FINANCIAL PLA

Assignment/coursework
general submission requirements

· 
Your student identification number must be clearly
stated at the top of each page of your work.

· 
Each page must be numbered.

· 
Please
use a minimum font size of 12.

· 
Where appropriate, a contents page, a list of
tables/figures and a list of abbreviations should precede your work.

· 
All referencing must adhere to School/Institutional
requirements.

· 
A word count must be stated at the end of your
work.

· 
Your course, year of study and the relevant module
must be included as a “footer” on each page.

· 
Appendices should be kept to the minimum and be of
direct relevance to the content of your work.

· 
All tables and figures must be correctly numbered
and labelled.

· 
Your assignment/coursework should be submitted in one A4 transparent pocket.

·  Please do
not staple your work

Grantchester Rovers is a
professional football club having had some success nationally and in Europe in
recent years. As a result of this, and astute financial planning and management,
the club have accumulated an additional £15 million to spend on future
development ready for the 2015/2016 season. The board of directors are
considering two, mutually exclusive options, for investing the funds available
with a view to the future.

The first option is to acquire
another player. James, a creative and goal scoring midfielder, has attracted
the attention of the team manager and is available from his current club for a
transfer fee of £15 million. A decision to acquire James would release an older
player, Jenkins. An offer of £3 million has already been received and Jenkins
has indicated he would like to go. This offer will only be accepted if James agrees
to sign for Melchester. If this does not happen, Jenkins will be expected to
stay at the club until his contract expires in three years. During this time Jenkins
would receive a salary of £350,000 per year and a loyalty bonus of £1 million
at the end of his contract. If Jenkins leaves now his loyalty bonus will be
paid now. James would want a salary of £500,000 per year and a terminal bonus
of £2,500,000. Assuming James is acquired, the team manager estimates that
match day receipts will increase by £ 1.5 million in the first year and by 5%
year on year after that.. There would also be an increase in shirt sponsorship
with a £6 million payment on at the start of 2015/16 season. In addition Grantchester
expect to see a £1 million increase in broadcast revenue in 2015/16 with a ten
per cent year on year increase and increased merchandising sales of £120,000 in
2015/2016 with a five percent year on year increase.

The second option for the club is
to improve its hospitality facilities especially the corporate boxes. The
Barnes stand would be developed at a capital cost of £5 million and more
corporate hospitality boxes opened plus there would need to be an improvement
in bar and kitchen facilities needing a further £2 million of capital
expenditure and £1,000,000 of working capital.

Match day revenues in 2015/2016
would increase by £2 million, increasing every year by 5%. Grantchester have
contracted for a new ground to be built ready for the 2020/21 season.

Required:

Part 1:

Using the information given above
calculate the effects on cash flow for both sets of circumstances viz: The
purchase and sale of James and Jenkins and the resultant cash flows and the
improvements to the Barnes stand and those resultant cash flows.

IMPORTANT – All capital expenditure/receipts from player movements and
improvements plus any expenditure on working capital should be done prior to
the first season.

You are only required to calculate Net Cash Flows for both options,
there are no Opening and Closing Balances. You should calculate net cash flows
for the following: Pre-season expenditure, 2015/16, 2016/17, 2017/18, 2018/19,
2019/20 and Totals.

40 marks

Part 2:

Using your results from part 1
calculate Net Present Value for both options using present value rates shown
below:

2015/16  0.893

2016/17  0.797

2017/18  0.712

2018/19  0.657

2019/20  0.636

As with Part 1 all capital expenditure and working capital should be treated
as occurring Pre-season in Year 0.

30 marks

Part 3:

From the results of your work in
part 2 make a recommendation as to which option should be undertaken from a
financial point of view. It is vitally important that a business develops plans
for the future. Briefly discuss and explain the planning process and the role
of forecasted financial statements.

Skill Category	Skill Elements to be developed
1.  Communications	a.  Written b.  Presentation: verbal and written c.  Listening and interpretation d.  Reading and interpretation
2.  Numeracy	a.  Calculation/estimation b.  Understanding conventional numerical data. c.  Handling and interpreting date.
3.  Technology	a.  Use/application of ICT b.  Electronic communications c.  Information retrieval and manipulation
4.  Learning and Study	a.  Personal time management b.  Learning/study/search c.  Learning technology
5.  Interactive Group	a.  Team working b.  Taking initiative c.  Leadership/managing others
6.  Problem Solving	a.  Identifying key issues b.  Planning c.  Managing tasks d.  Creativity and originality
7.  Professionalism	a.  Ethical evaluation b.  Responsibility c.  Entrepreneurship d.  Self reflection evaluation e.  Career/career development awareness.