A 365-Pound Rugby Player, and Profit Margin
What does it take for a 6-foot-8, 365-pound rugby player from Australia to start in a NFL Super Bowl?
A huge effort.
The Wall Street Journal explains how Jordan Mailata made the switch from one sport to another. This type of radical change is similar to the variety of products and services a business sells. The costs you incur to purchase inventory can be radically different – and so can the sales price and profits for each product.
More on costs and profits in a minute.
Give Blood, Play Rugby
This phrase is popular in the rugby community- and you may see bumper stickers with this comment.
I was a mediocre rugby player senior year of high school and for one semester in college (just ask around). I liked the game, and it’s fun to watch when played at a high level. While it make look like “kill the man with the ball” to a novice, there’s a great deal of strategy and skill involved.
Jordan Mailata is now a starter for the Philadelphia Eagles in the 2023 Super Bowl- with a huge contract.
“Mailata, an offensive tackle on (Jalen) Hurts’ blind side, is in his fifth full season in the league and his rapid development earned him a four-year, $64 million contract extension.”
Rugby and American Football require different skills.
The Rugby Skill Set
When played well, rugby is a game that moves the ball constantly. Unless the ball goes out of bounds, the game keeps moving, and the field is big: 120 meters long and 60 meters wide.
How much do rugby players run?
According to this source: “rugby players spend 70 per cent of a match standing or walking, 25 per cent jogging and five per cent sprinting. Over the course of the match, players averaged 750 changes of pace. That’s a lot of starting and stopping in the span of 80 minutes.”
However, front row players- the biggest athletes- may run only half the distance that the smaller, faster players run.
But, we can’t forget about scrums.
“A scrum is a means of restarting play after a minor infringement. It involves up to eight players from each team, known as the pack or forward pack, binding together in three rows and interlocking with the three opposing teams front row. At this point the ball is fed into the gap between the two forward packs and they both compete for the ball to win possession.” (See the image at the top of this post).
This video shows a scrum- and Jordan Mailata would be the perfect guy to push the pile for your team.
Rugby is run, stop and push, run more.
American Football Skills
In football, there’s far less running. A “wide receiver, corner back, or tight end runs about 1.25 miles per game. Linemen and others run much less.”
Football is a series of short quick bursts of effort. An NFL game averages 154 plays, and Jordan Mailata’s offense may run 60-70 of those plays. If you ran all the game plays together without stopping, there’s only 18 minutes of action, on average.
Mailata move from constant action on a rugby field to 60-70 quick bursts of effort in a football game.
Amazing.
Now think about the products and services you sell. Just how different are the costs you incur and the profits you generate?
Hammers, Lawnmowers, and Profit Margin
It’s a simple formula, but every business owner should compare the profitability of products using profit margin, which is defined as (net income) / (sales). Profit margin tells you the profit you make on each dollar sold, regardless of the sale price of a product.
Profit margin is a tool to make an “apples to apples” comparison between two products.
This formula is particularly useful for companies that sell dozens- or even hundreds- of products. Assume that a hardware store earns a 15% profit margin on a $5 hammer, and a 10% profit margin on a $250 lawn mower. While the mower brings in more revenue ($250), mowers produce less profit per dollar sold (10% vs. 15%).
So what’s the trick to managing hardware store profits?
You have to consider both the revenue and profit for hundreds of products. The store can’t make a living only selling $5 hammers- it doesn’t generate enough revenue to pay the bills. The company has to sell a variety of products to meet customer demand- while also generating a reasonable level of store profit.
Not easy.
The products your business sells can vary widely in price and profitability. Use profit margin to adjust the sales mix for products that you sell, so that you can increase your total company profit.
-Ken