Planful

Red Sox Manage Expenses and Grow Profitability Despite a Volatile Industry

In 2002, utilizing a system of statistical analysis similar to what Oakland A’s General Manager Billy Beane had adopted, and which was later profiled in a bestselling book and movie entitled Moneyball, Boston Red Sox former General Manager Theo Epstein struck financially savvy deals that would form the core of the 2004 championship team—including signing perennial All-Star David Ortiz. The team’s methods would bring another title in 2007 and a third in 2013. Sophisticated number-crunching had become central to the Red Sox’s success, and not just on the field.

In 2011, the finance team in the Red Sox front office would adopt the Planful cloud-based FP&A platform to keep a lid on expenses, ensuring profits despite a high degree of variance and volatility in the underlying business of running a storied baseball club.

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Challenges:

How could that be, especially given the Sox’s history? Ticket sales can ebb and flow according to where the team resides in the standings. Even playoff revenue can be tough to predict since proceeds are divided between the players, Major League Baseball, and the participating teams at different rates as teams progress through each round. Concessions and merchandise sales are outsourced, with vendors paying fees to sell in Fenway Park. Keeping a watchful eye on expenses can be crucial to ending the season in the black.

And yet, before 2011, Excel was the club’s primary tool for collecting expense budgets and developing forecasts.

“We had maybe 100 or so different Excel templates that different managers would fill out. Those all linked into a mothership workbook and would ultimately serve as our reporting package when it came to the budget,” said Ryan Scafidi, Senior Director of Financial Planning and Operations for the Red Sox, noting the process was too labor-intensive to perform more than twice a year. Gathering the data and correcting errors would usually take a couple of weeks each round, at which point the data had gone stale. Lacking real-time insights, managers had no choice but to model for worst-case outcomes.

Solution:

While Scafidi says the shift from Excel was partially motivated by the need to get more data to more people faster, his primary intent was to find a tool that would allow for collaborative planning and analysis. Planful fit the bill perfectly.

“We have 57 users today. Because the solution is cloud-based, they don’t have to be on the network, they can do it from home. They can do it from the beach. They can get their stuff done on their own time within the deadlines that we set. It makes the process a lot more efficient,” Scafidi said, joking that compiling reports now takes “five minutes” rather weeks. “I’m being dramatic a little bit, but it’s not that far off.”

Results:

Forecasts that had been developed only twice a year are now run monthly, with on-demand financial reports influencing estimates.

“Because we’re able to be more proactive and forecast over the course of a year we saved an additional half-million to $1 million in expenses that otherwise would have been water under the bridge in the old, Excel-driven world.”

Other short-term benefits include:

• Exhaustive trend data. Scafidi and his team regularly upload data from the team’s ticketing database into Planful for further processing.

“We can look at whether we’re on plan, and how current performance compares to last year or the year before or whatever year we want to look at,” Scafidi said. “And if we’re trending low, we can raise the red flag and make adjustments.”

• Smarter spending. All 57 of the team’s users leverage Planful in different ways. For example, recently members of the facilities team uploaded photos of fading paint and ripped seat cushions found throughout Fenway. The extra detail in the system made real their pitch for added budget, something they never would have been able to do inside Excel.

Usage of Planful throughout the organization also means that Scafidi’s team is able to keep the right people informed as they work to keep budgets on track and expenses under control. In that spirit, his long-term plans include training managers to perform more independent analysis and apply what-if scenarios.

"The ability to drill down on any category gives department managers great insight into their areas of the business. They have the ability to generate every report on their own, without having to request assistance from finance."

Ryan Scafidi, Senior Director of Financial Planning and Analysis

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