Bowling Green Sports Facility

Bowling Green Sports Facility

Feasibility Project

Jamal Combs, Mila Consley, Angie Gates, William Lange

Entrepreneurship 312

Western Kentucky University

 Bowling Green Sports Facility

Service Description
Bowling Green Sports Facility will provide Bowling Green, Kentucky, and surrounding areas
with an indoor sports facility so that people of all ages can play or train in their sport, no matter
the season. We want to help develop young athletes into fulfilling their potential by training them
year-round. Our 250,000 square foot facility will consist of six basketball courts, three football
fields, three baseball fields, and one training room. This will be plenty of courts and fields to host
AAU, high school, and club tournaments and practices. Bowling Green Sports Facility will have
trainers on hand that will do one on one training and host camps for every sport. This will also be
a facility that will accommodate people who want to participate in pickup games or leagues for
all ages to keep people involved in the community. Bowling Green Sports Facility will have its
own leagues. These leagues will be ran by BGSF staff. Monthly membership fees are $150 and
include unlimited access to all services and facilities.

Our customers will have the option to host parties here, and people can come to open gym daily.
By having every type of court and field at one place, this will be very convenient and will set our
sports facility aside from any other gym. Bowling Green Sports Facility will be located at 2067
Blue Level Road, Bowling Green, Kentucky 42101. This is fifteen minutes away from
downtown Bowling Green and is a central location for everyone traveling to our sports facility.
Our business will fall under the NAICS category 713940, fitness and recreational sports center. It
will also fall under SIC category 7991, fitness and recreational sports center.

Industry Feasibility
AAU and club sports are thriving. Sports such as basketball are currently being held at local
gyms and community centers. For example, the Vette City Shootout, which is a basketball
tournament, is being held at 5 different locations throughout the Bowling Green area. By
installing this facility, it will eliminate the need to travel between 5 different locations. Sports are
becoming more competitive even at younger ages. Swanson (2016) states that “three out of four
American households have at least one school-aged child participating in youth sports” and that
80 percent of those quit after the age of 15 (2016). With our facility, we can lower that
percentage by providing a place where they can develop skills at their own pace and compete
with others at their skill level.

This facility will provide an of opportunity for the city of Bowling Green and its surrounding
areas to maximize their full potential. Athletes of all ages will finally have a local place to further
develop their skills and compete. They can take advantage of leagues, personal training, group
training, and networking. This facility will be full of athletes from around this area. It will be a
great opportunity for these athletes to network with each other and with coaches. Another
opportunity will be for the people we hire as coaches. These individuals will utilize state of the
art training facilities while instructing their teams. For those who have no coaching experience
but would like to begin, this is a great place to start at the bottom and work their way up. Start
out by becoming an assistant coach or by networking with existing head coaches.

In order to capitalize on these opportunities, we need to make sure that our facility is state of the
art. We will be located about 20 minutes from downtown Bowling Green, which will be a central
location for all customers. Our equipment must always be up and running and ready for use. Our
hours of operation must cooperate with demanding schedules of student athletes. We must be
 Bowling Green Sports Facility

dedicated to our constituents and listen to their needs and wants. Our staff must be
knowledgeable and welcoming to athletes of all ages and skill and their families. Our initial
startup costs will add up to $635,433 and will increase as we get more customers through the
door.

Our greatest challenge in this industry will be initial startup. We need to hire people who are just
as passionate about athletics and developing athletes as we are. They need to be willing to come
in even when they are scheduled off. We need to hire available and dedicated individuals. Also,
initially getting the word out and getting athletes to come compete and train with us will be a
challenge. Being a new facility in the area, people may be hesitant to try it out for the first time
instead of training how they usually train. However, once people discover our state of the art
facilities and dedicated staff, they will begin to spread the word and we will get more people in.
There are great opportunities yielded for an indoor sports facility like Bowling Green Indoor
Sports Facility. The service of providing all sports in one central location and having them
indoor to where they can be played year round, makes this market so appealing. We are
providing the opportunity for athletes of all ages to come train, compete, and play during all
seasons and this differentiates from every other facility, because no other gym in the surrounding
area provides this. Our facility is a one-stop shop for athletes and that is what is so unique about
it. The Bowling Green Indoor Sports Facility has a great opportunity to get involved with the
school systems by providing student athletes a place to practice, train, and play. By involving the
school systems, we are getting not only the student athletes involved, but the coaches, families,
and other students. Our goal is to have a well-established sports facility that not only produces
great athletes, but getting everyone involved in the community and we have a great opportunity
to do just that.

One of our biggest goals as a sports facility is to focus on our customers. We want to be the type
of facility that has workers who truly care about you and your progress and actually take the time
to help you with what you need. Instead of being structured and having certain lessons, we want
each individual to have their personal experience with the facility and their own unique growth.
There are opportunities for differentiation from competitors. Other indoor facilities could arise
with a focus on one particular sport. They could also only provide training, or be specifically for
competing. [Currently our only competitors are school gyms and fields, and any workout facility
around Bowling Green]. Bowling Green Indoor Sports Facility has a great chance at thriving,
because even though we have competitors, they are not big competitors. Our facility is the whole
package for athletics and I do not see competition being a problem.

It would not be hard to imitate. Majority of facilities would go with a smaller approach, whether
that would be fewer gyms, courts, fields, or just less sports in general. We are planning to make
this a large facility and I do not think others would want to take the risk of putting the work into
this considering how big it would be, so it would take a lot of time and cost a lot of money and
that is a risk many people are not willing to take. An advantage of being in this industry is that
we would be the only company in this area who would have something like this. We would profit
tremendously because people would not have to travel as far. That being said, we would not have
any close competition to take us out of business. We would also work alongside with high
schools in the area and the community to keep our business relevant.
 Bowling Green Sports Facility

Service Feasibility
The service that we provide is tailored towards athletes between the sixth and twelfth grades.
Within Warren County, there are five high schools with a total of 5634 students and five middle
schools with 3076 students. In data gathered in 2016, 56% of all high school students played at
least one sport while in school (Child Trends, 2018). With taking a more conservative number
(25%), that leaves us with 2175 athletes in Warren County. Now assuming roughly one out of
every ten athletes would like to train in their respective sport outside of school, we are left with
nearly 220 student athletes that we can train, teach, and coach. When including the counties that
surround Warren County, our number of forecasted athletes increase by 250 to a total of 470
athletes. With current population growth trends, we can estimate an increase of 10 athletes per
year (Warren County).

While these students are receiving the benefit from our services, they are not the ones paying for
our services. That is why are primary target market is the parents of these athletes. So, while it is
important to sell the athlete on what we do, it is vastly more important to sell to the parent. We
are able to do this with our brand-new state of the art facility, world class coaching, and results
of the athletes that go through our program. With an average increase of household income per
year at 4.5% (Warren County), disposable incomes continue to rise. A recent study shows that
20% of parents are willing to spend over $2000 per year per child for activities they participate
in (Albrecht, 2017). As disposable income increases so will their willingness to spend that
money on their children’s athletic development.

A large problem that many student athletes face is the offseason. For warm weather sports, like
baseball, softball, and soccer, the sport shuts down completely during the winter. There is a lack
of space for these athletes to refine their skill during the offseason. We are able to provide these
individuals a place to work on their game throughout the year. Because all our facilities are
indoors, the offseason can be eliminated. Other people might be looking for what will push them
to the next level. Our trainers and coaches will be better equipped and more knowledgeable than
their high school counterparts. A 2017 study for that an overwhelming amount (95% female,
93% male) of NCAA athletes trained for their sport outside of their high school team (Moore,
2017). By allowing their child to train with us, the athlete’s chances of playing after high school
increase dramatically.

Financial Feasibility
The founders of Bowling Green Sports Facility did primary and secondary research for the
financial feasibility analysis to estimate the capital requirements. Our research gave us the
estimates for revenue and expenses provided below.

Financial Feasibility Summary

Total Fixed Variable Total Estimated
Revenue Expenses Expenses Expenses Earnings
Year 1 $846,000 $270,833 $364,600 $635,433 $210,567
Year 2 $847,500 $248,833 $434,200 $683,033 $164,467
Year 3 $849,000 $248,833 $503,800 $752,633 $96,367
Total $2,542,500 $768,499 $1,302,600 $2,071,099 $471,401
 Bowling Green Sports Facility

For startup, the four founders will invest $100,000 each with a total of $400,000. This is 47.28%
of the first year’s capital requirements. We are looking for other investors to cover the other
$446,000 in year one.
Capital Requirements:
Variable and Fixed Costs
Fixed Variable Total
Expense Expenses Expenses
Year 1 $270,833 $364,600 $635,433
Year 2 $248,833 $434,200 $683,033
Year 3 $248,833 $503,800 $752,633

Fixed Expenses
Furniture and Decoration: This includes tables, chairs, decorations, and computers. The tables
will be used for faculty purposes and the chairs are for seating for our customers and any
audiences. We want minimal decoration to make our facility look appealing. Computers will also
be used for faculty purposes. The budgeted cost for furniture and decoration for year one is
$5,000 and $1,000 in preceding years.
Insurance: Our insurance will include general liability and property insurance. General liability
will cost $4,000 and property insurance will cost $8,000 with a total of $12,000 of insurance per
year. We retrieved estimates of insurance cost for sports facilities by taking the average cost of
insurance from multiple sports facilities. Budgeted insurance costs are shown in the appendix.
Building: We are building a 250,000 square foot building. We wanted to build a big enough
building for six basketball courts and three football/baseball fields. We got a quote from a close
friend that is a contractor that we can have this facility built for $10 per square foot. We are
paying the building off over 30 years, so we will be paying $83,333 a year and a monthly
payment of $6,945.
Advertising: For our first year of business, we will have advertising costs of $5,000. We will do
most of our advertising by word of mouth, but for our first year we want to make sure we get the
word out. After our first year, our advertising expense will decrease to $2,000 a year.
Professional Services: This includes our financial and accounting services. One of our owners,
Angie gates, is an accountant and will handle this area for us. We can budget $500 a year for this
area.
Equipment: We have a breakdown of equipment expenses in the appendix. We have a total of
$400,000 in equipment costs and will pay this over a 3-year period. This allows us to budget
$133,333 for equipment per year.
 Bowling Green Sports Facility

Variable Expenses
Labor Costs: We will start out with 5 trained employees during our first year of business, and
we plan to increase by 5 trained employees in the preceding years. Our trainers will be part-time
workers. We estimated 1,265 hours worked per trainer per year. We will pay our trainers $11 an
hour.
Salary: Our four owners will have a salary of $30,000 a year each.
Utilities: Utilities included are water, electricity, and internet. We found that we can get utilities
at an average of 70 cents per square foot, making our utility cost per month $14,600 for our
250,000 square foot facility.

Estimated Revenues:
Sales Revenue Model
Members per Monthly Fee Revenue per Revenue per Growth
Year Month Year
Year 1 470 $150 $70,500 $846,000 -
Year 2 480 $150 $72,000 $864,000 2.13%
Year 3 490 $150 $73,500 $882,000 2.08%

We will charge our customers a monthly fee of $150. We expect 470 customers in our first year
of business with an increase of 10 customers each year after. This fee was based on an average of
multiple sports facilities in surrounding areas.

Financial Analysis Summary Conclusion

Capital Estimated Return on Break Even -
Requirements Earnings Investments Members
Year 1 $635,433 $210,567 33.14% 353
Year 2 $683,033 $164,467 24.08% 380
Year 3 $752,633 $96,367 12.80% 418

As shown above, with the research conducted from many sources, we are perceived to make a
profit from year one. We are estimated to have $210,567 in revenue in the first year making our
return on investment 33.14%. Even though in years 2 and 3 our revenue decreases, we are still
profitable and have a high return on investment rates. We expect even more growth in years to
come. This plan is what is most likely to happen, and if we have more members than expected,
we will be even more profitable.
 Bowling Green Sports Facility

Appendix

Furniture/Decoration Furniture/Decoration
Year 1 Year 2 & 3
Tables $700 Tables $100
Chairs $1000 Chairs $300
Decoration $300 Decoration $100
Computers $3,000 Computers $500
Total $5,000 Total $1,000

Insurance Expense Year 1,2,3

General Liability $4,000
Property Insurance $8,000
Total $12,000

Equipment Year 1,2,3

Basketball Courts $50,000
Football/Baseball Fields $80,000
Balls, Bats, Helmets, Etc. $333
Weight Equipment $3,000
Total $133,333

Break Even Analysis

Total Cost Revenue per Average Number of Full-
Customer Monthly Fee Year Members
Year 1 $635,433 $846,000 $150 470
Year 2 $683,033 $864,000 $150 480
Year 3 $752,633 $882,000 $150 490
 Bowling Green Sports Facility

Variable and Fixed Variable and Fixed Variable and Fixed

Expenses Year 1 Expenses Year 2 Expenses Year 3
Variable Expenses Variable Expenses Variable Expenses
Labor Costs $69,600 Labor Costs $139,200 Labor Costs $208,800
Salary $120,000 Salary $120,000 Salary $120,000
Utilities $175,000 Utilities $175,000 Utilities $175,000
Total $364,600 Total $434,200 Total $503,800
Fixed Expenses Fixed Expenses Fixed Expenses
Land $16,667 Land $16,667 Land $16,667
Parking Lot $15,000 Parking Lot $0 Parking Lot $0
Building $83,333 Building $83,333 Building $83,333
Equipment $133,333 Equipment $133,333 Equipment $133,333
Insurance $12,000 Insurance $12,000 Insurance $12,000
Furniture $5,000 Furniture $1,000 Furniture $1,000
Advertising $5,000 Advertising $2,000 Advertising $2,000
Professional $500 Professional $500 Professional $500
Services Services Services
Total $270,833 Total $248,833 Total $248,833
Total $635,433 Total $683,033 Total $752,633
 Bowling Green Sports Facility

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