sport finance mod 1 finance basics

welcome to module one module one is a

focus on some just the basic

fundamentals there are two parts of

module one what is dealing with some of

the financial basics the second part

deals with assets and liabilities so I'm

going to be covering first in this video

that some of the basics of finance now

what is sport finance sport finance is

the ability to take numbers derive from

accounting as to what's going on within

an organization and taking other numbers

that might be out there

for example balanced scorecard or other

techniques that are part of financial

accounting that's what most those from

managerial accounting help make

decisions those numbers that are derived

through the accounting process help set

a picture for an organization for

example what happens with an

organization is that they might set a

budget for next year they're in a rely

upon numbers derived through the

budgetary process to anticipate what the

roadmap might be for the future but they

were lying upon numbers developed

through accounting to determine whether

or not they in fact have met the

budgeting process and if they are

accurate or not so I want to make sure

that there's a clear line of demarcation

between sport finance sport accounting

and sport economics for economics for

example does not look at an individual

organization it looks either at a micro

level or macro level and industries or

countries or regions and tries to

determine are people buying people in a

better economic mood where they're going

to be willing to spend more money that

can help the budgeting process because

the people who want to buy more tickets

and they're an upbeat manner then you

might anticipate increased ticket sales

for the future so there is significant

difference but finance especially sport

finance is designed take a look at

numbers as a planning tool to help you

reach your goal of financial success now

if we take a look at what is the primary

reason you have

well why do we think of the sport

finance in the way that we do is that

people that run organizations need to

make a profit what is a profit

what depends upon the organization even

a nonprofit organization you need to

make money or they will not be able to

keep their doors open similarly a

for-profit organization either has to

make stockholders happy and that means

having a good return on the stockholders

investment when they purchase stock and

that could be either through dividends

or through increase in share value or

they could be trying to post buy and pay

their bills like a lot of startups try

to do and hope that a big paydays in the

future regardless of what the issue is

going to be it's all going to be

dictated based upon what are the goals

of the organization

so finance is based upon goals if the

goal is to be able to survive for a

couple years until a product is launched

for sports of najuk company that goals

gonna be completely different than

amateur sport organization which might

have to pay two to five percent a year

in dividends or it might have preferred

stocks that pay dividends or they might

have bonds that need to be repaid at

certain interest rates there's going to

be completely different obligations and

requirements on the finance side then in

some other areas for example nonprofits

for an organization college athletic

department that's in a state institution

might not have to balance its books

similar to a for-profit organization so

you always want to take a look at what

is the goal or goals of an organization

as it relates to the financial future

other things that I think might be

important to understand in this

introductory process that we do right

now be explaining what I think is

important this I understand that finance

affects every facet of an organization

it affects human resources and that

could be how much you pay people what

their benefit should be whether or not

they should be paid benefits

it affects legal we're not gonna settle

the lawsuit or not as an example or what

kind of

try to injury - it affects me facture

that if you want to do lean

manufacturing as an example or Six Sigma

or being black belt in terms of analysis

of the supply chain

it affects all marketing decisions

everything nowadays is data-driven and

almost everything is finance driven and

that can help you understand and

appreciate the process that much more

because it is in depth in and will

affect every facet of an organization

another issue is is debt back some

people try running away from debt

thinking that is bad you know I

shouldn't have any credit card debt well

if you can avoid credit card debt that's

great but for a business oftentimes the

only way to grow is to take on debt

whether it's balance whether it's bank

financing whether might be issuing

additional shares which is going to be

equity liability and equity debt that's

the way you have to grow you need the

money so if you're building a factory

it's gonna cost you hundreds of millions

of dollars normally most organizations

can't just reach into the pocketbook and

do that they're not use finance as a way

to grow so we want to have from very

beginning this common bog that we

understand that then it's not

necessarily bad when you take on debt

that you cannot repay that's what it's

bad if you make wrong assumptions about

the debt and your ability to repay that

debt that's going to be problematic and

so if we take a look at the various

tools we're gonna be covering them in

greater detail throughout the class but

your and-a-half acids in liability

revenue and expenses we're gonna be

looking at budgets we're going to be

looking at different equations and

ratios we're gonna be looking at

benchmarking there's a number of key

financial tools that we'll be using all

designed to help you understand and

appreciate what goes on within an

organization in their effort to manage

finances more appropriately one last

thing before we go into the second part

of this much

and that is to highlight the concept of

time value of money just like I just

talked about debt as being important and

understanding that and then

understanding that there are a number of

basic tools that you need to have your

toolkit to successfully engage in

analyzing the financial state in

situation of an organization is to

understand the concept of time value of

money money changes in value in the

textbook we use there is an entire

chapter on time value of money on the

newest version of the textbook I'm going

to write it without that chapter I'm

just gonna have a couple paragraphs on

it why time value of money is important

but it's also a very simple concept a

dollar today is worth more than a dollar

tomorrow and that's for a couple reasons

one is because of inflation another is

because the fact that if you have a

dollar today you can invest it and do

something with it if you have the

promise of a dollar tomorrow what if

that promise does not come true if it

doesn't come true and there's no money

then that's gonna affect your

organization so time value of money is

very critical to understand that look at

you know I'd rather have the dollar now

than a dollar tomorrow but if someone's

willing to offer me a dollar 10 tomorrow

versus a dollar today and there's a very

good chance that they're gonna be paid

that's 10 percent rate of return I will

take that any day if it's a solid

prospect that they're gonna be repaying

because that represents a 10 percent

increase in value versus if it's only a

dollar five a year from now and it's at

risk five percent might not be

worthwhile for me to take that risk so

welcome to class I hope you enjoyed

module one and now we're to continue the

second part of module one in the next

segment

take care