CAREER CLUSTER Finance CAREER PATHWAY Corporate Finance INSTRUCTIONAL AREA Economics BUSINESS FINANCE SERIES EVENT PARTICIPANT INSTRUCTIONS PROCEDURES 1. The event will be presented to you through your reading of these instructions, including the Performance Indicators and Event Situation. You will have up to 10 minutes to review this information to determine how you will handle the role-play situation and demonstrate the performance indicators of this event. During the preparation period, you may make notes to use during the role-play situation. 2. You will have up to 10 minutes to role-play your situation with a judge (you may have more than one judge). 3. You will be evaluated on how well you meet the performance indicators of this event. 4. Turn in all your notes and event materials when you have completed the role-play. PERFORMANCE INDICATORS 1. Describe the nature of business finance. 2. Calculate gross revenue. 3. Describe the functions of prices in markets. 4. Explain how organizations adapt to today s markets. 5. Identify factors affecting a business s profit. Published by DECA Related Materials. Copyright by DECA Inc. No part of this publication may be reproduced for resale without written permission from the publisher. Printed in the United States of America.
EVENT SITUATION BFS You are to assume the role of manager of finance and operations for the ROCK COUNTY COUGARS, a minor league baseball team. The team owner (judge) has asked for your recommendation to increase revenue for the upcoming season. The ROCK COUNTY COUGARS operate as a minor league baseball team playing in a stadium with a seating capacity of 8,200, although attendance over the past three years has averaged only 3,660 per game. Last season the COUGARS performed poorly on the field as well as on the bottom line, finishing with a record of 53 87 and posting a loss of $136,000. Budgeted expenses for the upcoming season have been cut dramatically and the team expects they will not increase this season. The owner (judge) would like to see a significant increase in revenue this season to at least wipe out last season s financial loss, if not also produce a small profit. The most actionable options to boost revenue are increasing ticket prices, concession prices and parking fees. Those options are summarized below: Ticket Prices For 70 Home Games The average price paid per ticket to attend a COUGARS game last season was $7. Concessions Last season, the average fan attending a COUGARS game spent $6 on food, beverages and souvenirs. Parking Fans pay $2 to park their cars. Last season the average number of cars in the stadium parking lot was 1,110 per game. The team projects a similar attendance for the upcoming season and the owner sees four possible solutions to eliminate the deficit: Increase ticket prices, which would raise the average price per ticket from $7. Increase concession prices, which would drive up the average spending on concessions from $6 per fan per game. Increase the parking fee from the present $2. Any combination of the three which produces additional revenue of at least $136,000. The owner (judge) has requested a meeting with you to obtain your analysis and recommendation on increasing revenue. Specifically, you are to evaluate each of the options listed above from a financial perspective and make a detailed recommendation which would eliminate the deficit. You will present to the team owner (judge) in a role-play to take place in the owner s (judge s) office. The owner (judge) will begin the role-play by greeting you and asking to hear your ideas on reducing the deficit. After you have presented and have answered the owner s (judge s) questions, the owner (judge) will conclude the role-play by thanking you for your work. 2
JUDGE S INSTRUCTIONS DIRECTIONS, PROCEDURES AND JUDGE S ROLE In preparation for this event, you should review the following information with your event manager and other judges: 1. Procedures 2. Performance Indicators 3. Event Situation 4. Judge Role-play Characterization Participants may conduct a slightly different type of meeting and/or discussion with you each time; however, it is important that the information you provide and the questions you ask be uniform for every participant. 5. Judge s Evaluation Instructions 6. Judge s Evaluation Form Please use a critical and consistent eye in rating each participant. JUDGE ROLE-PLAY CHARACTERIZATION You are to assume the role of team owner of the ROCK COUNTY COUGARS, a minor league baseball team. You have asked the manager of finance and operations (participant) for a recommendation to increase revenue for the upcoming season. The ROCK COUNTY COUGARS operate as a minor league baseball team playing in a stadium with a seating capacity of 8,200, although attendance over the past three years has averaged only 3,660 per game. Last season the COUGARS performed poorly on the field as well as on the bottom line, finishing with a record of 53 87 and posting a loss of $136,000. Budgeted expenses for the upcoming season have been cut dramatically and the team expects they will not increase this season. You would like to see a significant increase in revenue this season to at least wipe out last season s financial loss, if not also produce a small profit. The most actionable options to boost revenue are increasing ticket prices, concession prices and parking fees. Those options are summarized below: Ticket Prices For 70 Home Games The average price paid per ticket to attend a COUGARS game last season was $7. ($7 x 3,660 fans per game x 70 games = $1,793,400 last season) 3
Concessions Last season, the average fan attending a COUGARS game spent $6 on food, beverages and souvenirs. ($6 x 3,660 fans per game x 70 games = $1,537,200 last season) Parking Fans pay $2 to park their cars. Last season the average number of cars in the stadium parking lot was 1,110 per game. ($2 x 1,110 cars per game x 70 games = $155,400 last season) The total revenue last season from tickets, concessions and parking was $3,486,000. To cover last season s deficit an additional $136,000 needs to be generated which is a 3.9% increase in revenue. While answers will certainly vary, the manager of finance and operations (participant) at least needs to cover last season s deficit. The team projects a similar attendance for the upcoming season and you see four possible solutions to eliminate the deficit: Increase ticket prices, which would raise the average price per ticket from $7. Increase concession prices, which would drive up the average spending on concessions from $6 per fan per game. Increase the parking fee from the present $2. Any combination of the three which produces additional revenue of at least $136,000. You have requested a meeting with the manager of finance and operations (participant) to obtain his/her analysis and recommendation on increasing revenue. Specifically, he/she is to evaluate each of the options listed above from a financial perspective and make a detailed recommendation which would eliminate the deficit. Sample Solutions: Increase ticket prices so that the average price per ticket rises to $7.55; produces additional revenue of $140,910. OR Increase concession prices so that the average spent per fan per game rises to $6.60; produces additional revenue of $153,720. OR Double the price of parking to $4; produce additional revenue of $155,400. The manager of finance and operations (participant) will present to you in a role-play to take place in your office. You will begin the role-play by greeting the manager (participant) and asking to hear about his/her ideas. During the course of the role-play you are to ask the following questions of each participant: 1. Just because we raise our prices on tickets, concessions or parking, are we assured of being able to eliminate our deficit from the previous season? Please explain. 4
2. What role can marketing play in reducing the team s deficit? BFS Once the manager of finance and operations (participant) has presented and has answered your questions, you will conclude the role-play by thanking the manager (participant) for the work. You are not to make any comments after the event is over except to thank the participant. 5
Evaluation Form Information JUDGE S EVALUATION INSTRUCTIONS The participants are to be evaluated on their ability to perform the specific performance indicators stated on the cover sheet of this event and restated on the Judge s Evaluation Form. Although you may see other performance indicators being demonstrated by the participants, those listed in the Performance Indicators section are the critical ones you are measuring for this particular event. Evaluation Form Interpretation The evaluation levels listed below and the evaluation rating procedures should be discussed thoroughly with your event chairperson and the other judges to ensure complete and common understanding for judging consistency. Level of Evaluation Exceeds Expectations Meets Expectations Below Expectations Little/No Value Interpretation Level Participant demonstrated the performance indicator in an extremely professional manner; greatly exceeds business standards; would rank in the top 10% of business personnel performing this performance indicator. Participant demonstrated the performance indicator in an acceptable and effective manner; meets at least minimal business standards; there would be no need for additional formalized training at this time; would rank in the 70-89 th percentile of business personnel performing this performance indicator. Participant demonstrated the performance indicator with limited effectiveness; performance generally fell below minimal business standards; additional training would be required to improve knowledge, attitude and/or skills; would rank in the 50-69 th percentile of business personnel performing this performance indicator. Participant demonstrated the performance indicator with little or no effectiveness; a great deal of formal training would be needed immediately; perhaps this person should seek other employment; would rank in the 0-49 th percentile of business personnel performing this performance indicator. 6
JUDGE S EVALUATION FORM BFS SAMPLE EVENT DO NOT WRITE ON THIS PAGE. RECORD ALL SCORES ON THE SCANTRON SHEET PROVIDED. DID THE PARTICIPANT: 1. Describe the nature of business finance? Attempts at describing the nature of business finance were inadequate or weak. Adequately described the nature of business finance. Effectively described the nature of business finance. Very effectively described the nature of business finance. 2. Calculate gross revenue? Attempts at calculating gross revenue were inadequate or weak. Adequately calculated gross revenue. Effectively calculated gross revenue. Very effectively calculated gross revenue. 3. Describe the functions of prices in markets? Attempts at describing the functions of prices in markets were weak or incorrect. Adequately described the functions of prices in markets. Effectively described the functions of prices in markets. Very effectively described the functions of prices in markets. 4. Explain how organizations adapt to today s markets? Attempts at explaining how organizations adapt to today s markets were inadequate or unclear. Adequately explained how organizations adapt to today s markets. Effectively explained how organizations adapt to today s markets. Very effectively explained how organizations adapt to today s markets. 5. Identify factors affecting a business s profit? Attempts at identifying factors affecting a business s profit were inadequate or weak. Adequately identified factors affecting a business s profit. Effectively identified factors affecting a business s profit. Very effectively identified factors affecting a business s profit. 6. Overall impression and response to the judge s questions. 0, 1, 2 3, 4, 5 6, 7, 8 9, 10 Demonstrated few skills; could not answer the judge s questions. Demonstrated limited ability to link some skills; answered the judge s questions adequately. Demonstrated the specified skills; answered the judge s questions effectively. Demonstrated skills confidently and professionally; answered the judge s questions very effectively and thoroughly. Judge s Initials TOTAL SCORE 7