North Carolina State University

PRT 466: Sport Finance and Economics

Spring 2021 Budget Assignment

The Richmond Arena* is a privately owned and financed multi‐purpose entertainment and sports
arena. The arena is 500,000 square feet and has an 18,000‐seat capacity. The arena was built to host
major concerts, ice shows, trade shows, monster truck rallies, circuses, and sporting events. It has
NCAA/NBA/NHL‐ready core features to support collegiate tournaments and potentially a professional
sports franchise. Unfortunately, while it attracts enough events to remain solvent, the arena has not
attracted an anchor tenant and revenues for the current year are not reaching projected goals.
Therefore, the operating budget for the arena must be cut.

Your task is to take the Arena’s budget and, abiding by some restrictions (see below), revise it so that
an 6.5% reduction is achieved.

You will turn in two files.

1. Excel File that shows an accurate current budget, your proposed budget, and % changes to
each account
2. Word Document* that explains the following:
a. The steps you proposed to reduce the budget by 6.5% (Give specific $ amounts
and categories).
b. Your reasoning/justifications behind your decisions to reduce specific parts of the
budget.
i. This should include specific sources to support your decisions
ii. Every account you adjust requires a separate justification
c. A reflection (no more than 300 words) about the strategy and ethical dilemmas you
faced when reducing the budget 6.5%.
*See template below

Notes for Budget Reduction Project:

1. Fringe benefits are based on the salary amounts. Total Fringe is 32.5% additional funds
based on salary amounts for full time staff (10.25% for part‐time). If you reduce salaries or
salary lines, the fringe benefits should also be appropriately reduced. So take this into
consideration when you are reducing the budget.
2. You may not reduce by a % or stock dollar amount "across the board" for multiple accounts.
For example, you cannot just cut multiple accounts by $5000 or $10,000 (or 10%, 25%)
without clear justification for those amounts.

*The Richmond Arena is a composite invention of multiple proposed arenas that were not
actually constructed.

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Current Budget Details
1. Personnel/Salaries
Full‐Time
The following is the list of the 46 full‐time staff and the current salary for each position.
Position
General Manager
Assistant General Manager
Executive Assistant
Receptionist
Director of Finance
Comptroller
Staff Accountant
HR Manager
Director of Ticketing
Ticket Office Manager
Ticket Office Supervisor
Director of Marketing
Public Relations Manager
Social Media Manager
Premium Seating Manager
Group Sales Director
Account Executive
Senior Event Manager
Event Manager
Event Coordinator
Production Director
Production Coordinator
IT Manager
Director of Security
Security Manager
Director of Operations
Asst. Director of Operations
Administrative Assistant
Conversion Manager
Conversion Supervisor
Maintenance Technician
Housekeeping Manager
Housekeeping Supervisor
Housekeeper
Number of Staff Salary
1 $165,000
1 $125,000
1 $45,000
1 $35,000
1 $90,000
1 $65,000
2 $40,000
1 $50,000
1 $75,000
1 $60,000
1 $45,000
1 $100,000
1 $60,000
1 $50,000
2 $40,000
1 $45,000
2 $32,000
1 $65,000
2 $50,000
1 $35,000
1 $65,000
2 $45,000
1 $60,000
1 $70,000
2 $45,000
1 $105,000
2 $70,000
1 $35,000
1 $40,000
2 $35,000
3 $30,000
1 $50,000
2 $35,000
2 $28,000
2
Part Time
The following is the breakdown on part‐time staffing for the arena. Weekly expense represents the
total amount per week per position in each category. For example, the arena pays $672 each week for
one ticket seller position.

Weekday Weekend Weekly Total

Pay Rate Personnel Hours (per Hours (per Expense per Weeks
day) day) 1 position
(hours x
days)
Ticket Seller $12.00 4 8 8 $672 45
Guest Services $9.00 2 8 8 $504 51
Operations $9.00 4 8 8 $504 50
Security $12.00 1 24 24 $2,016 50
Custodial $8.00 2 6 5 $320 51

2. Contractual Services

Account Amount
Equipment Rental $52,000
Landscaping $50,000
Legal $26,000
Maintenance Services $140,000
Pest Control $50,000
Photography/Design $13,000
Plumbing $20,000
Staff Uniforms (and Laundry) $15,000
Waste Removal $60,000

3. Internal Services

Account Amount
Carpentry/Painting $10,000
Ice Maintenance $65,000
General Repairs/Maintenance $50,000
HVAC Preventative Maintenance $120,000

4. Equipment/Supplies

Account Amount
Equipment Expenses $55,000
Building Supplies $50,000
Electrical Supplies $25,000
General Supplies $80,000

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 5. Utilities

Account Amount
Arena Utilities $1,100,000
Office Utilities $165,000

6. Marketing/Promotions

Account Amount
Advertising $120,000
Customer Relations $35,000
Promotions $75,000
Selling Expenses $32,000

7. General/Administrative

Account Amount
Automobile Expenses $20,000
Background Checks $16,000
Bank Fees $30,000
Computer/Software $100,000
Credit Card Fees $40,000
Dues/Subscriptions $25,000
Human Resources Recruitment $20,000
Insurance $330,000
IT/Internet $45,000
License/Permits $11,000
Office Supplies $30,000
Postage/Shipping $20,000
Professional Fees $75,000
Staff Training $30,000
Telephone $93,000
Travel & Entertainment $30,000
Miscellaneous $10,000

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 BUDGET REPORT TEMPLATE
The next few pages represent a template for how your report should be organized. You don’t have to use the
exact template, but you will be expected to include:

1. Cover Page

2. Table of Contents

3. Executive Summary

4. Justifications (with sub-sections for each account)

5. Reflection

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 Richmond Arena Budget Reduction Report

PRT 466 – Spring 2021

Student Name

Date

PLEASE NOTE THAT EVERYTING WRITTEN IN RED ARE MY COMMENTS AND SHOULD NOT BE INCLUDED
IN YOUR REPORT
 Table of Contents

Executive Summary....................................................................................................................................... 2
Justifications.................................................................................................................................................. 3
Utilities ...................................................................................................................................................... 3
General/Administrative ............................................................................................................................ 3
Reflection ...................................................................................................................................................... 4

1
Executive Summary

Write a brief (no more than 1-2 paragraphs) summary of your overall report here

2
Justifications
[In this section, you will include a summary of each of the adjustments made to each account]

Utilities
The following accounts were adjusted in Utilities [Example text]

Arena Utilities (Reduced by $220,000)

Through research, I found that Municipal Arena had a problem with their utilities budget. They had only
budgeted for $700,000 and needed approximately $1.2 million to cover utilities. With this stadium
seating 25,500 people and having a square footage of 470,400 sf, we can conclude Municipal Stadium is
similar to our stadium. While our current budget is $1.6 million dollars for arena utilities, we should be
able to reduce the Arena Utility budget by $220,000 to $1.38 million, which still provides a 15%
contingency in the event utilities trend higher.

https://journalstar.com/news/local/govt-and-politics/jpa-money-will-put-stadium- budget-in-the-
black/article_4ed7847c-7be4-5c6b-8336-4dd63c0cceef.html

https://www.municipalarena.com/about

Please note that this section is completely made up, but represents what the process might look like in
researching both an account rationale and support for the appropriate estimate of an amount to be cut

General/Administrative
The following accounts were adjusted in General/Administrative

Telephone (Reduced by $16,000)

We budgeted $130,000 for telephone services. I believe we are overpaying for these services and can
utilize a cheaper alternative. By switching to Spectrum Business we can cut our costs on these services
to $114,000 per year. Spectrum Business offers a bundle of 500 Mbps internet for $64.99 a month plus
$29.99 phone services per line per month. Assuming that we need approximately 100 phone lines for
the arena (based on 50 full-time employees + additional lines for sales and media as an estimate
obtained from direct communication with PNC Arena general manager Mr. Davin Olsen). This switch will
save our company $16,000 in expenses.

business.spectrum.com/bundles

Davin Olsen, personal communication, January 31, 2019

Please note that this section is completely made up, but represents what the process might look like in
researching both an account rationale and support for the appropriate estimate of an amount to be cut

3
Reflection
Here you would write your 300 word reflection

You should not need a reference page because all references should be included with each justification
above