Background: The Craddock Cup is a regional soccer tournament held by the Craddock Youth Soccer League (CYSL) and managed by Joe Rivaldo every year. The cup brings in around 32 premier high school soccer teams (both boys and girls teams) from throughout the region to compete. Each year the cup is considered a great success by players, their families and the local community and is now widely considered as the premier tournament for high school soccer players. Over the past few years the cup has developed into a showcase event for high school soccer players and has been able to attract the region’s best teams due to the fact that on average 25 college scouts attend the cup each year for recruiting purposes.
Main Issue or Problem: The main problem is that of the Craddock Cup being cancelled and Jose Rivaldo the manger of CYSL losing his job. This is due to the issue that, CYSL who fund the Craddock Cup, do so in part to fund a field acquisition program for the league with the expectation the cup will generate at least $6,000 annually towards this goal. However the cups profits are averaging a loss of around $4,000 a year and the board of CYSL is becoming impatient with the lack of profits being generated. Therefore Joe needs to find a solution to increase the cups profitability and by doing so save his job.
Three Possible Mutually Exclusive Alternatives that Might be used to Solve the Problem (these must not include the status quo (current practice) and should include at least one alternative that is not mentioned in the case): Alternative| Quantitative Techniques to Use + Reason| Qualitative Issues to Discuss + Reason| Suggested reading (pages) in HDR (2012)| 1. Make changes to the overhead expenses allocated to the tournament including salaries, rent, utilities and field rental.| Relevant cost and relevant revenue analysis. If the cup was to be cancelled then CYSL would still incur the sunk costs of rent, utilities, field rental and Rivaldo’s salary meaning they should not be allocated to the cup. However the cost of Jansten’s salary would be saved if the cup was cancelled.| If the cup was to be cancelled then it would result in the loss of Jansten’s job as his/her employment is solely related to the cup.
This could affect the moral of fellow employees.| 415-416, 430-434| 2. Organize a deal with a hotel/s where you arrange accommodation for all the players. In return for the extra business the hotel/s offer you free or discounted accommodation for the college scouts. | Breakeven analysis and contribution margin. If the variable cost of putting the college scouts in hotels (which is a large cost of $4,000) could be eliminated or reduced significantly it would greatly affect the contribution margin of the cup (CM = Sales – VC) as variable costs would decrease significantly. It would also decrease the breakeven point in revenue. | Issues could include the problem of finding a hotel or hotels that will be able to provide enough accommodation for the large amount of players and that will agree to the proposal as the hotel or hotels may feel they will be able to attract the players on their own accord and do not need to avoid losing the additional profit of the scouts by doing so. | 86-88, 90-91, 94| 3. Increase the tournament size from 32 teams to 64 teams. | Incremental profit and costs. If the cup was to increase its size to 64 teams it would bring in additional revenue from the new teams registration fees. Other revenue would also likely increase. While most expenses such as registration fees, face books, hotels and marketing would remain the same as the scouts are only looking for high school players, where the new teams introduced would be from middle schools.| Issues include finding enough teams to be able to expand the tournament along with making sure the suppliers of things such as t-shirts and food can provide enough goods to match the extra demand. Also whether or not the staff can cope with the increased work load or whether another employee will need to be hired.| 421, 579-80, 584-86|