Idea for Two Research Projects/Feld Profit Per SX and Training Facility Success

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9/8/2017 3:20 PM

I have an idea for two research projects that I feel will be interesting to complete, but I don’t have the time to work on them beyond this very preliminary assessment. Perhaps a college student or someone with more time will want to put the effort into them and get school credit.

The first has to do with using public information for non-public companies to try to back into financial information. The end goal is to try to use information available to get as close as possible in determining Feld’s profitability per supercross.

Here is what I’ve pieced together that would need validating and could be improved with some additional data:

Feld purchased Monster Jam, Supercross, and a few other entities from Live Nation for $205M in 2008. A reasonable multiple for a growing entity, which these two primary entities is ten times earnings before interest, taxes, depreciation and amortization (EBITDA). So this would be $20.5M/Year in EBITDA.

I believe it’s been stated that the entities had attendance of 4.5M in total, with Supercross having attendance of 876K in 2014, so you could assume it had 800K in 2008. I would estimate this puts Monster Jam at 3.5M or so, or 81% of the attendance. If some other entities attendance are also included, it wouldn’t really matter.

Other entities purchased include IHRA, arenacross, freestyle, etc. All have had various success levels and/or been sold or reformatted substantially, so I would assume those to have a negligible impact on earnings (this could be validated).

Monster Jam would appear to have more licensing revenue than supercross, but it appears supercross has more sponsors, so these could offset. Supercross would appear to cost more to build the track, but also has $1M in TV revenue (link below), so these could offset. I’m assuming ticket prices are roughly equal. These are very big assumptions that would need to be validated.

Based on the above considerations and based on attendance, Monster Jam would have 81% of the earnings, and Supercross 19%. 19% of the $20.5M/Year in earnings (EBITDA) is $3.9M.

There were 17 supercross events in 2008, so that would be EBITDA of about $225K to $230K per Supercross.

Thoughts? It would be interesting to take this and improve the VERY preliminary data I put together. Admittedly there could be big flaws, wrong assumptions, etc. but I think they could be worked out with more research.

Some links:

http://www.sportsbusinessdaily.com/Journal/Issues/2013/05/20/Media/Supercross-TV.aspx

http://www.roadking.com/lifestyle/monster-jam-trucks-show-flash-and-dash/

The second research project has to do with where the past few years of Loretta Lynn’s champions have “trained” the past couple of years to try to project a success rate of certain training facilities, or if the success rate is higher than not being at a training facilityl. This could then be plotted against Pro level success too. I’m fascinated by some riders taking a different path like Carson Brown, who rides mostly at home, in the mud in Washington winters, etc. I wonder if his statistical probability of succeeding in the pro ranks would be better, based on historical stats, if he was at a training facility.

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9/8/2017 3:43 PM

Why?

If you want to do a deep-dive on the economics of the sport, guesstimating the numbers of private companies isn't likely to lead to any real benefit or even an interesting discussion.

We are all fans of the pro-level stuff, but we pay way too much attention to it when the sport is being crippled at the amateur level.

A more interesting project would be to contact a large sample of dealers and promoters from around the country to relay their experiences from the past 20 years, and see what trends can be gleaned from that.

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9/8/2017 3:45 PM

That is some already deeply researched stuff. Wanna be promoters are probably calling their accountants. It does seem to be based on 2008? 17 events at around a 1/4 mil each, 4.25 mil a year. Hmm
[LINK TO IMAGE]

I'm not too interested in the other, that is too subjective. I'd like to see a study proving whips help lap times and overall results in a sport where endurance is key. Maybe seat bouncing distance and Mono'ing the whoops vs. wheel taps too.

Eli Tomac Famous Daytona wheel tap

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2015 Beta 500 RS, history: 99 KTM 300, 87 CR250, 84 KLR 600, 82 GPZ 550, 81 KX 250, 80 KX 250, 79 Montesa 414 VE, 78 250 VB, 77 360 VB, 76 360 VA, 75 YZ 125, 74 TM 125, 72 TS 125, 60's West Bend Go Boy Kart

9/8/2017 9:13 PM

to what end? so you can say the riders deserve more money?

just remember two things; riders are not enslaved. and only a fool would pay more than they have to.


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9/8/2017 10:25 PM

I've did several M&A case competitions through out my MBA program and I know there's no way we could find the correct answer to these questions. Assumptions are too large and we don't even have a balance sheet to work with. Not having even basic financial data makes this impossible

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