFlows === "") {

document.getElementById("npv-result").innerHTML = "";

document.getElementById("nfv-result").innerHTML = "";

document.getElementById("error-message").innerHTML = "Please enter at least one cash flow.";

return;

}

// split input into an array of cash flows

cashFlows = cashFlows.split(",");

// parse each cash flow and check for invalid input

for (var i = 0; i < cashFlows.length; i++) {

var cashFlow = parseFloat(cashFlows[i]);

if (isNaN(cashFlow)) {

document.getElementById("npv-result").innerHTML = "";

document.getElementById("nfv-result").innerHTML = "";

document.getElementById("error-message").innerHTML = "Invalid cash flow entered at position " + (i+1) + ".";

return;

}

cashFlows[i] = cashFlow;

}

// calculate net present value

var npv = -initialInvestment;

for (var i = 0; i < cashFlows.length; i++) {

npv += cashFlows[i] / Math.pow(1 + discountRate, i+1);

}

// calculate net future value

var nfv = npv * Math.pow(1 + discountRate, cashFlows.length);

// display results

document.getElementById("npv-result").innerHTML = "Net Present Value: $" + npv.toFixed(2);

document.getElementById("nfv-result").innerHTML = "Net Future Value: $" + nfv.toFixed(2);

document.getElementById("error-message").innerHTML = "";

}

</script>

</head>

<body>

<h1>Net Present and Future Value Calculator</h1>

<label for="initial-investment">Initial Investment:</label>

<label for="discount-rate">Discount Rate:</label>

<label for="cash-flows">Cash Flows:</label>

<button onclick="calculateNPV()">Calculate NPV and NFV</button>

</body>

</html>

Second Midterm Exam 3/29/2023

· In class, class book close notes

· Chapters 5-3 (bond), 6, 8, 8-1 (capital budgeting)

Review video in class (must watch)

Study Guide

Chapter 5-3 (bond)

1. What is a municipal bond and its purpose?

2. Define the terms coupon and coupon rate in relation to bonds. What does a higher coupon rate indicate?

3. What is the face value of a bond?

4. What is the yield to maturity and how is it calculated?

5. What was the reason behind Jax selling 200 million bonds in 2022?

6. What is the coupon rate for Jax's municipal bond?

7. What distinguishes Jax's municipal bond from the US government Treasury bond, and which one would you find more attractive? Why?

8. What is the difference between a bond and a stock, and how can you use Walmart as an example to explain this?

Chapters 6 and 8:

1. Who is the designer of the Jax stadium upgrade, and what are the proposed upgrades?

2. How will the Jaguars stadium be upgraded, and do you support this innovation project? Why or why not?

3. Which NFL team was the most valuable in 2022, and where does the Jaguars team rank in the list?

4. How has COVID-19 affected NFL teams, and how has it impacted the Green Bay Packers?

5. Demonstrate your understanding of how to evaluate an NFL team.

Chapter 8-1 (capital budgeting)

1. Could you explain what NPV stands for?

2. Can you define IRR?

3. What does payback period mean in the context of finance?

4. What is the definition of capital budgeting?

5. What are the steps to determine whether a project is financially viable using NPV?

6. How can IRR be used to determine whether a project is financially viable?

7. In what way can the payback period be used to evaluate the financial feasibility of a project?

8. Could you compare and contrast NPV, IRR, and payback period as financial evaluation techniques?

9. How can NPV be utilized to make accurate decisions for NFL teams?

Chapter 8 – 2 Team Valuation – What is Stock?

Ppt

Part I Dividend payout and Stock Valuation

For class discussion:

· Why can we use dividend to estimate a firm’s intrinsic value?

· Are future dividends predictable?

Wal-Mart Dividend History

· Refer to the following table for Wal-mart (WMT’s dividend history)

http://stock.walmart.com/investors/stock-information/dividend-history/default.aspx

https://www.nasdaq.com/market-activity/stocks/wmt/dividend-history

WMT Dividend History

· EX-DIVIDEND DATE 12/08/2022

· DIVIDEND YIELD N/A

· ANNUAL DIVIDEND $2.24

· P/E RATIO 33.29

Ex/EFF DATE	TYPE	CASH AMOUNT	DECLARATION DATE	RECORD DATE	PAYMENT DATE
12/07/2023	CASH	$0.57	02/21/2023	12/08/2023	01/02/2024
08/10/2023	CASH	$0.57	02/17/2023	08/11/2023	09/05/2023
05/04/2023	CASH	$0.57	02/21/2023	05/05/2023	05/30/2023
03/16/2023	CASH	$0.57	02/21/2023	03/17/2023	04/03/2023
12/08/2022	CASH	$0.56	02/17/2022	12/09/2022	01/03/2023
08/11/2022	CASH	$0.56	02/17/2022	08/12/2022	09/06/2022
05/05/2022	CASH	$0.56	02/17/2022	05/06/2022	05/31/2022
03/17/2022	CASH	$0.56	02/17/2022	03/18/2022	04/04/2022
12/09/2021	CASH	$0.55	02/18/2021	12/10/2021	01/03/2022
08/12/2021	CASH	$0.55	02/18/2021	08/13/2021	09/07/2021
05/06/2021	CASH	$0.55	02/18/2021	05/07/2021	06/01/2021
03/18/2021	CASH	$0.55	02/18/2021	03/19/2021	04/05/2021
12/10/2020	CASH	$0.54	02/18/2020	12/11/2020	01/04/2021
08/13/2020	CASH	$0.54	02/18/2020	08/14/2020	09/08/2020
05/07/2020	CASH	$0.54	02/18/2020	05/08/2020	06/01/2020
03/19/2020	CASH	$0.54	02/18/2020	03/20/2020	04/06/2020
12/05/2019	CASH	$0.53	02/19/2019	12/06/2019	01/02/2020
08/08/2019	CASH	$0.53	02/19/2019	08/09/2019	09/03/2019
05/09/2019	CASH	$0.53	02/19/2019	05/10/2019	06/03/2019
03/14/2019	CASH	$0.53	02/19/2019	03/15/2019	04/01/2019
12/06/2018	CASH	$0.52	02/21/2018	12/07/2018	01/02/2019
08/09/2018	CASH	$0.52	02/21/2018	08/10/2018	09/04/2018
05/10/2018	CASH	$0.52	02/20/2018	05/11/2018	06/04/2018
03/08/2018	CASH	$0.52	02/20/2018	03/09/2018	04/02/2018
12/07/2017	CASH	$0.51	02/21/2017	12/08/2017	01/02/2018
08/09/2017	CASH	$0.51	02/21/2017	08/11/2017	09/05/2017
05/10/2017	CASH	$0.51	02/21/2017	05/12/2017	06/05/2017
03/08/2017	CASH	$0.51	02/21/2017	03/10/2017	04/03/2017
12/07/2016	CASH	$0.50	02/18/2016	12/09/2016	01/03/2017
08/10/2016	CASH	$0.50	02/18/2016	08/12/2016	09/06/2016

05/11/2016	CASH	$0.50	02/18/2016	05/13/2016	06/06/2016
03/09/2016	CASH	$0.50	02/18/2016	03/11/2016	04/04/2016
12/02/2015	CASH	$0.49	02/19/2015	12/04/2015	01/04/2016
08/05/2015	CASH	$0.49	02/19/2015	08/07/2015	09/08/2015
05/06/2015	CASH	$0.49	02/19/2015	05/08/2015	06/01/2015
03/11/2015	CASH	$0.49	02/19/2015	03/13/2015	04/06/2015
12/03/2014	CASH	$0.48	02/20/2014	12/05/2014	01/05/2015
08/06/2014	CASH	$0.48	02/20/2014	08/08/2014	09/03/2014
05/07/2014	CASH	$0.48	02/20/2014	05/09/2014	06/02/2014
03/07/2014	CASH	$0.48	02/20/2014	03/11/2014	04/01/2014
12/04/2013	CASH	$0.47	02/21/2013	12/06/2013	01/02/2014
08/07/2013	CASH	$0.47	02/21/2013	08/09/2013	09/03/2013
05/08/2013	CASH	$0.47	02/21/2013	05/10/2013	06/03/2013
03/08/2013	CASH	$0.47	02/21/2013	03/12/2013	04/01/2013
12/05/2012	CASH	$0.3975	03/01/2012	12/07/2012	12/27/2012
08/08/2012	CASH	$0.3975	03/01/2012	08/10/2012	09/04/2012
05/09/2012	CASH	$0.3975	03/01/2012	05/11/2012	06/04/2012
03/08/2012	CASH	$0.3975	03/01/2012	03/12/2012	04/04/2012
12/07/2011	CASH	$0.365	03/03/2011	12/09/2011	01/03/2012
08/10/2011	CASH	$0.365	03/03/2011	08/12/2011	09/06/2011
05/11/2011	CASH	$0.365	03/03/2011	05/13/2011	06/06/2011
03/09/2011	CASH	$0.365	03/03/2011	03/11/2011	04/04/2011
12/08/2010	CASH	$0.3025	03/04/2010	12/10/2010	01/03/2011
08/11/2010	CASH	$0.3025	03/04/2010	08/13/2010	09/07/2010
05/12/2010	CASH	$0.3025	03/04/2010	05/14/2010	06/01/2010
03/10/2010	CASH	$0.3025	03/04/2010	03/11/2010
12/09/2009	CASH	$0.2725	03/05/2009	12/10/2009
08/12/2009	CASH	$0.2725	03/05/2009	08/14/2009	09/08/2009
05/13/2009	CASH	$0.2725	03/05/2009	05/15/2009	06/01/2009
03/11/2009	CASH	$0.2725	03/05/2009	03/13/2009	04/06/2009
12/11/2008	CASH	$0.2375	03/06/2008	12/15/2008	01/02/2009
08/13/2008	CASH	$0.2375	03/06/2008	08/15/2008	09/02/2008
05/14/2008	CASH	$0.2375	03/06/2008	05/16/2008	06/02/2008
03/12/2008	CASH	$0.2375	03/06/2008	03/14/2008	04/07/2008
12/12/2007	CASH	$0.22	03/08/2007	12/14/2007	01/02/2008
08/15/2007	CASH	$0.22	03/08/2007	08/17/2007	09/04/2007
05/16/2007	CASH	$0.22	03/08/2007	05/18/2007	06/04/2007
03/14/2007	CASH	$0.22	03/08/2007	03/16/2007	04/02/2007
12/13/2006	CASH	$0.1675	03/02/2006	12/15/2006	01/02/2007
08/16/2006	CASH	$0.1675	03/02/2006	08/18/2006	09/05/2006
05/17/2006	CASH	$0.1675	03/02/2006	05/19/2006	06/05/2006
03/15/2006	CASH	$0.1675	03/02/2006	03/17/2006	04/03/2006
12/14/2005	CASH	$0.15
08/17/2005	CASH	$0.15	03/03/2005	08/19/2005	09/06/2005
05/18/2005	CASH	$0.15	03/03/2005	05/20/2005	06/06/2005
03/16/2005	CASH	$0.15	03/03/2005	03/18/2005	04/04/2005
12/15/2004	CASH	$0.13	03/02/2004	12/17/2004	01/03/2005
08/18/2004	CASH	$0.13	03/02/2004	08/20/2004	09/07/2004
05/19/2004	CASH	$0.13	03/02/2004	05/21/2004	06/07/2004
03/17/2004	CASH	$0.13	03/02/2004	03/19/2004	04/05/2004

Can you estimate the expected dividend in 2023? And in 2024? And on and on…

For class discussion:

What conclusions can be drawn from the above information?

Can we figure out the stock price of Wal-Mart based on dividend, with reasonable assumptions?

Can you write down the math equation now?

WMT stock price = ?

WMT stock price = npv(return, D1, D2, …D∞)

WMT stock price = D1/(1+r) + D2/(1+r)² + D3/(1+r)³ + D4/(1+r)⁴ + …

Can you calculate now? It is hard right because we assume dividend payment goes to infinity. How can we simplify the calculation?

We can assume that dividend grows at certain rate, just as the table on the right shows.

Discount rate is r (based on Beta and CAPM that we will learn in chapter 6)

https://www.nasdaq.com/market-activity/stocks/wmt

What does each item indicate?

From finviz.com https://finviz.com/quote.ashx?t=WMT

Part II: Constant Dividend Growth-Dividend growth model

Calculate stock prices

1) Given next dividends and price expected to be sold for

Po=

Po= +

Po= + +

Po= + ++

……

Refer to http://www.calculatinginvestor.com/2011/05/18/gordon-growth-model/

· Now let’s apply this Dividend growth model in problem solving.

Constant dividend growth model calculator ( www.jufinance.com/dividend)

Equations

· Po= D1/(r-g) or Po= Do*(1+g)/(r-g)

· r = D1/Po+g = Do*(1+g)/Po+g; So r = total return = dividend yield + capital gain yield

· g= r-D₁/Po = r- Do*(1+g)/Po

· D1 = Po *(r-g); D0 = Po*(r-g)/(1+g)

· Capital Gain yield = g = (P₁-Po)/Po; P₁: Stock price one year later (P₁=D₂/(r-g))

· Dividend Yield = r – g = D₁ / Po = Do*(1+g) / Po

· D₁=Do*(1+g); D₂= D₁*(1+g); D₃=D₂*(1+g)…

For discussion:

§ You own 100 shares of WMT. Are you a significant shareholder of WMT? What type of rights you have as minor shareholders?

§ If WMT runs into trouble, how risky is your investment in WMT? Compare with Treasury bill investors, Treasury bond investors, WMT bond investors, Apple stock holders, etc.

§ Doug McMillon is the CEO of Wal-Mart. Do you have any suggestive advices for him? How can you let him hear from you? How much do you trust him not to abuse your investment? Are there any ways to discipline him?

§ More exercise about the dividend growth model.

§ Consider the valuation of a common stock that paid $1.00 dividend at the end of the last year and is expected to pay a cash dividend in the future. Dividends are expected to grow at 10% and the investors required rate of return is 17%. How much is the price?

§ The current market price of stock is $90 and the stock pays dividend of $3 with a growth rate of 5%. What is the return of this stock?

HW of chapter 8 (due with final)

Video on 4/7/2023 (in class)

1. Northern Gas recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return? (answer: 14.6%)

2. Douglass Gardens pays an annual dividend that is expected to increase by 4.1 percent per year. The stock commands a market rate of return of 12.6 percent and sells for $24.90 a share. What is the expected amount of the next dividend? (answer: 2.12)

3. IBM just paid $3.00 dividend per share to investors. The dividend growth rate is 10%. What is the expected dividend of the next year? (answer: 3.3)

4. You bought 1 share of HPD for $20 in May 2018 and sold it for $30 in May 2019. How much is the holding period return? (answer: 50%)

5. The current market price of stock is $50 and the stock is expected to pay dividend of $2 with a growth rate of 6%. How much is the expected return to stockholders? (answer: 10%)

6. The stockholder’s expected return is 8% and the stock is expected to pay dividend of $2 with a growth rate of 4%. How much should the stock be traded for? (answer: 50)

Jax Stocks
Symbol	Name
LSTR	Landstar System, Inc.
PATI	Patriot Transportation Holding, Inc.
REG	Regency Centers Corporation
RYAM	Rayonier Advanced Materials Inc.
CSX	CSX Corporation
CNNE	Cannae Holdings, Inc.
FNF	Fidelity National Financial, Inc.
RYN	Rayonier Inc. REIT
BKI	Black Knight, Inc.
FIS	Fidelity National Information Services, Inc.
ABCB	Ameris Bancorp
DUOT	Duos Technologies Group, Inc.
BBGI	Beasley Broadcast Group, Inc.

https://swingtradebot.com/stocks-tagged-as/3542-jacksonville?page=1

Fidelity

https://finviz.com/quote.ashx?t=FNF&p=d

Black Knight

https://finviz.com/quote.ashx?t=BKI&p=d

Green Bay Packers, Inc. (Wikipedia)

https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc.#:~:text=The%20Packers%20have%20been%20a,sixth%20stock%20sale%20in%202021.

Formation August 18, 1923; 99 years ago

Legal status publicly held nonprofit corporation

Headquarters Green Bay, WI 54304-3927

President Mark Murphy

Affiliations Green Bay Packers Foundation

Green Bay Packers, Inc. is the publicly held nonprofit corporation that owns the National Football League (NFL)'s Green Bay Packers football franchise, based in Green Bay, Wisconsin. Established in 1923 as the Green Bay Football Corporation, the company received its current legal name in 1935.

The Packers are the only publicly owned major professional sports franchise in the United States. Rather than being the property of an individual, partnership, or corporate entity, they are held as of 2022 by 537,460 stockholders.

Green Bay is the only team with this public form of ownership structure in the NFL, grandfathered when the NFL's current ownership policy stipulating a maximum of 32 owners per team, with one holding a minimum 30% stake, was established in the 1980s.

Board of directors

The Green Bay Packers Board of Directors is the organization that serves as the owner of record for the Green Bay Packers of the National Football League (NFL).

The corporation is governed by a seven-member executive committee, elected from among the board of directors. The committee directs corporate management, approves major capital expenditures, establishes board policy, and monitors performance of management in conducting the business and affairs of the corporation.

The elected president, currently Mark H. Murphy, represents the corporation at NFL owners meetings and other league functions. The president is the only officer who receives compensation. The balance of the committee sits gratis.

At the time of his death, Green Bay Press-Gazette publisher Michael Gage was said to be the largest shareholder of the team.[9]

Shareholder rights

Even though it is referred to as "common stock" in corporate offering documents, a share of Packers stock does not share the same rights traditionally associated with common or preferred stock. It does not include an equity interest, does not pay dividends, cannot be traded, and has no protection under securities law. It also confers no season-ticket purchasing privileges. Shareholders receive nothing more than voting rights, an invitation to the corporation's annual meeting, and an opportunity to purchase exclusive shareholder-only merchandise.[5]

Shares cannot be resold, except back to the team for a fraction of the original price. While new shares can be given as gifts, transfers are technically allowed only between immediate family members once ownership has been established.[4]

Stock sales

A 1923 Green Bay Packers stock certificate, as displayed at the Green Bay Packers Hall of Fame

There have been six stock issues over the history of the Packers organization:

1923: Shares of stock were first sold to establish the club as an corporation. A total of $5,000 was raised through the sale of 1,000 shares at $5 apiece. Each stockholder was required to buy six season tickets and buying five stocks for $25 also came with a box seat for each home game. To ensure that there could never be any financial inducement for shareholders to move the club outside Green Bay, the original articles of incorporation for the Green Bay Football Corporation stipulated that in the event of the sale of the franchise, all profits from the sale be donated to the Sullivan-Wallen Post of the American Legion, earmarked for the purpose of building "a proper soldier's memorial." At the November 1997 annual meeting, shareholders voted to change the beneficiary to the Green Bay Packers Foundation, established to make donations to charities and institutions throughout Wisconsin.

……

2011: To rai0se money for a large $143-million Lambeau Field expansion, which included approximately 6,700 new seats, new high-definition video boards, a new sound system, and two new gates, a fifth stock sale began on December 6, 2011.

Who Owns the Green Bay Packers & How Do Fans Buy Stock? (FYI)

BY DANIELL MARLOW | DECEMBER 19, 2022

https://fanbuzz.com/nfl/who-owns-the-green-bay-packers/

Green Bay Packers issue rare 'ownership' shares to public for $300 (video)

The National Football League is a league of iconic franchises. But even despite the Minnesota Vikings, Los Angeles Rams, Chicago Bears, Philadelphia Eagles, New York Giants, Cleveland Browns, and the New England Patriots, no other NFL team stands out quite like NFC powerhouse, the Green Bay Packers. From their classic green-and-yellow colors to their unique ownership structure, the Packers organization is a completely different type of NFL franchise.

While other sports teams have a single owner, Green Bay appears to either be owned by a seven-member executive committee or Packers president Mark Murphy. But the truth isn't so simple. In reality, the own the four-time Lombardi Trophy-winning franchise is community-owned. This ownership -- through stock offerings -- is the only of its kind in any of the prominent major league sports.

So, who exactly owns the Green Bay Packers, and how does it work?

They are a publicly-owned and traded nonprofit organization, the only of its kind in North American professional sports. The nonprofit signed its articles of incorporation in 1923 and began issuing shares of stock through stock certificates. They are technically called Green Bay Packers, Inc.

According to the Packers website, the team is owned by a total of 361,300 people (that represent approximately 5,009,400 shares).

No single shareholder can own more than roughly 4 percent of the available shares. Shareholding fans have gotten the team through five devastating stock sales: 1923, 1935, 1950, 1997 and 2011. The last ended in 2012 and created 250,000 new shareholders. This unique ownership system is the reason why Green Bay, Wis., the smallest market in U.S. professional sports, has been able to keep a professional team in their Wisconsin city since 1923.

There has been speculation that buying stock in Green Bay is one of the worst financial decisions you can make. Whether or not that's true, someone has to represent Green Bay at NFL owner meetings. That man is Mark Murphy, former athletic director of Northwestern University. He was elected president of Green Bay Packers, Inc. in 2007 and oversaw both the Brett Favre trade and Aaron Rodger's masterful Super Bowl MVP performance in Green Bay's Super Bowl XLV victory over the Pittsburgh Steelers. Managing two future Hall of Fame talents isn't easy. Murphy is the man who works with general manager Brian Gutekunst to field the best team they can at Lambeau Field.

There you have it: any Cheesehead fan who can get a certificate can own stock in Lambeau Field. NFL rules now stipulate a maximum of 32 owners per team, but Green Bay made the only exception because of their history. So, how does one become a shareholder?

How to Become a Green Bay Packers Shareholder

Becoming a Green Bay Packer shareholder for the first time is not an easy thing to do. It's not like you can pop into the Packers Pro Shop or head on over to Packers.com and pick up some shares.

Green Bay Packers stock has not been available for purchase from Green Bay Packers, Inc. since February 2012. If you want to purchase some stock, you have to convince a stockholder to sell, which is illegal. The Packers common stock comes with a legally binding agreement not to sell the stock. You can only sell the stock back to Green Bay for a fraction of what you paid for it.

If you want to buy some stock, you'll have to wait until Lambeau needs a new scoreboard (or something of that nature). Green Bay Packers, Inc. is the only issuer of new stock, something they haven't done in nearly a decade. You could always ask around Lambeau during a home game or their annual shareholders meeting, but you probably won't have much luck.

Notable Packers Shareholders

Sir Paul McCartney is a Green Bay Packers shareholder. You read that right -- one of the Beatles bought into Green Bay, Inc., in 2019. Like it was just Yesterday.

The Liverpudlian singer might be the most international of the Green Bay shareholders. Most shareholders are local to the team and come from families that have owned shares for a long time.

As many articles have explained, owning part of the Packers is a financial dead end. Packers stock is labeled common stock, meaning you can't trade it, there's no equity interest and it doesn't pay dividends. Stockholders only vote on a few decisions, like naming new members to the Board of Directors. If you're not a Packers fan, buying stock in Green Bay, Inc. just doesn't make any sense at all. Much like seeing the Lions in the playoffs.

For discussion:

What benefits can a typical investor receive from owning Green Bay Packers stock?

Topic 2 - What Is the Capital Asset Pricing Model?

The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital.

R_i = R_f + β_i * (R_m - R_f) ------ CAPM model

R_i = Expected return of investment

R_f = Risk-free rate

β_i = Beta of the investment

R_m = Expected return of market

(R_m - R_f) = Market risk premium

CAPM calculator

Chapter 11-3 Homework (due with final)

Homework help video 1(Questions 1-5) – 4/14/2023 – in class

1) Stock A has the following returns for various states of the economy:

State of

the Economy Probability Stock A's Return

Recession 10% -30%

Below Average 20% -2%

Average 40% 10%

Above Average 20% 18%

Boom 10% 40%

Stock A's expected return is? (ANSWER: 8.2%)

2) Joe purchased 800 shares of Robotics Stock at $3 per share on 1/1/19. Bill sold the shares on 12/31/19 for $3.45. Robotics stock has a beta of 1.9, the risk-free rate of return is 4%, and the market risk premium is 9%. Joe's holding period return is? (ANSWER: 15%)

3. You own a portfolio with the following expected returns given the various states of the economy. What is the overall portfolio expected return? (ANSWER: 9.05%)

State of economy probability of state of economy rate of return if state occurs

Boom 27% 14%

Normal 70% 8%

Recession 3% -11%

4) Collectibles Corp. has a beta of 2.5 and a standard deviation of returns of 20%. The return on the market portfolio is 15% and the risk free rate is 4%. What is the risk premium on the market? (ANSWER: 11%)

5: Risk-free rate of return is 3.9 percent and the market risk premium (r_m –r_f) is 6.2 percent. What is the expected rate of return on a stock with a beta of 1.21? (ANSWER: 11.4%)

6: Read the following paper and answer the question: how to use AI in the NFL? Do you agree with the author’s opinion? Why or why not?

From Touchdowns to Algorithms: How AI is Used in the NFL

From Touchdowns to Algorithms How AI is Used in the NFL

https://inclusioncloud.com/insights/blog/ai-nfl/#:~:text=By%20analyzing%20player%20stats%2C%20injury,of%20drafting%20a%20winning%20team.

How the NFL's Digital Athlete uses AI to reduce concussions in American Football (video)

Conclusion

As technology continues to advance at an unprecedented rate, industries across the board are utilizing AI to optimize and streamline their operations. The sports industry is no exception. In the National Football League (NFL), AI has been instrumental in enhancing player safety, improving fan experience, and providing teams with data-driven insights for better decision-making.

In this blog post, we will dive into how AI is being used in the NFL and its impact on the sport.

The Importance of AI in American Sports

Artificial intelligence is rapidly transforming the way that American sports are played, coached, and analyzed. In addition to the NFL, other professional sports leagues like the NBA, MLB, and NHL have started to adopt AI technology to improve performance, prevent injuries, and gain a competitive edge.

With AI, teams can leverage advanced data analytics, computer vision, and natural language processing to better understand their opponents, players, and game strategies. AI also has the potential to enhance the fan experience by providing personalized content, improving stadium operations, and enabling new forms of engagement. As the sports industry continues to evolve, AI is expected to play an increasingly critical role in shaping the future of American sports.

The History of AI Applications in NFL

The use of AI in American football dates back to the early 1990s when teams first started using computer simulations to analyze game strategies and player performance. Over time, the application of AI technology in the NFL has evolved significantly, thanks to advances in machine learning, computer vision, and big data analytics.

Today, teams use AI for a wide range of purposes, including player safety, injury prevention, game strategy, and fan engagement. From the use of wearable technology to track player performance, AI has become an integral part of modern football. As technology continues to improve and new applications emerge, the use of AI in the NFL is expected to become even more widespread and impactful in the years to come.

How the NFL Is Using Data to Improve the Game

AI is being applied in different aspects of sports, both on and off the field. Here are some of the situations where this technology is having the greatest impact:

Preventing player injuries

Injuries are an inherent risk in any contact sport, and the NFL is no exception. However, AI is being used to mitigate the risk of player injuries. Teams are now using wearable technology to track player movement and collect data on their physical exertion during games and practices.

This data is then analyzed by AI algorithms to identify patterns that could lead to injury. Teams can use this information to create individualized training programs for each player, reducing the risk of injury and prolonging their careers.

Improving fan experience

AI is also being used to enhance the fan experience. Fans can now enjoy real-time stats and game highlights on their smartphones through the NFL’s official app, thanks to AI-powered video and audio recognition. Additionally, AI is used to personalize the viewing experience for fans by providing them with customized content based on their preferences and viewing history.

Making better decisions

The NFL is a highly competitive sport, and the difference between winning and losing can often come down to split-second decisions. AI is being used to provide teams with data-driven insights to make better decisions on and off the field.

For example, teams can use AI to analyze their opponents’ strategies, identify their weaknesses, and adjust their game plans accordingly. Teams can also use AI to analyze player performance and make informed decisions about who to draft, trade, or sign as a free agent.

Analyzing the game

AI algorithms can analyze vast amounts of data to identify patterns and trends in the game. Teams can use this information to create predictive models that can help them anticipate their opponents’ moves and make informed decisions about their own strategies.

Additionally, AI can analyze player performance and identify the best players for each position. This information can be used to improve team performance and increase the chances of winning.

The Application of AI in the Draft

One of the most innovative uses of AI in the NFL is in the player draft. Teams are leveraging machine learning algorithms and predictive analytics to identify top-performing college players that fit their team’s specific needs.

By analyzing player stats, injury history, and even social media activity, AI can help teams make more informed decisions when selecting new talent. With AI, teams can identify players with high potential and predict their long-term success in the NFL, ultimately increasing the likelihood of drafting a winning team.

Dallas Cowboys and Houston Texans using AI in the NFL

The Dallas Cowboys and Houston Texans are two NFL teams that are leading the way in the adoption of AI technology. The Cowboys have implemented a wearable technology program that collects real-time data on player performance, such as speed, acceleration, and heart rate. The data is then used to analyze player fatigue, monitor injury risk, and improve training regimens.

The Houston Texans have taken a different approach by using AI to analyze game footage and generate customized game plans for their players. By using machine learning algorithms, the team can quickly identify patterns and insights from past games, allowing them to make more informed decisions and gain a competitive edge. With these innovative AI applications, the Dallas Cowboys and Houston Texans are setting a new standard for how technology can be used in the NFL.

Conclusion

AI is transforming the NFL, from preventing player injuries to improving fan experience and providing teams with data-driven insights for better decision-making. As AI technology continues to evolve, we can expect to see even more advancements that really change the game.

Excel Command:

sumproduct(array1, array2) ---- to get expected returns

stdev(observation1, obv2, obv3,….) ---- to get standard deviation

correl(stock 1’s return, stock 2’s return) --- to get correlation between stocks

beta = slope(stock return, sp500 return) --- to get the stock’s beta

Expected return calculator

www.jufinance.com/return

Holding Period Return Calculator

www.jufinance.com/hpr

CAPM Model Calculator

www.jufinance.com/capm

Two Stock Portfolio Return and Standard Deviation

www.jufinance.com/portfolio

FYI only

W1 and W2 are the percentage of each stock in the portfolio.

2022 High Beta Stocks List | The 100 Highest Beta S&P 500 Stocks (FYI)

Updated on September 15th, 2022 by Bob Ciura

https://www.suredividend.com/high-beta-stocks/

#5: Fortinet, Inc. (FTNT)

Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions around the world. It offers FortiGate hardware and software licenses that provide various security and networking functions. Fortinet is a large-cap stock with a market cap above $40 billion.

In the 2022 second quarter, Fortinet generated revenue of $1.03 billion, up 29% from the same quarter last year. Product and service revenue grew 34% and 25%, respectively. Adjusted earnings-per-share increased 26% year-over-year.

For 2022, Fortinet expects revenue of $4.25 billion to $4.40 billion, consisting of $2.62 billion to $2.67 billion in service revenue. Billings are expected between $5.56 billion and $5.64 billion. Adjusted earnings-per-share are expected in a range of $1.01 to $1.06 for the full year.

FTNT has a Beta value of 1.71.

#4: Paycom Software Inc. (PAYC)

Paycom is a technology stock that produces cloud-based human capital management (HCM) as-a-service software. Services help employers manage a variety of HCM tasks such as talent acquisition, and time and labor management.

In the most recent quarter, Paycom generated $317 million in revenue, up 31% year-over-year. Recurring revenue grew 31%, and represented 98% of total revenue. Earnings-per-share of $1.26 increased 30% compared with $0.97 in the year-ago quarter.

PAYC has a Beta value of 1.71.

#3: ServiceNow (NOW)

ServiceNow is a high-quality technology company, which transforms old, manual ways of working into modern digital workflows. It reduces the complexity of jobs and makes work more pleasant to employees, thus resulting in increased productivity.

ServiceNow currently has more than 7,400 enterprise customers, which include about 80% of the Fortune 500. All these customers use the Now Platform, which is an intelligent cloud platform that carries out their digital transformation.

ServiceNow is a leader in the digital transformation of companies towards making work better for their employees. According to a research of IDC, more than $3 trillion has been invested in digital transformation initiatives but only 26% of the investments have delivered acceptable returns.

NOW has a Beta value of 1.77.

#2: Advanced Micro Devices (AMD)

Advanced Micro Devices was founded in 1959 and in the decades since it has become a sizable player in the chip market. AMD is heavy in gaming chips, competing with others like NVIDIA for the lucrative, but competitive market.

In the 2022 second quarter, AMD reported revenue of $6.6 billion. This was a 70% year-over-year increase, driven by organic growth as well as the contribution from Xilinx. Gross margin contracted two percentage points to 46% for the quarter. Operating income rose 22% to $526 million. Adjusted earnings-per-share of $1.05 increased 67%.

AMD has a Beta value of 2.09.

#1: NVIDIA Corporation (NVDA)

NVIDIA Corporation is a specialized semiconductor company that designs and manufactures graphics processors, chipsets and related software products.

Its products include processors that are specialized for gaming, design, artificial intelligence, data science and big data research, as well as chips designed for autonomous vehicles and robots.

Over the last five years, NVIDIA’s growth exploded. This growth was partially driven by cryptocurrency mining, although that has mostly ceased to be a tailwind, and future growth will be centered on other growth drivers. NVIDIA’s GPUs are very versatile in AI applications, which was an unintended benefit of the company’s research and development efforts.

The company has immediately started to capitalize on this trend by offering GPUs that are optimized for deep learning and other specialized applications. These GPUs act as the brains of computers, robots, and self-driving cars. Those GPUs are, among others, utilized in professional visualization and data centers. The markets NVIDIA supplies GPUs for have strong growth tailwinds, which bodes well for NVIDIA’s long-term revenue outlook.

NVDA has a Beta value of 2.31.

Final Exam (non-cumulative, 4/24/2023, in class, close book close notes)

Study Guide – Video in class on 4/19/2023

1. Define risk.

2. Explain standard deviation.

3. Define beta in the context of finance.

4. What does CAPM stand for and what is its significance in finance?

5. Define risk-free rate.

6. What is meant by market portfolio?

7. What is the beta associated with the risk-free rate?

8. What is the beta associated with the market portfolio?

9. Explain the concept of correlation between a pair of stocks.

10. What is the range of correlation values between two stocks?

11. How can diversification be achieved in the context of correlation?

12. In what ways can AI be applied to the NFL?

13. Define dividend.

14. How can the stock price be estimated using the dividend growth model?

15. How can the stock return be calculated using the dividend growth model?

16. Did the Green Bay Packers have any shareholders?

17. Can shareholders sell their shares of the Green Bay Packers?

18. What rights do shareholders of the Green Bay Packers have?

19. What rights do shareholders of the WalMart have?

20. Can investing in WalMart stocks lead to financial gains?

21. Can investing in Green Bay Packers tocks lead to financial gains?

22. As a shareholder of WalMart, what actions can be taken to prevent the CEO from abusing shareholder rights?

23. What actions by a CEO can be considered as misuse of shareholders' funds?

24. What are the differences between a stock and a bond?

25. What is dividend yield?

26. What is capital gain yield?

Wishing you a joyful summer break and looking forward to seeing you in the fall!