SPO301 Class Web Page, Spring ' 23

Instructor: Maggie Foley

Jacksonville University

 

The Syllabus 

Term project 1 (ratio analysis) Video for this project (FYI)

 

Term project 2 (Green Bay Packers financial statement analysis https://shareholder.broadridge.com/pdf/2022-packers-annual-report.pdf)

Video for this project (FYI)

 

 

Weekly SCHEDULE, LINKS, FILES and Questions

Chapter

Coverage, HW, Supplements

-       Required

References

 

 

Marketwatch Stock Trading Game (Pass code: havefun)

Use the information and directions below to join the game.

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How To Win The MarketWatch Stock Market Game (youtube, FYI) finviz example

 

How Short Selling Works (Short Selling for Beginners) (youtube, FYI)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 1: Redefining the Sport Business Industry

 

Ppt

 

Challenges Facing Sports Managers Today

 

The business of the National Football League -- NFL. How do teams make money? (youtube)

 

 

       Change Number 1: Ownership Models

 

Billions - Mark Cuban Educates Bobby Axelrod On Owning A Sports Team (youtube)

 

Why Billionaires Actually Buy Professional Sports Teams (youtube)

 

How NFL Teams Make Money (youtube)

 

Forbes: Shahid Khan's Path To Success | Forbes (youtube)

 

TOP 10 Richest NFL Owners in 2023 (youtube)

 

 

       Change Number 2: Sport, Entertainment Complexes, and Real Estate Development

https://www.sportico.com/feature/nfl-team-values-ranking-list-1234684165/

 

 

       Change Number 3: Young Fans and Their Loyalties

       Change Number 4: A New Media World

       Change Number 5: The Real Estate Management Issues within Venues
Change Number 6: League Policies

2023 NFL Team Salary Cap Space Tracker - Spotrac.com

 

 

2023 NFL Salary Cap TO THE MOON! (youtube)

 

       Change Number 7: The Globalization of Sports

       Change Number 8: Teams and Public/Private Partnerships

 

 

 

No homework for chapter 1

 

Critical thinking challenge: How to help Jaguars to

Generating income from sport

http://www.leoisaac.com/sportman/sportman08.htm

 

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

Its 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 schools 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. Its 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. Its 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 Baylors 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 universitys 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 universitys 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 Fridays meeting discussing support programs and the student experience at Baylor.

 

Weve looked at the progress we have in place for our students that are really looking for kind of the above and beyond experience, whether thats 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 were supporting in the right way, Livingstone said.

 

The board also passed a resolution thanking Baylors faculty for their role in the universitys 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 campaigns $1.1 billion fundraising goal and the universitys athletic success. Livingstone said hopeful candidates have submitted more than 40,000 applications for next year so far.

 

Its 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))

Or

N = ln(1/(1-(PV/C)*r)))/ (ln(1+r))

 

image001.jpg

 

 

 

 

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 owners 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 firms 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 universitys athletic director (AD) oversees each teams finances, even though the college or university is ultimately responsible.

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

       A universitys athletic budget is typically around 510 percent of the universitys 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, its 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 nations 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 cant 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, theres 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 cant be finalized until approved by other members.

 

Restrictions:

 

The NFL doesnt 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 leagues 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 Waltons 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, isnt a private company. Its a glamorized trade association, financially supported by its 32 members. Its an exclusive club that even the worlds richest dont get the chance to be part of. So, if you build the relationships and understand the process, you can join too. Just dont 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 thats made up of two different conferences.

 

Its 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

 

Heres a guide on who owns the NFL and how you can join the organizations 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.

 

Heres 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 teams 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 30th, 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 30th, 2011 

 

Home Depot (Ticker in the market: HD) reported the following information for the year ended January 30th, 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 30th, 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 Investor center  market data  bond  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 bonds 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 IBMs 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 bonds 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)

 

image033.jpg

 

 

 

image035.jpg

 

 

 

image036.jpg

 

 

 

 

image037.jpg

 

 

 

 

image038.jpg

 

 

 

 

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 ratesas 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 bondsrather than seek bank loans for debt financing in many casesbecause 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 theyll 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 teams proposed $120 million football performance center.

 

Council approved a bill 17-0 on Aug. 24 to authorize Mayor Lenny Currys administration to borrow $60 million to help finance the NFL teams 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 citys 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 Auditors 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 citys 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 teams 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 fields 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.

 

Hazouris 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, HOKs 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, theyd 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 its 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 arent 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 Dailys 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 teams 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

 

image069.jpg

 

 

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 teams profits in year t and r is the required return.

       The required return represents the owners 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.