Pricing Strategy for a Car Racing Event

This assignment delves into the pricing strategy for a car racing event organized by ATPI in London. It requires students to analyze the costs associated with the event, identify potential revenue streams from ticket sales, sponsorships, and other sources, and propose a comprehensive pricing plan. The analysis should also consider funding requirements and explore various financial options available to ATPI to ensure the successful execution of the event.

Financial Decision Making
for Creative Projects and
Events

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Outcomes of the market research................................................................................................1
Funding for event........................................................................................................................1
Discussion over relevant income streams...................................................................................2
Illustration on proposed event.....................................................................................................3
Pricing strategy............................................................................................................................5
Recommendation.........................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
ATPI is offering the best event management services which organises the events for
corporations and for sports tournaments. Currently the firm is being engaged in organising the
car racing sports' event in London. However, there will be influence of various sponsors and
corporations which will help in managing the events. The report will help managers in analysing
the requirement of resources for such event such as arrangements, funds, numbers of employees,
sponsors as well as the participants. To organise the profitable event there is need to have proper
planning and costs estimation which help in deciding the level of requirements. Moreover, the
report will present an accurate analysis over the forecasted revenue and costs will incur in such
sport event.
Outcomes of the market research
In relation with the online survey made by the professionals of ATPI it has been
determined that there are positive responses towards the car racing sports. Thus, the method of
conducting the online market research which was on the basis of various reasons such as it will
require less time, cost efficient as well as wider area of analysis will be made. There will be
record of large reviews from mass audience (Amornkitvikai and Harvie, 2018). On the other
side, it will be beneficial for ATPI to have favourable marketing of the event they are going to
organise. Additionally, the survey consist of various questionnaires which were made over mass
media. Thus, the organisation had received positive outcomes from that survey and which
indicates that it will be profitable and fruitful for the growth of entity.
Funding for event
ATPI is planning for car racing event on which there will be requirement of appropriate
amount of funds which will help in succeeding the satisfactory event. To gatherer the sufficient
capital resources the invitation need to be proposed among various sponsors, stakeholders or
investors of the business (Ferrando and Lekpek, 2018). However, there are various big MNCs
which have the collaboration and partnership in various events such as Heineken, Microsoft and
Hyundai. The investments will be made on the basis of the area of operations, numbers of staff
and the audience which will take the memorable experience of the racing game. Thus, the proper
marketing will help in attracting the large consumers and it will evaluate the profitability of the
business. Therefore, in relation with the funds gathered by the firm from its sponsors or investors
it can be seen as below listed table:
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Particulars Amount (in £)
Estimated requirement 5000000
Investors:
Heineken 1000000
Microsoft 150000
Hyundai 2000000
Equity capital 3000000
General public 150000
Earned income 8000000
Surplus 9300000
By considering the estimated costs and requirement in organisation such event it has been
analysed that, there will be need of £5 millions. The investments will be made by the potentiality
sponsors on which Hyundai has the highest share. Thus, the estimation of the funding determines
that there will be surplus of the gathered funds to meet the costs incurred in such events.
Discussion over relevant income streams
In relation with gathering the sufficient amount of funds that will be beneficial in meeting
the operational requirements. Thus, there are some sources which are need to be considered by
the ATPI professionals in terms of having the appropriate funds for this car racing event. The
source from which ATPI will have appropriate capital gathering are as follows:
Equity share capital: This is the source of funds on which the firm will have appropriate
capital balance which will be utilise in the operation. Thus, ATPI will have revenue from the
owner's, directors and their contribution in the organisation (Gadenne, 2017). It is the most
convenient source of having funds as it does not require any return or dividend payments.
Funds from operations: The organisation will have collection through facilitating the
operational activities in the market. Thus, it can be said that, The firm have the capital and funds
for the events as if the past operations and profits were gathered on business activities (Kienzler
and Kowalkowski, 2017). ATPI is currently working as the best event managements
organisational and has the revenue of more than £15.8 million. Similarly, the firm has profitable
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gains over the period and which will be good indication for having appropriate reserves for the
future needs.
Sponsors: ATPI has collaboration with various big organisation which are investing in
the business to have the profitable gains. Thus, the motive of business is to successfully organise
the car racing event the influence of such sponsors will be helpful in funding, marketing and in
attracting the wide population for this event. However, there are various sponsors such as
Heineken, Microsoft and Hyundai.
Government: In accordance with governmental support in the events like sports, national
events etc. They grant funds for the succession of such plan which will increase the tourism and
economy of the particular location (Reimers and Waldfogel, 2017). Therefore, ATPI will have
effective revenue gathering from such operations and it will be helpful for making the
appropriate gains for the future. The car racing is a sport tournament which will be attractive to
the various people who has interest in participating and watching the race. Thus, the government
will support such event and will provide the required funds for such occasion.
Stakeholders: The revenue will be collected from the shareholder's investments. Thus,
they seek for the favourable divided policy as to have the profitable returns (Hallberg, 2017).
This is the source on which ATPI will have the sufficient funds only just to reflect the surplus
balance in the profit and loss statement.
Illustration on proposed event
Event cost:
Particulars Details Total cost
Direct labour 150000
Direct Material 100000
Direct expenses 100000
Prime costs 350000
Add: Operational overheads
Fuel and Power 2500000
Insurance 800000
Repair and maintenance of cars 50000
medical expenses 250000
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Promotional expenses 100000
Location 100000
Operational costs 3800000
Legal charges 180000
Payments to suppliers 220000
Bank commission 200000
Production cost 600000
Pavilion expenses 150000
Electricity and lightings 100000
Cost of sales 250000
Total cost 5000000
Revenue:
Forecasted income statement Details Details Amount
Revenue 8000000
Less: COGS
Direct labour 150000
Direct Material 100000
Direct expenses 100000 350000 350000
Gross Profit 7650000
Operating expenses
Fuel and Power 2500000
Insurance 800000
Repair and maintenance of cars 50000
medical expenses 250000
Promotional expenses 100000
Location 100000
Legal charges 180000
Payments to suppliers 220000
Bank commission 200000
Pavilion expenses 150000
Electricity and lightings 100000
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Total operating expenses 4650000 4650000
Operating income 3000000
Less: Corporate tax 30% 900000 900000
Net profit 2100000
Balance sheet:
Balance sheet amount
Current assets
cash balance 10500000
Bank balance 25000000
Debtors 2000000
Total current assets 37500000
Non-current assets
Cars 1500000
Pavilion 1800000
service station 1500000
Total non-current assets 4800000
Total Assets 42300000
Liabilities
Current liabilities
Creditors 33200000
Salaries 250000
payment to suppliers 220000
Bank commission 200000
Legal charges 180000
Total liabilities 34050000
Shareholder's equity
Equity Capital 3000000
sponsor's investments 3150000
Net profit 2100000
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Total liabilities and shareholders equity 42300000
Break-even:
Break even analysis
Particulars Amount (in £)
Fixed cost 3800000
Selling price 8000000
variable cost 600000
BE 0.5135135135
Return on capital: Operating profit * 100
Capital employed
3000000 *100
8250000
36.36%
Pricing strategy
In relation with obtaining the appropriate revenue from the car racing events there is need
to set several strategies which will be helpful for enhancing the operational viability of the ATPI.
Thus, there are various pricing techniques which help in stabilising the capitals well as revenue
generation of the firm. However, there are several methods which are as follows:
 Determining the premium pricing
 Ascertaining the prices for the market penetration
 Adopting the price skimming techniques for facilitating the passes and tickets for the
tournaments (6 Different Pricing Strategies: Which Is Right for Your Business?, 2017).
 Start online booking system which will be helpful in having less crowd as well as more
revenue.
 Apply the psychological pricing technique which in turn helpful for making effective
pricing techniques.
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Recommendation
It will be suggested to the ATPI managers that they must implicate new strategic
technique to promote such event in London. However, there will be various capital operations
which will required higher funds and to meet such requirement there is need to invite sponsors as
well as investors in the event (Amornkitvikai and Harvie, 2018). On the basis of available
sources such as revenue from operations, stakeholders, investors, sponsors, government and the
owner's equity will be sufficient source in gathering the appropriate amount. Moreover, it will be
helpful to the entity as if they have the collection of funds over the prices of tickets and passes on
the basis of proposed pricing strategy.
CONCLUSION
The above report ascertains that ATPI is going to organise a car racing sports' event in
which various companies and participants will have collaboration. Therefore, in order to
succeeds such plan the directors and managers has planned to estimate the costs and revenue
they will have from such operations. Thus, in accordance with such study there will be
requirement of 5 million funds which will be managed and convenience by the revenue gathering
and sources of finances.
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