Exercise 12
The Black Stump Football Club
Directors of the Black Stump Football Club anticipate that income for the forthcoming year will be earned from the following sources:
- Player Registration Fees
- Game Fees
- Coaching Levy
- Canteen Sales
- Clothing and Equipment Sales
- Sponsorship
- Subsidy from Local Council
Player Registration Fees
The club's membership is as follows:
| Table 1: Club Membership | ||
|
Players
|
Teams
|
|
| Juniors (5 - 10 years) |
130
|
14
|
|
Juniors (11 - 16 years) |
168
|
12 |
|
Youth (17 - 19 years) |
16
|
1 |
| Seniors |
48
|
3 |
| Veterans (Over 35 years) |
16
|
1
|
| Total |
378
|
31 |
Registration Fees
Registration Fees are as follows:
| Table 2: Registration Fees | ||
| Juniors (5 - 10 years) |
$150
|
|
|
Juniors (11 - 16 years) |
$190 |
|
|
Youth (17 - 19 years) |
$190 |
|
| Seniors |
$250 |
|
| Veterans (Over 35 years) |
$200
|
|
Game Fees
All players play Game Fees each week of the season. A small proportion of game fees covers the cost of referees but the rest is general revenue that the club needs to sustain its operations. Game fees are collected as follows:
| Table 3: Game Fees | |||
|
Season in Weeks
|
Fee per Week
|
||
| Juniors (5 - 10 years) |
18
|
$5
|
|
|
Juniors (11 - 16 years) |
18
|
$7 |
|
|
Youth (17 - 19 years) |
22
|
$8 |
|
| Seniors |
22
|
$10 |
|
| Veterans (Over 35 years) |
18
|
$10
|
|
Coaching Levy
The Coaching Levy is $100 per player and only the first team of each age group (11 - 16 years) is charged. The normal number of players in a team is 14. The Coaching levy covers the cost of hiring a high standing coach for the first team. All other Junior teams, the Youth Team, Seniors and Veterans are not charged the Coaching Levy.
Canteen Sales
The Canteen is run by volunteers and is operational usually on Friday nights (3 hours), all day Saturday (9am - 10pm) and Sunday mornings (3 hours). The Canteen generally has total sales of approximately $1,500 per week end and the club endeavour to keep the Canteen running on every week end of the Junior Season (18 weeks). There are about four (4) weeks of the year that the Canteen is open only during Saturdays from 4pm - 10pm for Youth and Senior Games. The total sales on these extra weekends can be estimated according to the total operating hours for the weekend.
The amount of gross profit made in the Canteen is about 50% of total sales.
Clothing and Equipment Sales
The expected clothing and equipment sales are as follows:
| Table 4: Clothing and Equipment Sales | ||||
|
Qty
|
Cost Price
|
Selling Price
|
||
| Socks (pairs) |
500
|
$7
|
$12
|
|
|
Training Shorts |
300
|
$10
|
$15 |
|
|
Playing Shorts |
300
|
$15
|
$20 |
|
| Training Shirts |
300
|
$15
|
$20 |
|
| Footballs (size 3) |
50
|
$12
|
$15
|
|
| Footballs (size 4) |
50
|
$13
|
$16
|
|
| Footballs (size 5) |
50
|
$14
|
$17
|
|
All the above items are bought for resale purposes.
Sponsorship
Sponsorship receipts are expected to be as follows:
| Table 5: Sponsorship Receipts | |||
| Field Signage |
10
|
$500
|
|
|
Major Sponsor |
|
$10,000 |
|
|
Other Sponsors |
|
$2,000 |
|
Subsidy from Local Council
The club receives a subsidy of $500 per month to maintain the park which is owned by the council and leased to the club.
Your Tasks
Task (1)
Calculate the total annual income for the club based on the above information.
Task (2)
The Directors of the club have plans to take the Senior team into the Premier League but realise that more income must be generated for this purpose. The additional funding is needed to cover the cost of recruiting the best possible coaching and support staff and providing remuneration for players. The Directors think that the total income of the club needs to rise to $250,000 to achieve this goal.
Provide feasible proposals for the how the club will reach a total income of $250,000 per annum. Produce an income budget using Excel that shows your workings clearly.
Look carefully at existing sources of income and consider new sources of income. You may need to consider some factors such as hiring paid staff, engaging in promotion and advertising, developing new ways to earn income, or increasing profitability.
In all cases, you must justify your answer and be prepared to present your ideas to the class.
Task (3)
The Directors of the club are also considering extending the clubhouse so that it has a fully licensed bar. The extension has been costed at $400,000. The club has $50,000 in cash but must borrow the remainder from the bank at 12% interest per annum. The Directors understand that the bar would earn a gross profit of 50%. Furthermore, it is also known that the employment cost of a bar attendant is $20 per hour.
How many hours a week would the bar have to be open, and what would the bar sales have to be per hour in order for the club to make an extra net profit of $50,000 per year?
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