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MBA 524 MBA524 MBA/524 Week 5 Assignment The State Fair of Virginia.docx

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MBA 524 MBA524 MBA/524 Week 5 Assignment The State Fair of Virginia.docx

Professor Michael Miceli November 29, 2020
1.What caused State Fair of Virginia to be in its current precarious financial condition?
In late 2011, the State Fair of Virginia Inc (SFVA) had a difficult financial decision to make, despite the positive revenues experienced during that year.

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MBA 524 MBA524 MBA/524 Week 5 Assignment The State Fair of Virginia.docx

Professor Michael Miceli November 29, 2020
1.What caused State Fair of Virginia to be in its current precarious financial condition?
In late 2011, the State Fair of Virginia Inc (SFVA) had a difficult financial decision to make, despite the positive revenues experienced during that year.
The initial cause of the financial dilemma occurred in2003, when SFVA incurred $83 million in debt, borrowed against almost half the loan amount in a $47 million investment portfolio.
This exuberant investment was supposed to be used to expand the fair grounds and “take advantage of the development potential of the new 348-acre site”.
This debt incurred was unnecessary for the fair to continue to prosper as the operators of the Richmond Raceway, the original site, would have continued to host the fair at their site.
The organization used the loan to develop the Meadow Farm with updated and expanded fairgrounds, 10-acres of wetlands, huge horse stalls, an exhibition hall, a multipurpose facility, and an enormous renovated mansion for special events, all of which were supposed to increase revenue to help repay the loan.
The organization did not capitalize on any other of these areas other than the fair. With the primary focus in promoting the fair, they lost out on a wide range of potential revenue in capitalizing on other areas of their investment.
If the organization diversified their investment in using the land purchased, and facilities built/renovated, other than the fair, they could have increased revenue and not have been so negatively impacted by the risk of inclement weather during “fair time”.
Weather condidtions hampered the success of the 2009 and 2010 fairs, leading to low collections from attendance charges (Schnarr, 2012).
When the new fair grounds were ready in 2009, the financial markets in the United States also collapsed and the lenders forced SFVA to sell its stock positions at the bottom of the market (Schwartz, 2012).
In summary, the following factors contributed to SFVA’s poor financial status; they borrowed unnecessarily, expanded beyond their means, did not fully capitalize on their “over” investment, were financially impacted by external weather conditions (which could have been softened in diversifying their resources into other

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