Understand your point but not the details
by Freight Train (2014-12-29 17:26:06)
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  In reply to: Simple "logic". We are #2 overall right now with a losing  posted by btd



If $15MM represents the entire incremental expense, then breakeven only requires incremental $15MM in revenue. Perhaps not possible, which would be the issue, but why the $45MM incremental revenue?


Ok, I was thinking of the $15MM on contribution margin basis *
by Freight Train  (2014-12-30 00:15:03)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


You're assuming that an increase in gross revenue...
by Kbyrnes  (2014-12-29 19:21:21)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

...by $15 million leaves you $15 million to pay new expenses over and above the expenses that already vary with revenues. In other words, you're assuming that $15 million gross is $15 million net. Most likely, $15 million in additional gross revenues from ticket sales, merchandise sales, and food & beverage sales would be whittled down significantly by costs of goods sold, additional wages, and additional operating overheads related to the revenue generation. In this scenario, you also add a new coaching staff salary increment to the expense load. Maybe $45 million is too high, but you'll need more than $15 million in new gross revenues.


Yes. That's exactly what I meant. I just guessed 33%
by btd  (2014-12-29 20:10:05)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

profit margins on that incremental revenue. I have no idea what our margins are, but for the sake of argument our cost of goods sold is at least 50%, so we'd need to raise revenue by 30 million to recover the 15 million off the bottom line.

To be clear, I am not saying I don't think we should spend the money. I am just saying a pure financial argument would likely fail if someone tried to make one. It arguably would show breakeven or even a loss in terms of absolute dollars.


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