Case Study and Sample Slides Saudi Arabia: Football Training Program
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Football Training Club Client • The client is a leading investor in Saudi Arabia
Client Ask • The client mandated SGS to prepare a business plan to setup a Football training club in Saudi Arabia • The key objective of the study was to research on revenues and profits projection, competitive benchmarking, positioning and promotion strategies
Sutherland’s Solution • Primary Research: We conducted extensive primary research (telephonic interviews) with key competitors of in the similar industry to benchmark the strategies and existing business plans • SGS conducted extensive secondary research to understand the sports market, football popularity and penetration, and target market opportunities; Our secondary sources included company websites, select paid databases such as OneSource and Zawya and generic Internet search
• Benefits to the Client • SGS provided an exhaustive business plan to the client which included – Competitive landscape, – Sponsorship – Infrastructure/amenities details – Capital Funding – Pricing – Cash Flows – Location options – Revenue and Profit Projections – Promotional Strategies – Sensitivity Analysis, ROI, Return Multiples
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State-of-the-art equipment & amenities and expert Brazilian trainers ensure finest training for the students
Description
Football Field
Training Kits/ Equipment
• Football field forms the most basic and the most necessary part for this program
• Training Kits will comprise of training gear, training equipments and coaching kit
• The Saudi Stars Program assumes to train 180 students per field with 6 sessions per field considering 30 students per session
• The playing fields would be taken up on a rental basis from schools, football clubs and associations
Costing
• The contracts for usage of grounds will vary from cost per student enrolled or % of fees received from kids’ enrolment, or flat rent
Office Infrastructure • The Saudi Stars Program would be headquartered in Jeddah with branch offices spread in rest of the cities through out the country • The head office would be set up in a facility of approximately 250 Sqm and branch office at 200 Sqm
• Training Gear: SAR 3900 per field • Training Equipments: SAR 900 per field • Coaching Kit: SAR 500 per field
• Head Office: Approximate rental expense of the facility would be up to SAR 1.65 million annually • Branch Office: Total rental expense would be SAR 5.28 million for the first year
Coaching Staff • The coaching staff would consist of a senior/head coach, a junior coach and a local coach. The head coach and the junior coach would be from Brazil • Each field would have a senior coach along-with either a junior or a local coach • Head Coach: SAR 28,816 per month • Junior Coach: SAR 8,133 for locals and SAR 12,571 for expatriates
Source: Sutherland Research
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Pricing remains dynamic, with early bird discounts; with ‘live’ promotions conducted at various venues Pricing •
Saudi Stars Program being a new format, the first few customers would be getting early bird discounts
•
The rates would be standardized after the program establishes a proper foothold over the market. Thus, a differential pricing strategy that rewards the early birds would be adopted
Student Break-up
Fee/Month
First 5000 Students
SAR 300
5000-8000 Students
SAR 400
Above 8000 Students
SAR 500
Place •
Promotion will be undertaken through road- shows, contests, games and media events, which will run in parallel to classes
•
These shows will be conducted by Brazilian trainers who would travel around in program’s dedicated van designed specifically for the road shows
•
Multiple shows (3-4) will be handled by a trainer in a day at different venues
Schools
Malls
Residential Compounds
Other Public Places
Source: Sutherland Research
© 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
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Multitude promotional strategies and sponsors’ back up ensure successful program operations Promotion • Effective promotion programs and strategies will be the key to the success of Saudi Stars Program Public Information Campaigns
Press Conferences
Outdoor Media
Print Media
Promotional Strategies Broadcast Media
Online Media
Newsletters
Sponsorship •
Primarily three categories of sponsors are being targeted with varying amount of fee structures for each
•
They will get visibility at all the tournaments, events and media functions being organized by the Program
•
The program has already garnered strong support from Pepsi Co, a multi national company, as a Category 1 sponsor
Public Relations
Sponsor Category
Fees (SAR)
No. of Sponsors
Category 1
3,000,000
2
Category 2
2,000,000
2
Category 3
1,000,000
3
Source: Sutherland Research
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Revenues are expected to grow exponentially with net profit margins posting above 40% returns consistently in long term Income Statement Projections (in SAR mn) Particulars
Profitability Ratios
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR 13.9
52.5
91.8
138.1
211.2
97%
Sponsorship revenue
13.0
14.3
15.7
103.8
133.2
79%
Total Revenue
26.9
66.8
107.5
242.0
344.4
89%
Operational Expenses
10.7
26.3
46.0
77.4
123.2
Gross Profit
16.2
40.5
61.5
164.5
221.2
Total Overheads
12.6
14.2
15.9
61.2
76.6
Net Profits
3.6
26.2
45.7
103.3
144.6
Revenue (in SAR mn)
Sales Revenue
400 350 300 250 200 150 100 50 0
Particulars
92%
Year 1
Year 2
Year 3
Year 4
Year 5
Return on Equity
30%
168%
109%
118%
76%
Gross Profit Margin
60%
61%
57%
68%
64%
Net Profit Margin
13%
39%
42%
43%
42%
151%
344.4
60% 242
40%
107.5 66.8
26.9 Year 1
Year 2
Year 3 Revenues
Gross Margin
Year 4
80% 70% 60% 50% 40% 30% 20% 10% 0%
Year 5
Net Margin
Source: Sutherland Research
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With zero debt finance and positive cash flows, the company plans to expand through its bulging cash reserves Capital Funding
SAR
USD
•
A total investment of SAR 12,000,000 will be needed for the establishment and operations of the Saudi Stars Program
Seed Capital Applied
9,000,000
2,400,000
•
Of the total capital to be raised, 0% is to be raised by means of debt. The entire capital employed will come from equity
Capital to be Raised
3,000,000
800,000
Total Capital
12,000,000
3,200,000
•
A total of 40 equity shares are to be issued. Of the total number of equity shares, the promoters/developers share is 40%, through goodwill, which amounts to 16 of the total 40 shares available
Paid Per Share
500,000
133,333
Share Value
300,000
80,000
•
The remaining 60% of the shares (i.e. 24 shares) are available at SAR 500,000 per share
Share % to Capital Total Number of Shares
40
Goodwill for Developers
16
Total Number of Shares
24
Cash Flows •
The project is expected to generate positive cash flows from the first year onwards
•
The cash in hand at the end of year five is expected to reach 376.0 million SAR ( a CAGR of 116% over the five year period)
•
Considering the scale of the venture, the magnitude of cash flows pictures an healthy returns
4.17%
SAR Opening Balance
---
Total Cash-in
38,938,600.0
Total Cash-out
23,563,308.0
Closing Balance
15,375,292.0
Source: Sutherland Research
© 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
www.sutherlandglobal.com January 15, 2013
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