You have been hired as a consultant to review and revise the operational budget for City Arena. The board has mandated a budget reduction of 3.75‐5.5% for the upcoming fiscal year. Your overall job is to identify areas where budget reductions

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North Carolina State University

PRT 466: Sport Finance and Economics Fall 2025 Budget Assignment

 Introduction:

The City Arena* is a privately operated multi‐purpose entertainment and sports arena, spanning 500,000 square feet with an 18,000‐seat capacity. It is built on a 4‐acre site. Designed for major concerts, ice shows, trade exhibitions, monster truck rallies, circuses, and sports events, the arena boasts NCAA/NBA/NHL‐ready core features suitable for collegiate tournaments and potentially hosting a professional sports franchise. Hosting around 125 events annually, the City Arena generates an average gross margin (revenues) of approximately $6.1‐6.5 million. However, revenues for the current year fell a little short of projected goals, necessitating a reduction in the operating budget for the upcoming fiscal year.

 Assignment Overview: 

You have been hired as a consultant to review and revise the operational budget for City Arena. The board has mandated a budget reduction of 3.75‐5.5% for the upcoming fiscal year. Your overall job is to identify areas where budget reductions can be made without compromising the arena’s operations, safety, guest experience, or revenues. Your specific task for this assignment is to revise the Arena’s current budget while adhering to specific constraints (outlined below) by adjusting exactly 5 accounts to reach a 3.75-5.5% reduction in the overall budget. 

 

This is not a “cut equally across all areas” task – it requires strategic analysis, prioritization, and justification. Your work should reflect real-world decision making and a thoughtful review of operations and services. 

 

Submission Requirements: 

You are required to submit two files for this assignment:

 

1)     Budget Spreadsheet (Excel Template Provided)

You must use the provided Excel template to input both current and proposed budgets. The spreadsheet will automatically calculate dollar and percentage changes. You are responsible for:

•        Editing the revised budget column to reflect your proposed cuts

•        Making sure your total cut falls within the 3.75-5.50% range

•        Ensuring all formulas remain functional

•        Saving and submitting the file in a spreadsheet format – not a PDF.

 

2)     Written Budget Report (Word or PDF Format)

Your report should be organized and professional in appearance. It must include:

•        Cover Page

•        Executive Summary: 1–2 paragraphs + infographic summarizing the overall budget report.

•        Detailed Justifications (See Below): o   Provide clear justifications for each budget line item cut or adjusted. o           Explain the reasoning behind the cut and how operations would be impacted (or not).

o        Support each justification with relevant sources.

•        Reflection: o Reflect on the ethical dilemmas or strategic challenges you faced.

o        Discuss trade‐offs, concerns about staff impacts, or issues of fairness.

 

Please use the Report Template Below to submit your Budget Report.

 

 

 

 

Expectations for Justifications

This is where you demonstrate depth of thinking. Each justification should be grounded in:

•        Operational logic: Why is this a smart or safe area to cut?

•        Strategic thinking: What is your rationale? 

•        Quantitative support: Include data or calculations (even estimates) to justify cut amounts.

•        Use credible sources (industry benchmarks, vendor quotes, professional publications).

•        Fabricated or AI‐generated sources will result in a significant penalty.

All sources must be cited in‐line in the justification section with specific links to sources. Any personal contact sources should also include contact information.

 

Notes and Policies for Budget Reduction Project:

1.     You should focus on adjusting 5 Accounts (no more or less): To maximize learning in this process, you should identify 5 accounts in the budget to cut 3.75‐5.5% from the current budget. Anywhere in that range is acceptable but should be done by cutting 5 accounts. For the purposes of this assignment “Full‐Time Salaries” is one Account, “Part‐Time Salaries” is also one Account. Therefore, for example, if you cut both full‐time and part‐time salaries, you will then need to cut 3 additional operating accounts to achieve the assignment goals.

2.     Fringe Benefits: Fringe benefits are tied to salary amounts. Full‐time staff incur 33.5% additional funds based on salary (11.5% for part‐time staff). If you adjust salaries or salary lines, appropriately reduce fringe benefits. Consider this when reducing the budget. Fringe benefit rates cannot be altered. Additionally, fringe benefits changes because of cutting salaries do not count as separate “Accounts adjusted”

3.     Targeted Reductions: Avoid applying a uniform % or fixed dollar amount reduction “across the board” to multiple accounts. For instance, refrain from cutting multiple accounts by arbitrary amounts like $5,000 or $10,000 (or percentages like 10%, 25%) without clear justification for each account’s amount.

4.     Independent Assumptions: While you may consult other budgets for insights on specific line items, refrain from directly importing numbers from another arena’s budget. Use comparative calculations based on reasonable assumptions considering facility differences.

5.     Focus on Short-Term Cuts: Prioritize short‐term operational budget reductions rather than long‐term savings strategies. While investments in technology to reduce utilities through green energy initiatives may be suitable, ensure your analysis accounts for both immediate budget effects and long‐term savings. Any capital investment costs must also be accounted for in these approaches.

6.     Insurance Mandate: State law mandates City Arena to maintain $100 million in general liability insurance coverage annually, which includes Liquor Liability. The current liability insurance premium is included in the current budget and accounts for 90% of the account budget, while the remaining 10% includes other business insurance premiums.

7.     Miscellaneous Considerations:

•        Avoid reducing salaries solely based on whether an employee’s pay exceeds national averages or medians for the position.

•        If your proposal involves infrastructure upgrades (e.g., transitioning to LED lighting), include associated capital costs in your justification.

•        Your strategy can involve adjusting accounts upwards (increasing amounts) to cut in other areas. The strategy must be clearly presented and supported (and the adjustment can be used as one of the 5 account adjustments if appropriately supported and justified).

•        Verify that any online quotes or estimates are intended for commercial‐grade or high‐capacity commercial pricing, not residential or small office settings.

Current Budget Details (These are also included in the Spreadsheet)

1.     Personnel/Salaries

 

Full-Time

The following is the list of the full‐time staff and the current salary for each position and includes estimated bonuses and commissions. 

Position	Number of Staff	Salary
General Manager	1	$165,000
Assistant General Manager	1	$106,000
Executive Assistant	1	$47,000
Receptionist	1	$31,500
Director of Finance	1	$88,000
Comptroller	1	$62,000
Staff Accountant	2	$54,000
HR Manager	1	$67,000
Director of Ticketing	1	$73,000
Ticket Office Manager	1	$68,000
Ticket Office Supervisor	1	$48,000
Director of Marketing	1	$77,500
Public Relations Manager	1	$56,000
Social Media Manager	1	$55,000
Premium Seating Manager	2	$62,000
Group Sales Director	1	$78,000
Account Executive	3	$42,000
Senior Event Manager	1	$68,000
Event Manager	1	$49,500
Event Coordinator	3	$32,000
Production Director	1	$66,000
Production Coordinator	2	$42,000
IT Manager	1	$65,000
Director of Security	1	$76,000
Security Manager	2	$48,000
Director of Operations	1	$96,000
Asst. Director of Operations	2	$68,000
Administrative Assistant	1	$32,500
Conversion Manager	1	$58,000
Conversion Supervisor	2	$46,000
Maintenance Technician	3	$41,000
Housekeeping Manager	1	$44,000
Housekeeping Supervisor	2	$34,000
Housekeeper	4	$28,000

Part Time Staffing Breakdown

The following provides a breakdown of part‐time staffing at the arena, along with corresponding weekly expenses. The weekly expense indicates the total cost per week for each position within each category. For instance, the arena allocates $644 each week for a single ticket seller position. The “Personnel” category reflects the number of positions staffed during operational hours. For example, a part‐time security role that covers 24 hours per day might be fulfilled by 4 individuals, each working 6‐hour shifts.

	Pay Rate	Personnel	Total Hours per Week		Weekly Expense per 1 position (hours x days)	Total Weeks
Ticket Seller	$11.50	5		56	$644	46
Guest Services	$10.50	3		56	$588	50
Operations	$10.00	4		60	$600	50
Security	$13.50	2		168	$2,268	52
Custodial	$9.00	3		45	$405	50

2.     Contractual Services (i.e., outsourced services)

 

Account	Amount
Equipment Rental	$35,000
Landscaping	$28,000
Legal	$25,000
Maintenance Services	$100,000
Pest Control	$18,000
Photography/Design	$11,000
Plumbing	$22,000
Staff Uniform Service	$15,000
Waste Removal	$66,000

3.     Internal Services (i.e., operational costs of internally managed services)

 

Account	Amount
Carpentry/Painting	$18,000
Ice Maintenance	$47,000
General Repairs/Maintenance	$59,000
HVAC Preventative Maintenance	$61,000

4.     Equipment/Supplies

 

Account	Amount
Equipment Expenses	$54,000
Building Supplies	$52,000
Electrical Supplies	$27,000
General Supplies	$42,000

5.     Utilities

 

Account	Amount
Arena Utilities	$1,012,000
Office Utilities	$56,000

6.     Marketing/Promotions

 

Account	Amount
Advertising	$110,000
Customer Relations	$19,500
Promotions	$44,000

7.     General/Administrative

 

Account	Amount
Automobile Expenses	$18,000
Background Checks	$4,000
Bank Fees	$22,000
Computer/Software	$33,000
Credit Card Fees	$33,000
Dues/Subscriptions	$14,000
Human Resources Recruitment	$28,000
Insurance	$208,000
IT/Internet	$12,000
License/Permits	$18,000
Office Supplies	$22,000
Postage/Shipping	$10,000
Professional Fees	$80,000
Staff Training and Development	$30,000
Telephone	$30,000
Travel & Entertainment	$18,000
Miscellaneous	$7,000

City Arena Budget Reduction Report

PRT 466 – Fall 2025

Student Name

Date

PLEASE NOTE THAT EVERYTING WRITTEN IN RED ARE MY COMMENTS AND SHOULD NOT BE INCLUDED IN YOUR REPORT

Executive Summary

 

Write a brief (no more than 1‐2 paragraphs) summary of your overall report here.

Be sure that the Executive Summary covers the entire report.

Consider an infographic or other visual to support your summary narrative.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Justifications

[In this section, you will include a summary of each of the adjustments made to each account] Be sure the break out each Object Classification and Account as a separate sub‐heading. Please note that the examples in this section is completely made up, but represents what the process might look like in researching both an account rationale and support for the appropriate estimate of an amount to be cut

Utilities

The following accounts were adjusted in Utilities

Utilities (Reduced by $12,000)

To achieve a cost reduction in utilities, I analyzed the energy usage trends of similar‐sized arenas with a focus on HVAC systems, which often contribute significantly to energy consumption. By researching energy‐efficient technologies, I found that programmable thermostats can reduce energy usage by up to 15% in large facilities (Energy Savings Institute, 2024). Based on this, I recommend installing a programmable thermostat system for all HVAC zones in the facility.

 

A consultation with A. Robinson, Facilities Manager at GreenTech Arena (personal communication, October 15, 2024), revealed that their implementation of programmable thermostats reduced their annual energy costs by $10,000. With an estimated implementation cost of $3,000 for our facility, the first‐year savings would still amount to $7,000, with larger savings in subsequent years. By adjusting HVAC usage during nonpeak hours and leveraging these thermostats, I project a total reduction in utilities of $12,000 for the upcoming fiscal year while maintaining optimal comfort levels for guests.

 

Sources:

•        Energy Savings Institute. (2024). HVAC Optimization for Large Venues.

•        A. Robinson, personal communication, October 15, 2024.

 

Contractual Services

The following accounts were adjusted in Contractual Services

 

Pest Control (Reduced by $3,000)

The current pest control budget allocates $21,000 annually. Research indicates that integrated pest management (IPM) programs, which rely on prevention and targeted treatments rather than routine applications, can reduce pest control costs by 10‐20% without sacrificing effectiveness (National Pest Management Association, 2024).

 

In consultation with J. Miller, Operations Director at Regional Sports Center (personal communication, October 20, 2024), I learned they transitioned to an IPM program last year, reducing their pest control expenses from $22,000 to $18,000 annually. Based on this approach, I recommend contracting with an IPMcertified provider to streamline our pest control services. This shift will allow us to reduce our budget by $3,000 while maintaining compliance with health and safety standards.

 

 

Sources:

     National Pest Management Association. (2024). Integrated Pest Management in Commercial Facilities.     J. Miller, personal communication, October 20, 2024.

 

Reflection

Here you would write your reflection

Your reflection should describe your overall philosophy that guided your approach to reducing the arena budget as well any ethical issues you faced with making specific decisions and difficulties faced in the process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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