If a sport team/business/entity were facing financial hardship, what red flags or signs would be visible?...

If a sport team/business/entity were facing financial hardship, what red flags or signs would be visible? What would be first steps a sports leader would take in response to these red flags?

Expert Solution

The red flags or signs that would be visible are:
1. Reporting losses in Financial statements or Having poor free cash flow.
2. Interest payment defaults or inability to pay them in the near future.
3. Changing Auditors: auditors resignation from the company due to no reasonable reason.
4. Frequent change in top management/players.
5. Large insider selling by promoters.

A sports leader would first try to restructure and rethink the business/team model. He would try to reduce the debt of possible or convert them into equity before business failing- it would save a lot of devaluation if debts are converted into equity beforehand of failing.

He would try to bring in new players/management/coach to change the way things were done before.
Coach is a very important member of the team and mutual understanding and respect between players is very important for success. The leader would try to induce a new corporate/ team culture.

jeff jeffy answered 10 months ago

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