Are you in Canada? Click here to proceed to the HK Canada website.

For all other locations, click here to continue to the HK US website.

Human Kinetics Logo

Purchase Courses or Access Digital Products

If you are looking to purchase online videos, online courses or to access previously purchased digital products please press continue.

Mare Nostrum Logo

Purchase Print Products or eBooks

Human Kinetics print books and eBooks are now distributed by Mare Nostrum, throughout the UK, Europe, Africa and Middle East, delivered to you from their warehouse. Please visit our new UK website to purchase Human Kinetics printed or eBooks.

Feedback Icon Feedback Get $15 Off

Business expenses affect ticket prices and more

This is an excerpt from Sport Finance-3rd Edition by Gil Fried,Timothy DeSchriver & Michael Mondello.

Business Costs

As highlighted in chapter 3, a business needs to plan for various expenses. Expenses can include office supplies, raw inventory, facility costs (from mortgages to electrical bills), corporate perks such as season tickets, and an endless number of other expenses. Given the complexity within some organizations, categorizing every dollar spent by a business is difficult because some expenses are grouped into a generic category called general expenses instead of being recorded separately. General expenses for a sport-related business can be highly diverse, as seen in the next Concepts Into Practice example using Speedway Motorsports.

One question often raised relates to ticket prices and player salaries. For example, what effect did the Los Angeles Angels' 2011 signing of free agent Albert Pujols have on ticket prices? Player salaries are a fixed expense—at the start of the season, the team knows what its total salary obligation will be except for possible bonuses and reductions in salaries if players are injured, cut, or traded. Furthermore, the team can then predict other expenses based on their level of salary expense. Similarly, the team can determine the potential revenue from broadcast rights, luxury seating, and sponsorship income. Considering these potential income areas, the team can examine how much it might need to charge ticket holders to ensure that it can cover its costs. Thus, expenses have a direct effect on prices of various items, from tickets to concessions.

We all know basic costs such as the price of going to McDonald's and spending $5 for a meal. When you do this, the cost to you is $5. If you earn $10 per hour, you can calculate your cost as 50% of your hourly wage. On the basis of an eight-hour day, you could calculate your $5 meal as 6.25% of your daily wage. Cost analysis is similar for a sport business.

Read more from Sport Finance, Third Edition by Gil Fried, Timothy DeSchriver, and Michael Mondello.

More Excerpts From Sport Finance 3rd Edition

HK INSIDER

Get the latest insights with regular newsletters, plus periodic product information and special insider offers.

JOIN NOW