Studyspark Study Document

Capital Budget in Recreation in Term Paper

Pages:5 (1338 words)

Sources:3

Subject:Mathematics

Topic:Capital Budgeting

Document Type:Term Paper

Document:#62456257


To solve these emerging needs of the company to satisfy the demand in the market, it is necessary to invest into expanding of the services offered and shifting the existing concept of the club. Firstly, it is necessary to expand the space occupied by renting out additional premises and organizing Spa procedures there. This will require also investment into necessary human resources, such as hiring Spa administrative and consultants specialists offering services for both women and men, and for both facials and body treatment to maximize the services mix. Costs for occupying this space, purchasing necessary equipment and hiring adequate staff so can exceed the current costs by ?450,000, so this is the incremental expense from proceeding with this services expansion programs. Cost to organize the fitness and Spa cafe, which is proposed to call at EnerGi Box, will amount to another ?100,000 annually. The final improvement step is investment into hiring a team of personal coaches or consultants which will hold personal training sessions and group seminars with the members of the club, to provide a full range of services. Incremental costs for the club for hiring the team will amount to ?150,000 annually. Thus, the system of improvement needs total ?700,000 additional costs annually. Initial investment into renovation and payment for facilities is estimated approximately in the order of ?150,000. But it is also vital to estimate the possible losses which the club will suffer if it does not forego this program and thus is most likely to lose the clients in the coming one to two years due to appearing competition from other clubs which will offer the new services and will win over the clients, thus causing losses to the City Point Club.

Currently, the club has 4,000 members all having different attendance patterns and being on different payment schemes. Generally, total annual income from the membership is approximately ?5,750,000, while the operating costs leave the profit margin of approximately 32% to the owner. Based on preliminary market research, it will be possible to increase standard membership payments by at least 17% if these new steps in the services offered are undertaken, which will lead into total club revenues of ?7,190,000, while the operating costs will increase only up to ?4,610,000, leaving the profit margin of ?2,120,000 which leaves also the margin of 32%, but is better by ?280,000 in financial terms. The initial investment of ?200,000 necessary to be made to consider the program will be paid back also within the first year of running this program, and the second year will bring already more profit to the company. The capital for this initial investment is rather small and can be taken out of the current profits achieved by the company and thus it is not necessary to take out the loans or the like.

As it is impossible to estimate precisely how much business and trading the company would lose if it does not proceed with this program, the assumption is that 25% of the customers will switch, thus making the total club revenues only ?4,315,000. The operating expenses will also decrease, but not at such high rate as 25% as there is a considerable share of fixed expenses within the total operating expenses structure. Assuming that operating expenses will decrease by 20%, and will amount to ?3,130, leaving the profit of ?1,005,000 which is only 25% and clearly reveals the financial sense of considering the expansion of the business and making this investment into it. It is even the only way not to start losing the money because of increasing and tightening competition in the market.

References

http://www.thecitypointclub.co.uk/

Brayley, R.E., McLean, D. (1999). Managing Financial Resources in Sport and Leisure Service Organizations, Sports Publishing.

Mitchell, D. Coles, C. (2004) Establishing a continuing business model innovation process, Journal of Business Strategy, 25 (3), pp. 39-49.

D. Mitchell, C. Coles, Establishing a continuing business model innovation process, Journal of Business Strategy, Volume 25, No. 3, 2004,…


Sample Source(s) Used

References

http://www.thecitypointclub.co.uk/

Brayley, R.E., McLean, D. (1999). Managing Financial Resources in Sport and Leisure Service Organizations, Sports Publishing.

Mitchell, D. Coles, C. (2004) Establishing a continuing business model innovation process, Journal of Business Strategy, 25 (3), pp. 39-49.

D. Mitchell, C. Coles, Establishing a continuing business model innovation process, Journal of Business Strategy, Volume 25, No. 3, 2004, pp. 39-49. http://www.thecitypointclub.co.uk/

Cite this Document

Join thousands of other students and "spark your studies."

Sign Up for FREE
Related Documents

Studyspark Study Document

Recreation and Leisure Introduction of

Pages: 7 (1925 words) Sources: 5 Subject: Recreation Document: #62200600

Programs and Services are listed in Appendix C: Table Seven and include: (1) Summer recreation programs; (2) after-school activities; (3) organized sports; and many others. Appendix a Clackamas Parks and Recreation District Source: Our Parks Future Master Plan Appendix B Organizational Structure of North Clackamas Parks and Recreation District Source: Our Parks Future Master Plan Appendix C Fiscal Year/Operating Budget/General Fund Budget and Percent of Total Fiscal Year Operating Budget General Fund Budget of Total 1998-99 1999-00 2000-01 2001-02 Source: Our Parks Future Master

Studyspark Study Document

Budget Plan Is a Quantitative Expression of

Pages: 8 (2353 words) Sources: 2 Subject: Economics Document: #33583598

Budget plan is a quantitative expression of planned income and expenses for a given financial year. A budget contains an estimated projected expenses and revenue for a financial year. A budget also reveals the estimated costs, expenses, liabilities and assets and the cash flows for a fiscal year. Syracuse is an historic city based in Sicily, and the city budget for 2011-2012 fiscal years is to achieve a balanced between

Studyspark Study Document

Public Administration Budgeting PA Budgeting for Public

Pages: 6 (1677 words) Sources: 8 Subject: Economics Document: #74205891

Public Administration Budgeting PA Budgeting Budgeting for Public Administration Budgets are used in addressing various purposes including management and control as well as communication of goals, successes, the public entity's philosophy and explain the various departmental functions. Public administration professionals must be able to analyze the financial health of an entity by examining the budget. This work will assess how well available budget documents and auxiliary information address each of these functions on

Studyspark Study Document

Government: Comparison of Three Budgets

Pages: 4 (1376 words) Sources: 1+ Subject: Economics Document: #36848788

The State of Nevada and Clark County appear to have a different manner of meeting budget deficiencies. The Office of Budget and Management has an amount of finances reserved for supplemental and emergency funding, at a total of $153.1 billion dollars. Neither Clark County nor the State of Nevada appears to have emergency or supplemental funding in their budgets. State of Nevada The budget for the State of Nevada is larger

Studyspark Study Document

10 Million Fund Allocation Budget Plan

Pages: 15 (4256 words) Sources: 5 Subject: Healthcare Document: #61902064

Budget Plan for $10 Million Fund Allocation Positive economic development in any city in the United States relies on the provision of effective, efficient, and strong infrastructures that will attract investment to generate job opportunities in the city. A central goal of any city is also to improve health outcomes for the residents to improve their health outcomes. City public officials should also provide safety and securities, and improve students achievements

Studyspark Study Document

City Governement Budget Analysis Newport

Pages: 10 (2665 words) Sources: 5 Subject: Family and Marriage Document: #89703996

The Property Taxes revenues' evolution is: for 2001-2002: $33,583,659; for 2002-2003: $39,474,865; for 2003-2004: $43,631,829; for 2004-2005: $56,254,917; for 2005-2006: $61,055,240; the proposed revenue for 2006-2007 is $67,102,454, with a 9.9% increase. The Licenses and Permits revenues' evolution is: for 2001-2002: $1,956,365; for 2002-2003: $2,305,118; for 2003-2004: $3,483,020; for 2004-2005: $3,061,667; for 2005-2006: $3,027,345; the proposed revenue for 2006-2007 is $2,819,900 with a 6.85% decrease. The Intergovernmental revenues' evolution is: for 2001-2002:

Join thousands of other students and

"spark your studies".