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Threshold Sports, Llc What Are Management’s Goals and Strategy?

By:   •  April 15, 2019  •  Case Study  •  638 Words (3 Pages)  •  1,329 Views

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Study Questions and Responses

  1. What are management’s goals and strategy?  What creates the financing need in this company?  Is there a first-mover advantage?  Explain.

Threshold Sports, LLC works to establish a cycling market in the U.S that is similar to the market in Europe by managing and producing competitive cycling events. With management’s experience in event planning and relationships in the cycling industry, they felt confident in creating a niche market in the U.S for cycling. Management has a goal to double their revenues within three years by developing additional racing events and leasing the company’s assets for noncompany events. Their strategy was to open a total of six new races in three years, but in order to do that they would need additional financing. Financing the development of the additional races would require approximately $500,000 in working capital. Threshold, LLC has a first-mover advantage because the cycling market is fairly small.

  1. Assuming a 40% tax rate, what is Threshold worth?

Threshold Sports, LLC

Estimated Fee Income and Loss, 2001-5

(in thousands)

2001

2002

2003

2004

2005

Revenue

Management-fee income

$1,150

$1,525

1,750

2,100

2240

Special-project income

80

80

90

105

110

Profit (loss) from racing events

90

337

752

1,322

2,015

Misc. income

2

3

3

4

3

Total Income

$1,322

$1,945

$2,595

$3,531

$4,368

Expenses

Salaries and overhead

$1,104

$1,296

$1,495

$1,719

$1,977

Special Projects

35

55

60

72

85

Depreciation

-11

-16

-22

-28

-34

Expansion expense

40

55

100

200

225

New business

24

30

60

100

200

Total expenses

$1,192

$1,420

$1,693

$2,063

$2,453

Profit (loss) before tax

$130

$525

$902

$1,468

$1,915

Tax 40%

$52.0

$210.0

$360.8

$587.2

$766.0

Net Profit (Loss)

$78.0

$315.0

$541.2

$880.8

$1,149.0

...

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