Financial Viability Report: NSYNC Concert in London - Analysis

This report provides a comprehensive financial analysis of a proposed NSYNC concert in London, organized by Austin Entertainment Group. It examines the market research and commercial viability, considering the band's popularity and the potential audience size. The report details funding sources, including equity and debt financing, and outlines relevant income streams from ticket sales and sponsorships. It projects cost expenditures, including artist fees and venue rental, and proposes a pricing strategy. The financial outcome, including profitability and break-even point, is assessed, with recommendations for optimizing financial performance. The report includes a profit and loss statement and balance sheet, offering a detailed financial overview of the event's potential success. The analysis includes a discussion on market research, funding sources, income streams, cost expenditures, pricing strategy, financing sources, and financial outcomes. The report also provides recommendations and conclusions based on the financial projections and the overall viability of the concert.

Running head: FINANCIAL DECISION MAKING
Financial Decision Making
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Market Research and Commercial Viability...............................................................................3
Funding Sources..........................................................................................................................3
Relevant Income Streams............................................................................................................4
Proposed Cost Expenditure and Revenues..................................................................................4
Pricing Strategy...........................................................................................................................5
Appropriate Financing Sources...................................................................................................5
Financial Outcome.......................................................................................................................5
Breakeven Point...........................................................................................................................6
Recommendations and Conclusion..................................................................................................6
References........................................................................................................................................8
Appendix........................................................................................................................................10
1) Profit and Loss Statement..........................................................................................................10
2) Balance Sheet............................................................................................................................11

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Introduction
The report will be conducting an overall financial review for the event that will be
conducted by the NSYNC Band that will be performing in London. The new start-up company
named Austin Entertainment Group would solely handle the event. The name of the concert
would be namely NSYNC Return concert in London. NSYNC is a famous American Boy Band
formed in Orlando, Florida in the year 1995, which was primarily launched in Germany by BMG
Ariola Munich. The key member of the group are Justin Timberlake, JC Chasez, Lance Bass,
Chris Kirkpatrick & Joey Fatone. The key Genres that the band performs is the Pop music,
Dance Pop, Contemporary R&B and Teen Pop (Gardner 2016). The American Band will be
performing up in the O2 Arena, which is an indoor stadium that serves as a multi-purpose indoor
arena located in the centre of the O2 entertainment complex of the Greenwich Island. The arena
opened in the year 2007 and conducts various types of events, as the place is a home to world’s
most popular music, sport, comedy and many other. The O2 arena can host conference events
thereby accommodating 1,500 guest to 15,000 guest. The event will be taking place in the month
of 18th August 2019 and the same is decided according to the availability of the stars and due to
weekend where the expected number of turn-outs will be maximum (Chang 2016). The area
gives a proper separate place for the VIP and are perfectly suited for Breakouts, Catering and
various networking spaces that will be carried out by the company. It is important that the
financial manager of the company assess the effectiveness of the event that will be conducted. In
order to evaluate the financial viability it is important at the same time to review the popular
bands or the craze that the people will give towards the return of NSYNC Band. Costs, Effort
and Goodwill of the Company is all involved when conducting or organising such an event and it

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is important that the financial sustainability of the same is proved with the financial projections
that will be made for the company.
Discussion
Market Research and Commercial Viability
In order to assess the financial viability of the event it is important an adequate amount of
effort spent in conducting data and ideas about the effectiveness of such an event. Since, the year
2002, when the NSYNC split there were major new bands such as Linkin Park, Metallica, One
Direction and Twenty One Pilots were some of the common band that have outperformed in the
recent years (Horning 2018). Commercial Viability of the financial event can be well tested out
for the company with the help of financials forecasted for the company. The level of profitability
and the amount of expenses can be well stated in the financials and accordingly the budget for
the event can be well planned by the management of the company. The accommodation number
for the guest is set up at 15,000 guest however on the other hand differences in the ticket sold can
be of much significance for the company (Kepczynski et al., 2018).
Funding Sources
Funding of the event would be done based on equity and debt finance whereby the
company will be maintaining an adequate source for both the financing sources. Equity financing
would be the key sources of financing comprising about 50% and the rest of finance would be
coming from debt sources that would be giving around 50%. It is estimated that around $2.5
million would be required in the initial start-up capital for the firm for conducting the event for
the company (McKeever 2016).

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Relevant Income Streams
The income stream for the financial event undertaken by the company would primarily be
derived with the help of two categories of ticket sold as VIP Tickets and Economy Tickets. The
pricing of the ticket would be $180. The total number of expected ticket sales would be for
15,000 seats, which is the maximum capacity of the hall. In terms of classification, around
14,500 seats would be for the Economy class and the rest of 500 seats would be for the Premium
or VIP class (Wagner 2019). The total revenue from the financial event undertaken by the
company would be around $3 million. Austin Entertainment Group would also be bringing
sponsorship for the programme by way of commercial ads in banner, hoardings and led display
board. In different classification of sponsorships that will be offered by the company for
commercial advertisement segmentation of the various kinds of sponsorship and the benefit they
will get will be clearly mentioned (Hatak and Snellman 2017).
Proposed Cost Expenditure and Revenues
The cost expenditure for the company primarily would be in the form of the charges
incurred by the NSYNC Band, which is estimated to be around $1 million. The company would
also be spending another $0.75 million for hiring the O2 Arena for the event (Harrison and
Mason 2017). Other costs that the company would be incurring would be in the form of rent of
premises where the company will be conducting planning and operations, salary and wages to
employees, sales and marketing cost and other selling marketing expenses that will be incurred
directly by the company. The financial viability of the event was well executed with the level of
profitability, the amount of expenses can be well stated in the financials, and accordingly the
budget for the event can be well planned by the management of the company (Bewayo 2015).

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Pricing Strategy
The pricing of the ticket on an event wise would be done for the company where the price
of the ticket would be sold for a $200 sum. On a total basis, the company expects that the show
would be a houseful, as the guest capacity is limited and the accommodation being only 15,000
guests. The pricing strategy for the event would be such that it attracts core audience who have
inspiration and a true fan of NSYNC Band. Marketing of the event through social media
marketing and advertisement in the televisions and banners would be the way in which audience
and general masses would be informed about the event details. The price of the ticket is though
kept at $200 and the same has been kept in order to attract audiences that have a huge support for
the NSYNC Band.
Appropriate Financing Sources
The appropriate financing sources that the company would be considering for financing
the event would be taking a 50% debt in the form of bank loans and 50% equity investment in
the company. The company would repay the 50% debt financing once the company collects the
revenue earned from the event and simultaneously the equity holders of the company would be
paid from the profitability earned on the same time. Financial risk of the company would though
be increased with the introduction of debt financing however, it is also important to understand
the business factors and risks associated with the company (McKenzie 2015).
Financial Outcome
The financial outcome as proposed and as expected would be bringing around $3 million
for the company where by the total company would be spending around $2.5 million as a form of
initial capital for the event. The profitability that the company would be incurring from the event
would be around $375,600 and the same applies about 30% of return on investment for the

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company. The net profitability margin for the company as estimated would stand around at 16%
profitability (Ghezzi et al., 2015).
Breakeven Point
It is essential to cover the fixed costs that are incurred by the company and the same
would be in the form of operational expenses that are incurred by the company.
The operational expenses or the fixed expenses of the company amounts to around $1.53
million and the gross margin contribution for the company stands out at near 66.67% that shows
that the company needs to sell around 11,479 tickets. In order to cover the fixed cost or the
operational expenses that are incurred by the company (Jeffrey, Lévesque and Maxwell 2016).
Recommendations and Conclusion
It is recommended that the management of the company under take both optimistic and
pessimistic scenario for the financial event. Changes in the musical event is a common thing and
the same thing can be well regarded as the sensitivity in the number of tickets sold and the
corresponding revenues earned by the company. The financial viability of the event was well
executed with the level of profitability, the amount of expenses can be well stated in the
financials, and accordingly the budget for the event can be well planned by the management of
Where;
Fixed Costs (Overhead Expenses) 1,530,500
Gross Margin (Contribution) 66.67%
Contribution = $3mn-$1mn
Contribution Per Unit = $2mn
Breakeven Sales Point = 2295750
Breakeven in Seats/Quantity 11479
Breakeven Analysis
Breakeven Sales Point = Fixed Cost/Contribution Per Unit
(Contribution = Selling Price Per Unit - Variable Costs Per Unit)

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the company. The American Band will be performing up in the O2 Arena, which is an indoor
stadium that serves as a multi-purpose indoor arena located in the centre of the O2 entertainment
complex of the Greenwich Island. The accommodation number for the guest is set up at 15,000
guest however on the other hand differences in the ticket sold can be of much significance for the
company.

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References
Bewayo, E.D., 2015. The overemphasis on business plans in entrepreneurship education: Why
does it persist. Journal of Small Business and Entrepreneurship Development, 3(1), pp.1-7.
Chang, M., 2016. Entrepreneurship your business plan. IEEE Engineering Management Review,
44(1), pp.21-23.
Gardner, A., 2016. ‘Rock On’: Women, Ageing and Popular Music. Routledge.
Ghezzi, A., Cavallaro, A., Rangone, A. and Balocco, R., 2015, April. A Comparative Study on
the Impact of Business Model Design & Lean Startup Approach versus Traditional Business
Plan on Mobile Startups Performance. In ICEIS (3) (pp. 196-203).
Harrison, R.T. and Mason, C.M., 2017. Backing the horse or the jockey? Due diligence, agency
costs, information and the evaluation of risk by business angel investors. International Review of
Entrepreneurship, 15(3), pp.269-290.
Hatak, I. and Snellman, K., 2017. The influence of anticipated regret on business start-up
behaviour. International small business journal, 35(3), pp.349-360.
Horning, N., 2018. Pop Music: Chart-Toppers Throughout History. Greenhaven Publishing
LLC.
Jeffrey, S.A., Lévesque, M. and Maxwell, A.L., 2016. The non-compensatory relationship
between risk and return in business angel investment decision making. Venture Capital, 18(3),
pp.189-209.
Kepczynski, R., Jandhyala, R., Sankaran, G. and Dimofte, A., 2018. Integrated Business
Planning. Management for Professionals.
McKeever, M., 2016. How to write a business plan. Nolo.

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McKenzie, D., 2015. Identifying and spurring high-growth entrepreneurship: Experimental
evidence from a business plan competition. The World Bank.
Wagner, R.A., 2019. The Business-Model ‘Flag’: A Visualization Tool for Pitching Financials.
Available at SSRN 3409229.

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Appendix
1) Profit and Loss Statement
Year 1
Revenue 3,000,000
Cost of sales 1,000,000
Gross profit 2,000,000
Expenses/overheads
Premises (rent, rates) 750,000
Wages and salaries 500,000
General expenses 2,000
Accountant Fees 5,000
Payroll Tax 500
Utilities 5,000
Sales and Marketing 250,000
Postage & Telephone 500
Repairs and Maintainance 2,500
Preliminary expenses 5,000
Depreciation 0
Lease Payments 10,000
Total expenses/overheads 1,530,500
Profit before tax 469,500
Tax @ 20% 93,900
Before tax net margin 16%
Profit after tax 375,600
Transfer to reserves 375,600
Particulars Year 1
Return on Investment 30.05%
Profit and Loss Statement

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2) Balance Sheet
Assets FY-1
Current Assets
Cash $1,512,500
Accounts receivable $2,850,000
Total current assets $4,362,500
Total Assets $4,362,500
Liabilities and Owner's Equity
Current Liabilities
Accounts payable $5,000
Accrued Rent $750,000
Bank Charges Payable $125,000
Short-term loans $1,000
Income taxes payable $93,900
Accrued salaries and wages $500,000
General Expenses $2,000
Lease Payment $10,000
Total current liabilities $1,486,900
Long-Term Liabilities
Long-term debt $1,250,000
Less: Loan Repayment $0
Total long-term liabilities $1,250,000
Owner's Equity
Owner's investment $1,250,000
Net Profits $375,600
Reserve and Surplus $0
Total owner's equity $1,625,600
Total Liabilities and Owner's Equity $4,362,500
Balance Sheet