The Last Thing I Need Is The Government Taking My Hard Earned $$ To Pay For The Arena I Won’t Be Able To Afford Going To!

It is so interesting to learn about the history of facility funding because of how many of these “mega stadiums” have been popping up around the country over the last 4-5 years, especially Cowboys stadium in Arlington. I believe that arenas can be used as way to improve a city’s economy but really should not be completely funded by the government, no matter what. When you think about it Professional sports is a “private good” USUALLY. The only ones who benefit from the team and new arenas are the team itself and the millionaire/billionaire owners who get to walk away with more money in their pockets, while taxpayers are stuck having to pay extra money from their income to cover the costs that come with a multimillion dollar arena or stadium. Public funding is something in my opinion that should never take place, because the government can use tax payers’ money to take care of things in the community that will actually produce a stable environment, whether that’s building more public libraries, or public buildings where corporations can come in and hire the townspeople, or whatever the case may be. I just have a hard time believing that a sports arena is something can be beneficial to everyone due to how quickly they become commercially obsolete. I think the Fully Loaded Private-Public partnership is a beneficial to everyone and is something that can help both our economy, and sports teams get the arenas they want. Corporations who are financially capable to make the investments into these stadiums are going to continue to do so because of the brand recognition that will come from it with having their names on the building and all over the place associated with that particular team.

Another characteristic that I believe should continue to be included in stadiums and arenas that are built should be the model that AT&T (Cowboys) Stadium has. You see that stadium being used for all sorts of things, sports and non-sports related. We have seen obviously the Cowboys play there every single year since it opened, but also College Football games, NCAA Final Fours, Boxing Matches, Concerts, Band Competitions, Conferences, all taking place. This allows the stadium to be “multi-purpose” and have more use and more of an impact for the community and the economy. The “arms race” between Universities and the Professional leagues has been an interesting one to watch over the past few seasons as more and more universities are looking to build/renovate stadiums. We all know that recruiting is the biggest factor when it comes to Universities, and they know the better the facilities they have the better players they get, the more the fans are willing to come out and use those facilities and the more money they make in return. However, we also see that universities do not have the leverage with the government and rarely ever get any kind of help funding these projects and therefor are left out looking for private investors to help pay the high costs the schools are left with to avoid being 2nd tier schools. We see more schools are becoming associated with corporations, like the KFC Yum! Center here in a Louisville, and they are leading to bigger and better facilities for teams on and off campuses. The NFL/NBA/MLB are always going to have the better facilities because when they do not get the proper funding from governments in one city, they always have the potential to pick up that team and move to another city, for example St. Louis Rams possibly being attracted by Los Angeles due to a lack of a new stadium/resigned lease in St. Louis. However, like Professor Hambrick pointed out in the lecture we will NEVER see a university leave town and head for a better city to get appropriate funding. I think that the government should be more involved in the College/University aspect of funding than professional because of the impact it can have on education and the improvement of education, but I know that is something that will probably never happen due to the fear of insignificant revenues. I think that when we take a look at the future of facility funding we will see more than ever, Corporations willing to fork over big bucks to have their name associated with sports. Like we saw in the lecture sports interest is at an all-time high and corporations are going to want a piece of that because of the revenue that could potentially come from that brand association. I also think more stadiums are going to be built with plans of using it as a multipurpose venue like Cowboys stadium, and that they will build as many amenities as they can to attract more usage from across the country. I think government funding will be less and less used due to the interest rates that will come from it, and the potential hit they could take if the economy takes a downward spiral again, and tax payers like me and you will rejoice not having a tax increase to pay for the latest and greatest arenas. I think we will see a lot of renovations coming to some of the oldest stadiums with too much tradition to tear down like Fenway Park, Wrigley Field, etc. in order to stay away from becoming obsolete.


GoPro 2014 Budget

Revenue                                              960

Cost of Revenue                              475

Gross Profit                                        485

I believe that in the next year we will see GoPro’s revenue go up just a tad bit due to the amount that was spent in research and development in the past calendar year, the sales and marketing, with partnerships such as Red Bull and endorsement deals with new athletes, which will lead to a higher number in total sales. In 2011-2013 we saw the numbers jump significantly with new sales and I think we will continue to see that trend in 2014.

I believe in 2014 we will see the cost of revenue go down as GoPro will be able to find ways to lower that cost, as we bring out new products and spend more money in the research and development department. Why does research and development have anything to do with the total cost of revenue you ask? Well as we know, GoPro is still relying on third party manufacturing which brings the cost higher, but in the next year we anticipate bringing more and more of that manufacturing in-house as we want to open our very first manufacturing and distribution center.

Research/Development                               165

I believe that this number is the key to the future of GoPro. Like we have discussed all year long GoPro is funneling large amounts of money into company, and industry wide research into how we can create new products that will continue to grow the company. We are going to be researching three main things 1) how we can turn a profit from users uploading footage to social media sites like Twitter, Facebook, and Instagram

2) How we can begin to use our own manufacturing and distributing centers to make our products and send them out to wholesalers

3) How we can create new products and new accessories to go along with the product lines we already have in place.

I got to the number of 165 because of the significant jump in R&D that we have seen over the past 3 years. I believe 2014 is the BIGGEST year for GoPro and has the chance to really take over a giant piece of market share from competitors due to the innovating products we produce.

Sales/Marketing                               195

Sales and marketing is the second biggest piece of spending that GoPro will do this year, as we focus on getting our name out on everything. We want to sign more endorsement deals across more sports including basketball, baseball, football, soccer, swimming, track/field, skateboarding, snowboarding, etc. We also want to sponsor more events that we believe go along with our product and the mission statement of our organization. There are many events that could really get GoPro into the public eye and get people talking and generating more word of mouth sales. We are going with the old quote of “you have to spend money to make money,” in order to increase revenue for GoPro in 2014.

General & Administration            50

With higher costs in sales and marketing, research and development we are estimating higher costs for our staff all across the board. We know that the more money we spend on creating new products and research for creating our own manufacturing and distributing plants the more staff/workers we will have to hire and pay. This number has increased every single year since 2011 and we see this to be no different in 2014.

Other Expenses                                                10

Just like General & administration costs, we expect other expenses to increase slightly in 2014. All numbers show us from 2011-2013 that this cost has risen or stayed the same every year and we have to account of expenses that may come along the way in 2014.

Total Operating Expenses            420

Operating Income                           65

Taxes                                                    15

Net income                                        50

I think there are several strengths that GoPro can use to its advantage over the next year, in order to maximize profits and limit expenses to the best of their abilities. The first strength GoPro needs to use is the fact that when customers are making purchases, they are not just buying the camera. Instead they are going out and purchasing a camera, a tri-pod, a helmet attachment, etc. I believe that GoPro can maximize profits by continuing to develop new accessories that will enhance the GoPro camera users experience with the camera, and they will allow them to capture even better footage while using the GoPro camera. The second biggest strength in my opinion is that GoPro has a lot of “word of mouth” advertising due to the footage that is constantly being uploaded to YouTube, and to other social media sites. People see this cool, inspirational, and unique footage and they say to themselves, “I want to go out and film myself doing _________.” There is no one who benefits more from this than GoPro, because then these new customers go out, buy a camera (and some accessories) and go out and then shoot footage themselves. Then someone else sees this and the cycle starts all over again. If GoPro is able to get the footage uploaded into one general area, and charge a subscription fee, that will produce a lot of extra money for the company, to then go out and produce more accessories, more selections in cameras, spend more in marketing and endorsements, do more research on producing and manufacturing, etc., which will in turn allow the company to continue to grow to unprecedented levels.

I believe GoPro has a few different opportunities that could increase potential revenue and sales for the upcoming year’s Pro Forma income statement. The first opportunity being something I have mentioned before is the potential for new customers and new products. GoPro has had a very solid and well-selling line of products thus far, but this year could include some game changing products and accessories that will go a long way into increasing our potential revenue and sales across the board. With new products comes the potential for new customers, and with the increase in marketing and endorsements this year across all sports such as basketball, football, soccer, and hockey, GoPro has the potential to reach a brand new market of customers. If GoPro is able to just reach two of those four new sports we will increase our clients and market share by close to 25-50% of what it is now. With these new sports will come a demand for new products which we hope we are able to produce within the next year to satisfy those consumers. The next potential opportunity will be to sell more stock in the growing company, which has only been public for a few years now. GoPro believes that with the increase in sales over the last three years, the increase in sales and marketing and word of mouth advertising, more people will be interested in buying stocks in the company. GoPro can then use this extra revenue to spend in the research and development/sales and marketing departments in order to better the company and its products all the way around.

Of course with opportunities that can grow GoPro, there also comes threats which has the possibility of hurting the company if handled properly. Over the past ten years we have seen technology products come and go if they are not able to continue producing gear that is wanted by its consumers. For example the Flip Video camera that was very popular during the mid-2000s. We saw that camera take a large portion of the market share because it was not bulky like the rest of the cameras being produced at that time, it was easy to carry with you, easy to use and you were able to upload video directly to your computer after shooting. However, they were not able to stay relevant because they did not continue to make new products that satisfied the customer’s wants and needs. GoPro can end up being just like Flip if they are not able to listen to feedback from customers and make changes and as well as new products for consumers. Another threat that could affect the sales of GoPro could come from the economy. If the economy is not doing well, people are not going to be able to go out and spend a good amount of money on a camera, especially with the power of the iPhone and other smartphones these days. GoPro is only going to continue to do well if the economy is doing well, which as of today it is, but plans have to be made on how to continue to make sales even if there is a downturn.

Below will be the factors that will go into the GoPro scenario analysis for the best-case, worst-case and most likely.

Best Case Scenario:

  • GoPro is able to find new wholesalers, a la Walmart, Target, etc. that can increase the sales of GoPro cameras and accessories
  • GoPro is able to find new ways to manufacture and distribute the products produced, instead of relying on 3rd party manufacturers and distributors
  • GoPro signs new endorsement deals with powerful athletes such as Kevin Durant, Russell Westbrook, Rob Dyrdek, Ryan Lochte, Calvin Johnson, Jimmy Johnson, Lionel Messi, etc. to spread the GoPro products to new sports and new countries
  • GoPro is able to partner and sponsor new events such as the X-Games, NBA Finals, etc.
  • A new website is created by GoPro that allows all footage to be uploaded and for customers to purchase subscriptions, giving them access to all footage, available for download, etc.
  • New stocks are issued onto the stock market for people to buy and become share holders
  • GoPro is able to increase sales during the first three months of year instead of relying on heavy sales during the holiday months

Worst Case Scenario:

  • GoPro is not able to sign deals with independent companies or wholesalers and the sales of cameras and accessories decrease
  • A new product is created for a cheaper price by another technology company and GoPro sales decrease and prices must be lowered to stay in competition
  • GoPro is still not able to find a way to distribute and manufacture the new cameras without signing deals with 3rd party manufactures
    • 3rd party manufactures raise the prices on GoPro
  • The economy takes a hit and people don’t have extra money to spend on cameras
  • Sales drop during the holiday season

Most Likely

  • GoPro is able to sign new endorsement deals with star athletes which creates a new market for the cameras and accessories
  • Some 3rd party manufacturing is brought in-house which lowers the cost of expenses for GoPro
  • The economy does not take a hit during the sales year, and GoPro is able to raise the prices of the new products that are released during the year
  • New stocks are issued
  • GoPro takes a slight hit in sales due to the new iPhone 6 and 6+ as customers decide to spend more money on the new phone, instead of a new camera
  • Sales do go up during the first two quarters of the year, allowing more profit to be made