After spending a month on his proposal, Sean was excited that the New Ulm Sleepy Eye Hockey Association ("the Association") had been selected to host two Minnesota State Hockey Championships for the 2019-2020 youth hockey season. The Association had an abundance of experience hosting large-scale tournaments, but these were the first two State Championships to be hosted by the Association since Sean had assumed the role of president on the Association's board. The major difference between hosting a State Championship and other tournaments was the expectation of hosting a banquet for all the tournament players, coaches, family and friends. Sean along with Alissa, the Association's tournament coordinator, had the responsibility of coordinating and running the banquet. The Association's Board of Directors ("the Board") wanted to provide a great banquet for the players, coaches, family, and friends. The selection of a tournament host was often based on the experiences observed and communicated from prior events. The banquet was an important component of that experience. The Association would observe a $15,000 to $20,000 windfall simply from team registration fees, ticket sales, and concessions. The event represented a significant boost to the Association's fundraising efforts for the year. The Board had no desire to make a significant profit or absorb significant losses from the banquet. The family and friends attending the tournament would already be responsible for purchasing game tickets, hotel rooms, meals and all other travel expenses. Providing a great banquet at a reasonable cost would enhance the overall attendee experience. If feasible, the Board also preferred to recognize the players and coaches that earned their spot in the State Championship by charging a reduced rate for their banquet attendance. Correspondingly, the Board turned to Sean and Alissa to accomplish their goals. The Board wanted Sean and Alissa to present their plan and recommendations at the next board meeting, less than four weeks away. Sean and Alissa collaborated to organize the banquet. Alissa was responsible for finding a venue and collecting the cost information to host the event. It was decided that Sean, a Certified Public Accountant, would be responsible for compiling the cost information and proposing pricing structure options with the goal of breaking even on the banquet. Sean knew that this would likely be more difficult than a standard break-even analysis as he suspected the Association would need to host two banquets at two separate venues due to the size of the available venues. The New Ulm Sleepy Eye Hockey Association was a not-for-profit youth hockey organization. The Association was formed in 2011 after a decision was made to combine two hockey organizations from neighboring communities (New Ulm Hockey Association and Sleep Eye Hockey Association). The mission of the Association was to provide a quality program that offers boys and girls an opportunity to experience the game of hockey. Although the Association supports two communities, it was always known that the New Ulm Civic Center, a dual rink complex in the City of New Ulm, would be the location of the State Championships. Correspondingly, it was quickly decided that since most teams and families would be staying in hotels in the immediate area, that any banquet should be located in the City of New Ulm. The two State Championships were for two different age groups. The Peewee B teams consisted of players aged 11-12. The Bantam B teams consisted of players aged 13-14. The Association assumed there would be an approximate total of 160 players/coaches for each of the tournaments for a total of 320 players and coaches. It was expected that all coaches and players would in attendance at the banquet regardless of cost. Based on discussions with other organizations that had hosted similar banquets, Alissa discovered that between 300 and 500 people would want to attend the banquet per level resulting in a total combined attendance of between 600 and 1,000 people for the two levels. Upon investigation, Sean and Alissa quickly learned that the City of New Ulm did not have any locations that could host a banquet of between 600 and 1,000 people. Correspondingly, they decided to host two separate banquets for the two separate levels. The first banquet for the Bantam B teams was hosted at the Brown County Convention Center ("Convention Center"). Convention Center had a capacity of 500 attendees for an event. Convention Center had a set-up fee of $1,200. The cost of the meal was $19.75 per attendee and there was a $0.50 per attendee miscellaneous charge. The second banquet for the PeeWee B teams was hosted at New Ulm Banquet Hall ("Banquet Hall"). Banquet Hall had a capacity of 500 attendees for an event. Banquet Hall had a set-up fee of $1,500. The cost of the meal was $15.50 per attendee and there was a $0.50 per attendee miscellaneous charge. In addition to the cost provided by the two facilities, the Association was responsible for providing table decorations and a guest speaker. Alissa recommended and Sean agreed that teenagers would be more excited by candy than fancy flowers or candles. Sean agreed and added that a fixed amount of candy would be easier to spread across the tables last minute if they happened to have more or less attendees than expected. It was decided that a fixed amount of $75 would be spent on candy for table decorations for each of the two events. As for a guest speaker, based on a recommendation from a peer, Alissa was able to book a renowned sports author and motivational speaker for a discounted rate of $2,050. The speaker provided a 45 minute motivational speech at each of the events. A summary of the cost information collected by Sean and Alissa is included in Table 1 (Appendix A). In addition to collecting the cost information, Sean and Alissa needed to decide on a price for each of the banquets. In talking with other communities that had hosted similar banquets, they found a wide range of pricing options: N.U.S.E. Hockey Association Option 1: Make the banquet free for the players and coaches and compensate with a high price ( $35$45 per attendee) for the family and friends. Option 2: Charge a lower price for the players and coaches (\$12-\$16 per attendee) and compensate with a modest price (\$24-\$28 per attendee) for the family and friends. Option 3: Charge the same price for all attendees. After considering what other communities had done, Sean and Alissa decided to focus on three pricing structures as indicated in Table 2 (Appendix A). The table provides the three options considered. They also decided that they wanted both banquets to use the same pricing structure knowing that, if given equal attendance, one of the banquets might end up subsidizing the other. While it was reasonable to assume that all players and coaches would attend, Sean and Alissa needed to recognize that the attendance of family and friends would be relatively price sensitive. CONCLUSION After reviewing the information collected by Alissa and himself, as well as the three pricing structure options, Sean was confident that he could determine how many attendees would need to attend the events for the Association to break-even. Sean also knew that it would be in his best interest to provide some sensitivity analysis around each of the three options given the Board's desire to avoid a significant profit or loss. Armed with all the necessary assumptions and cost information, Sean and Alissa had one week remaining before they were scheduled to present the Board with options and a recommendation by answering the following questions. How many people would need to attend each of the events for the event to break-even (no profit or loss)? What profit or loss would be observed at each of the banquets assuming that there were 300,400 or 500 attendees per banquet? What pricing structure would he and Alissa recommend? Will the recommendation align with the Association's mission? Discussion Questions 1. What is the break-even point in banquet attendees under each of the three proposed pricing structures? (15 points) 2. What is the expected profit or loss under each of the three pricing structures given the three levels of attendee volumes? (15 points) 3. Assume that you are an accounting consultant working on the Association's banquet pricing structure. What recommendation would you make that best meets the Association's stated goals? (10 points) Discussion Question Hints 1. Revenue and expenses should be treated as fixed for the players and coaches. In your solution this should be referred to as the "Players/Coaches Subsidy or Gain". 2. Using the templates provided, the solution for Discussion Question One should be completed following a six-step process for each of the banquet and pricing structure combinations: 1. Determine which costs are variable vs. fixed for each of the banquets. The relationship will remain constant regardless of pricing structure. (Table 3 ) 2. Calculate the "Players/Coaches Subsidy or Gain". (Table 4) 3. Calculate the contribution margin per family/friend. (Table 5) 4. Calculate the total fixed cost including the "Players/Coaches Subsidy or Gain". (Table 6) 5. Calculate the break-even in attendees. (Table 7) 6. Prepare proforma income statements proving the break-even calculations. (Table 8) 3. Using the templated provided, the solution for Discussion Question Two should be completed for the nine combinations of pricing structure/attendee levels. (Table 9) 4. Discussion Question Three should be answered in paragraph form based on the information provided in the case narrative as well as answers to Discussion Questions One and Two. A maximum of 2 pages double spaced in 12 pt Times New Roman font may be used. APPENDIX A Table 2 Banquet Pricing Options per Attendee Option 1 Option 2 Option 3 Pricing Structures: Players and Coaches Family and Friends