Wednesday, March 20, 2013

Your government at work

The University of Minnesota has done, apparently, what no Big 10 alumnus would think could ever be done--lose money selling liquor to Big 10 football fans.  How did they do it?

Well, let's work out the math.  At $7.25 per 16 ounce glass of beer, they sold about 125,000 glasses of liquor.  Revenue is $900k, cost of the liquor was $180k, about $450k went to the vendor, $30k for ATMs and plants, and $47k for security. 

OK, so the other costs--setting up tents and labor--appear to be about $205k in all for them to lose money.   What went wrong here?

Well, their wholesale price per drink (about $1.40 or so) is higher than the retail price of the beers they serve, their labor cost equates (even with generous wages of $20/hour) to each worker serving a drink every five minutes, and Aramark is getting an incredible amount of money for setting up a few beer tents.

In other words, it's the same old story of the fiscal habits of those who are spending other peoples' money, not to mention a nasty indictment of the Carlson School of Management.

1 comment:

tobin said...

The lack of accountability and oversight at institutions/organizations that use public money is staggering. I've heard how the "wealthy" have enough extra money to solve world-wide poverty...I'd rather look at how the amount of taxpayer dollars wasted in a week could do the same.