AFC @BeeBusinessBee may be a football club, however it is also a business. This means that it is important that it is able to manage its finances to ensure that it is successful. This is why good financial planning is criticial to the overall success of the club.
One of the financial tools that AFC @BeeBusinessBee can use is break even analysis. This is the process of working out how many tickets does the club have to sell to ensure that it covers its costs? If the club does not sell enough tickets for each match then it will make a loss, however if it sells more tickets than this figure, then it will make a profit.
This is known as the break even point. This is the point where revenue and costs are equal. At break even AFC @BeeBusinessBee will actually be making no profit or loss. It will actually end the year with £0. You could argue this is a good thing because the club has not made a loss, however it is probably a really bad thing because the club has actually made no profit.
Break even can be calculated using the following formula;
BEP = Fixed Costs / (Selling Price - Variable Costs)
This formula will tell the club how many tickets need to be sold to cover the costs that it has. So if the club sells each ticket at £20, but also has fixed costs of £50,000 and variable costs of £4 it can now work out how many fans need to attend each match to break even.
Placing these numbers into the formula we can see;
£50,000 / (£20 - £4) = 3125 tickets sold
This figure is important for the club to know as this can be used for target setting to see how well the football club is performing as a business. Every fan attending above this figure is helping the football club to make a profit.