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Medium Profitability Market Entry

FLC Sports League

#Sports #Professional Sports Leagues
ProHub Comment

This case tests candidates' ability to evaluate expansion opportunities using both quantitative screening and strategic reasoning. The key is to quickly eliminate low-royalty sports (hockey and baseball), then use market size and ROI calculations to compare remaining options. Strong candidates will also identify risks associated with expanding into unfamiliar sports.

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
Your client is a major sports league called FLC. They organize a national championship and several other smaller competitions. Serving as the only professional men’s soccer league in the country, FLC currently has 10 teams. FLC is involved in general league management, which includes setting rules of gameplay, organizing the US National Championship, drafts, matches, referees and deals with sponsors etc. Currently FLC only receives revenues from royalties paid by the teams within the league, and the company is interested in increasing its net income by expanding its operations.

Clarifying Information

  1. This year, FLC’s revenue was ~$100M with 10% Net Income
  2. FLC wants to increase its NI by 20% in the next year, with an ROI (NI / Investment) hurdle rate of 15%
  3. For the purpose of this case, consider that FLC’s current operations and revenue management are fully optimized (no organic growth possible)
  4. FLC is responsible for large upfront commercial, operational, and marketing costs when a new team enters the league
  5. FLC does not own any teams in the league
  6. Candidate should assume that teams are interested in joining the league for any option chosen