Written Analysis of the Case on “The Craddock Cup”

Thea Alavar

Angelique Balan

Fatima Sherlyn Ismun

Kevin Xavier Reyes

I. SUMMARY

II. STATEMENT OF THE PROBLEM

What will Rivaldo recommend to Craddock Youth Soccer League (CYSL) Board in order

to increase the annual profit of the tournament to at least 6,000 dollars so that it will continue to

be held and Rivaldo can keep his present job as the general manager?

III. OBJECTIVES

 To raise the necessary funds required to acquire a field for the league

 To continue to provide high-quality soccer activities to boys and girls who will

participate in the tournament

 To properly allocate the tournament’s overhead expenses

 To arrive at the tournament’s true operating profit

IV. AREAS OF CONSIDERATION

V. ALTERNATIVE COURSES OF ACTION

ACA 1. Stick with the usual plans for the tournament but with a revision of the

profit statement.

Craddock Cup
Revised Profit Statement

Current Size
Revenue: (32)
Team Registration Fee (295 per player) 9,440.00
Corporate Sponsorships 14,000.00
T-Shirt Sales (15 each) 4,800.00
Concession Sales (30 per player) 17,280.00
Participation Fees for Soccer Clinics (10 per child per day for 216
children) 4,320.00
Total Revenue 49,840.00
Relevant Costs:
Variable:
College scouts' hotel rooms (80 per night x 2 nights x 25 scouts) 4,000.00
Face Books (6 per book x 75 face books) 450.00
T-Shirt purchase (6 each) 1,920.00
Concession stands (15 per player) 8,640.00
Soccer Clinics (6 per child per day) 2,592.00
Insurance Premium (4 per player) 2,304.00
Soccer balls (27 each x 2) 432.00
Referees (100 per game x 4 games x 16 teams) 6,400.00
Trophies (25 per plater on the winning team) 900.00
Total Variable Costs 27,638.00
Fixed:
Craddock Registration with CYSL 1,500.00
Marketing and Advertising 2,200.00
Part-Time Workers (12,000 x 100%) 12,000.00
15,700.00
Total Costs 43,338.00
Operating Profit 6,502.00
The following costs were removed in revising the profit statement because these are fixed

irrelevant costs: Soccer field rent, fulltime worker's salary and rents and utilities. These

costs will still be incurred by CYSL whether the tournament will be hosted or not. Due to such

removal, the revised profit statement showed that the tournament was actually earning 6,502

which is more than the target earnings for the tournament.

Since the actual profit of the tournament is already a gain, might as well proceed with the usual

strategy with a few changes in the preparation of the profit statement.

Advantage:

1. The tournament already shows a profit so there’s a reason for it to be continually

hosted.

2. Rivaldo can keep his current job in CYSL.

Disadvantage:

1. Previously allocated costs will now be fully shouldered by CYSL main office.

2. The Profit Statement will no longer show the involvement of all the personnels

previously recognized.

ACA 2. Increase the size of the tournament by adding two middle-school brackets, one for

boys and one for girls.

ACA 1. Increase to 64 teams.

Craddock Cup
Revised Profit Statement

Revenue: Revised Size (64)

 Team Registration Fee (295 per player) 18,880.00
Corporate Sponsorships 14,000.00
T-Shirt Sales (15 each) 9,600.00
Concession Sales (30 per player) 34,560.00
Participation Fees for Soccer Clinics (10 per child per day for 216 children) 8,640.00
Total Revenue 85,680.00
Relevant Costs:
Variable:
College scouts' hotel rooms (80 per night x 2 nights x 25 scouts) 4,000.00
Face Books (6 per book x 75 face books) 450.00
T-Shirt purchase (6 each) 3,840.00
Concession stands (15 per player) 17,280.00
Soccer Clinics (6 per child per day) 5,184.00
Insurance Premium (4 per player) 4,608.00
Soccer balls (27 each x 2) 864.00
Referees (100 per game x 4 games x 32 teams) 12,800.00
Trophies (25 per plater on the winning team) 1,800.00
Total Variable Costs 50,826.00
Fixed:
Additional Soccer Fields (6 fields) 1,800.00
Additional Goals (6 fields x 2 goals each) 720.00
Craddock Registration with CYSL 1,500.00
Marketing and Advertising 2,200.00
Part-Time Workers (12,000 x 100%) 12,000.00
18,220.00
Total Costs 69,046.00
Operating Profit 16,634.00

Increasing the teams to participate in the tournament from 32 to 64 by adding the middle-school

bracket will increase the operating profit (without OH allocation) to 16,634. This is 2.6x greater

than the operating profit the tournament used to earn. Furthermore, a similar strategy will also

increase the operating profit of the tournament to 7,154 from a loss of almost 4,000 even if the

OH allocation is made as shown below.

ACA 1. Increase to 64 teams with allocation of OH.

Craddock Cup
Profit Statement
 Current Size
Revenue: (32)

Team Registration Fee (295 x 32) 18,880.00

Corporate Sponsorships 14,000.00

T-Shirt Sales (15 each) 9,600.00

Concession Sales (30 per player) 34,560.00

Participation Fees for Soccer Clinics (10 per child per day for 216 children) 8,640.00

85,680.00
Costs:

College scouts' hotel rooms (80 per night x 2 nights x 25 scouts) 4,000.00

Face Books (6 per book x 75 face books) 450.00

T-Shirt purchase (6 each) 3,840.00

Concession stands (15 per player) 17,280.00

Soccer Clinics (6 per child per day) 5,184.00

Craddock Registration with CYSL 1,500.00

Insurance Premium (4 per player) 4,608.00

Soccer Field Rent (1200 + 1800) 3,000.00

Soccer balls (27 each x 2) 864.00

Referees (100 per game x 4 games x 16 teams) 12,800.00

Trophies (25 per plater on the winning team) 1,800.00

Marketing and Advertising 2,200.00

Fulltime Worker's salary (42000 x 15%) 6,300.00

Part-Time Worker's Salary(12,000 x 100%) 12,000.00

Rent and Utilities (18,000 x 15%) 2,700.00

 78,526.00

Operating Loss 7,154.00

Advantage:

1. Profit will grow 2.60x (16,634/6,502) than what the tournament used to earn.

2. The local business establishments (i.e. hotels and restaurants) will profit more.

3. Wider and stronger relation with schools that CYSL hope to continually work with will

be built.

Disadvantage:

1. Increased expenses to cater the additional teams.

2. Crowded places which could result to chaos.

ACA 3. Increase in participants to 64 teams, Registration Fee and Other Expenses.

Incremental Costs
Marketing and Advertising Expense 1,000.00
College scouts' hotel rooms (80 per night x 2 nights x 25 scouts) 2,400.00
Face Books (6 per book x 20 face books) 120.00
3,520.00
Divided By: Revised # of Fields 64
Increase in Registration Fee 55

Current Registration Fee 295.00

55.00
350.00

Craddock Cup
Revised Profit Statement

Revenue: Revised Size (64)

 Team Registration Fee (350 per player) 22,400.00
Corporate Sponsorships 14,000.00
T-Shirt Sales (15 each) 9,600.00
Concession Sales (30 per player) 34,560.00
Participation Fees for Soccer Clinics (10 per child per day for 216 children) 8,640.00
Total Revenue 89,200.00
Relevant Costs:
Variable:
College scouts' hotel rooms (80 per night x 2 nights x 40 scouts) 6,400.00
Face Books (6 per book x 95 face books) 570.00
T-Shirt purchase (6 each) 3,840.00
Concession stands (15 per player) 17,280.00
Soccer Clinics (6 per child per day) 5,184.00
Insurance Premium (4 per player) 4,608.00
Soccer balls (27 each x 2) 864.00
Referees (100 per game x 4 games x 32 teams) 12,800.00
Trophies (25 per plater on the winning team) 1,800.00
Total Variable Costs 53,346.00
Fixed:
Additional Soccer Fields (6 fields) 1,800.00
Additional Goals (6 fields x 2 goals each) 720.00
Craddock Registration with CYSL 1,500.00
Marketing and Advertising 3,200.00
Part-Time Workers (12,000 x 100%) 12,000.00
19,220.00
Total Costs 72,566.00
Operating Profit 16,634.00

Increasing the advertising expense coupled with the increase in hotels expense for college scouts

and printing of more face books will result to an operating profit of 13,114. In order to bring the

operating profit to an amount similar to the previous ACA, there is a need to increase registration

fee to 350. (Profit Statement without OH Allocation)

If a profit statement with OH Allocation is to be done, doing this strategy will result to an

operating profit of 3,634 as shown below. Increasing the Registration Fee to 350 will bear the

same result as ACA 2.

Craddock Cup
Profit Statement

Revenue: Current Size (32)

Team Registration Fee (350 x 32) 18,880.00

Corporate Sponsorships 14,000.00

T-Shirt Sales (15 each) 9,600.00

Concession Sales (30 per player) 34,560.00

Participation Fees for Soccer Clinics (10 per child per day for 216 children) 8,640.00

85,680.00
Costs:

College scouts' hotel rooms (80 per night x 2 nights x 40 scouts) 6,400.00

Face Books (6 per book x 95 face books) 570.00

T-Shirt purchase (6 each) 3,840.00

Concession stands (15 per player) 17,280.00

Soccer Clinics (6 per child per day) 5,184.00

Craddock Registration with CYSL 1,500.00

Insurance Premium (4 per player) 4,608.00

Soccer Field Rent (1200 + 1800) 3,000.00

Soccer balls (27 each x 2) 864.00

Referees (100 per game x 4 games x 16 teams) 12,800.00

Trophies (25 per plater on the winning team) 1,800.00

Marketing and Advertising 3,200.00

Fulltime Worker's salary (42000 x 15%) 6,300.00

Part-Time Worker's Salary(12,000 x 100%) 12,000.00

Rent and Utilities (18,000 x 15%) 2,700.00

 82,046.00

Operating Loss 3,634.00

Advantage:

1. Inviting more college scouts will also encourage more students to participate.

2. Increase the visibility and prestige of the tournament.

3. Corporate sponsorships may increase due to the increase in participants of the

tournament.

Disadvantage:

1. Increase in Registration Fee may discourage those who have limited financial resources.

VI. RECOMMENDATION

VII. ACTION PLAN

VIII. POTENTIAL PROBLEM ARISING