Hare Events is a company which specialises in organising sporting events in major cities across Teeland. It
Question:
Hare Events is a company which specialises in organising sporting events in major cities across Teeland. It has approached the local council of Edglas, a large city in the north of Teeland, to request permission to host a running festival which will include both a full marathon and a half marathon race.
Based on the prices it charges for entry to similar events in other locations, Hare Events has decided on an entry fee of $55 for the full marathon and $30 for the half marathon. It expects that the maximum entries will be 20,000 for the full marathon and 14,000 for the half marathon.
Hare Events has done a full assessment of the likely costs involved. Each runner will receive a race pack on completion of the race which will include a medal, t-shirt, water and chocolate.
Water stations will need to be available at every five kilometre (km) point along the race route, stocked with sufficient supplies of water, sports drinks and gels. These costs are considered to be variable as they depend on the number of race entries.
Hare Events will also incur the following fixed costs. It will need to pay a fixed fee to the Edglas council for permits, road closures and support from the local police and medical services.
A full risk assessment needs to be undertaken for insurance purposes. A marketing campaign is planned via advertising on running websites, in fitness magazines and at other events Hare Events is organising in Teeland, and the company which Hare Events usually employs to do the race photography has been approached.
The details of these costs are shown below:
Full marathon | Half marathon | |
---|---|---|
($) | ($) | |
Race packs | 15.80 | 10.80 |
Water stations | 2.40 | 1.20 |
$ | |
---|---|
Council fees | 300,000 |
Risk assessment and insurance | 50,000 |
Marketing | 30,000 |
Photography | 5,000 |
Assuming that the race entries are sold in a constant sales mix based on the expected race entry numbers, what is the sales revenue Hare Events needs to achieve in order to break even (to the nearest $'000)?
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese