Sunteți pe pagina 1din 4

Page !

1
Erik Unger
Dr. Stephen Shin
Financial Aspects in Sport
9 November 2014
Sport Budgeting
In the given situation, the athletic department's total revenue and expenditure had them in
the hole with a negative $211,770. The only sport that was making a profit was football, and the
Administrative Expenses were also bringing in a profit. Every other sport had net losses ranging
from $18,600 to $96,300, while the Capital Improvements had an expense of $157,500. In order
to bring the cumulative balance to at the very least $0, drastic measures had to be taken to reduce
the expenses of the various sports. The goal of this budget was to take the net loss of $211,770
and bring it an even $0, and method that made sense would have to be implemented in order to
do that. The focus was simply on expenses, so for the purpose of the project, there were no
changes made to the revenue in any categories.
While there are various methods to reducing expenditure, such as simply cutting entire
programs or reducing all programs by the same amount, I took a different approach on
determining which programs received the cut that was designated to them. I brook each sport up
into 4 groups. I decided to exclude the football program from these groups as it was the only
program that was turning a profit. Each program was ranked in order from one to twelve based
on their net profit, with the program having the lowest net profit being ranked one, and the
program with the highest net profit being ranked twelve. Each program in a group would receive
the same cut in percentage of their overall budget. This cut in percentage was based off the net

Page !2
profit. Groups with a higher net profit received a smaller cut, and groups with a lower net profit
received a higher cut. For the sake of simplicity, I made the cuts 5%, 10%, 15%, and 20%. If
going in to far more detail, the percentage of cuts could have been more tailored to the actual net
profit and expenses and not have just been increments of 5. The overall idea behind the
incremental cuts to the overall budget of a program was that the sports who were not losing as
much money did not need to be penalized with the higher cuts for the programs that were losing
more money/ These method for budgeting may not work well in the real wold, but for the sake of
this project, it was the method I decided to use.
As stated before, each group was designated with an overall cut in their budget that
varied from 5% to 20%. Once actually deciding on which areas of the budget to cut, the process
became a bit more subjective. I knew I had to reduce the budget by a certain percentage, but I
had to setup some ground rules on which areas to cut as a method to be fair amongst the various
programs, or at least what I thought would be fair.
The first rule was that I did not want to cut salaries. Although the numbers given were all
hypothetical, almost all the salaries were very low, and that was the situation I went by. Also
hypothetical, but staff could still be under contract. The second rule was I did not want to cut
game management expenses as this was payment to the people that worked the events. In every
case, these two categories did not have to share the brunt of the designated cut in budget. The
third and final rule was to split up the budget, based purely on subjective decisions and what I
thought the sport might need more. For example, I thought some sports actually benefit from
video/film while others did not have as much a need for it. The same idea goes for printing and
telephone.

Page !3
With the four groups given their designated cut in budgets, there was still around $85,000
that needed to be cut. I did not want to make any cuts to the Administrative Expenses as this was
comprised of salaries, expenses that could benefit student athletes such as the training room and
scholarships, as well as a few revenue making programs. This left Capital Improvements and
Football to make cuts in the expenses to bring the overall cumulative balance to $0.
At first I experimented with completely cutting some of the Capital Expenses programs,
but for the sake of making a cumulative balance of $0, and staying true to my initial idea of cuts
from 5% to 20%, this did not work. In the end, I decided to cut each these programs by half. The
idea behind this was that while each program may not get the exact funding need to complete the
job, or do as nicely a job, once the athletic department starting turning a profit, these projects
could be revisited and done the way they were supposed to be. This left about $5,000 to cut, and
that was applied to the Football program. The Football program received an overall budget cut of
around .7%. Just like the four groups, I stuck to the same ground rules. I did not cut salaries or
game management, but instead took a small amount from the other categories I believed would
not be hurt losing a little money. The amount should be so negligible that it would not affect the
program.
To summarize the method in which I used to reduce expenses and bring the cumulative
balance to $0, I used both overall and individual reductions. The 12 programs that were ranked in
order of net profit were designated an over all reduction in budget. Once the percentage in
overall budget reduction was designated, individual categories received the cuts based on certain
rules set in place and subjective thought on what needed to be cut more and what could not be
cut as much. Capital expenses were reduced all reduced by half in order to cut the remaining

Page !4
$85,000 in expenses in order to reduce or refrain from making any cuts in Administrative
Expenses and the Football program. The Football program did end up receiving individual cuts
that amounted to around $5,000 which only amounted to a tiny .7% reduction in its overall
budget.
The method I chose was intended to be thought out and fair to every program. This
involved ranking all the sports with negative net profits and increasing the overall cut in budget
for those that were losing more money. This process was easy to determine how much had to be
cut overall from each program, but the decisions on which expenses had to be cut within each
program was a more difficult task. In the end, it was all subjective and determined without any
actual information on how much the program really needed certain expenses and how these cuts
would affect them. The remainder of cuts was not nearly as much thought out, and were more
necessities. One could argue that there was bias towards the Football program because it was the
only sport program to have a net profit, but in this hypothetical situation, that was the decision I
made.

S-ar putea să vă placă și