The Craddock Cup

Issues

1. Should the Craddock Cup’s overhead allocation expense be revised or eliminated?

2. What would be the expected financial impact of adding 32 more teams to the tournament schedule?

3. What would be the break-even increase in registration fees per team for 64 teams given a $1000 increase in advertising expense, 15 more college recruiters, and 20 additional face books?

Facts

Rivaldo the general manager of the Craddock Youth Soccer League (CYSL), was committed to providing high-quality soccer activities to boys and girls in the area. He was heavily involved in putting on regional soccer tournament, which brought approximately 32 premier high-school soccer teams from throughout the region each May.

Despite the success of this year tournament Rivaldo was aware that the Craddock Cup was in trouble. Tournament expenses continue to rise, while corporate sponsorships remained difficult to obtain. The CYSL had founded the Craddock Cup, in part, to fund a field-acquisition program for the league, with the expectation that the tournament would generate at least $6,000.00 annually toward that goal. Unfortunately with tournament profit averaging a loss of almost $4000.00 a year, CYSL’s board of directors was beginning to express frustration with the lack of profits generated by the Craddock Cup. Rivaldo was afraid of losing his job, therefore he decided to review the organization and expenses of the Craddock Cup to see if there was a way to increase the Cup’s profits and continue the tournament.

The Craddock Cup was widely regarded as the premier tournament for high-school soccer players in the region. Funding for the tournament came from team registration fees, corporate sponsorships, T-shirt sales, concession sales, and participation fees for soccer clinics held during the tournament for younger siblings of tournament participants. Each team paid a $295 registration fee to enter the tournament.

The Craddock Cup encouraged recruiters attendance to tournaments by...