sports and entertainment marketing © thomson/south-western chapterchapter sports and entertainment...

Sports and Entertainment Marketing© Thomson/South-Western

Chapter Chapter Chapter Chapter

Sports and Entertainment Means Business

2.1 Sports and Entertainment 2.1 Sports and Entertainment EconomicsEconomics

2.2 Risk Management2.2 Risk Management

2.3 Business Ethics2.3 Business Ethics

2.4 Financial Analysis2.4 Financial Analysis

2

Chapter 2Slide 2


Winning Strategies

one of the largest music content providers cost savings achieved through outsourcing

of manufacturing in 2005, income grew due to legitimate

sales of digital music the music industry embraces ever-changing

technology and helps drive the economy

EMI

Chapter 2Slide 3


Lesson 2.1

Sports and Entertainment EconomicsGoals Define profit and explain the profit

motive. Describe types of economic utility.

Chapter 2Slide 4


Terms profit profit motive economics economic utility

Chapter 2Slide 5


THE PROFIT MAKERS

profit the amount of money remaining from

revenues after all expenses are paid

Chapter 2Slide 6


the money a business receives from the sales of goods and services

profit motive making decisions to use resources in ways

that result in the greatest profit

revenue

Chapter 2Slide 7


Cultural Opportunities for Profits Worldwide distribution revenue is

critical for movie profits.

Chapter 2Slide 8


China has a tremendous movie market. the government censors movies for

content pirated movies diminish theater sales

Marketers must understand the markets in which sales occur.

Chapter 2Slide 9


In addition to U.S. ticket sales, name two other large sources of revenue for U.S. film studios.

International Ticket Sales DVD sales DVD Rentals Sale of Movie Themed Merchandise

Chapter 2Slide 10


ECONOMICS

economics the study of how goods and services are

produced, distributed, and consumed

--

Chapter 2Slide 11


the study of the economics of the entire society

microeconomics the study of the relationships between

individual consumers and producers Sports and entertainment marketers are

focused on microeconomics. relationships with consumers

macroeconomics

Chapter 2Slide 12


Sports and Entertainment Economics economic utility

the amount of satisfaction a person receives from the consumption of a particular product or service

Chapter 2Slide 13


Types of Utility form utility

when the physical characteristics of a product or service are improved

time utility making the product or service available when the

customer wants it place utility

the product is available where it is wanted possession utility

the product or service is available at an affordable price

Chapter 2Slide 14


List four types of economic utility.

Chapter 2Slide 15


Lesson 2.2

Risk Management

Goals Define risk and describe the categories

and classifications of risk. Name and describe four strategies for

risk management.

Chapter 2Slide 16


Terms risk risk management liable

Chapter 2Slide 17


RISKING IT ALL

risk the possibility of financial gain or loss or

personal injury

Chapter 2Slide 18


Categories of Risk

natural risk occurs from unavoidable weather

conditions human risk

dishonest customers and employees inadequately trained employees

economic risk occurs due to changes in the economy

Chapter 2Slide 19


Additional Classification of Risk gain or loss risk

speculative risk either a gain or loss could result

pure risk a chance of an event occurring that could only

result in a loss

Chapter 2Slide 20


if a loss can be prevented or the likelihood of its occurrence reduced

uncontrollable risk nothing can be done to prevent the risk

controllable risk

Chapter 2Slide 21


a pure risk for which the chances of loss are predictable and the amount of the loss can be estimated

uninsurable risk the chance that a dollar loss could occur the amount of the loss cannot be

estimated

insurable risk

Chapter 2Slide 22


What is meant by a controllable risk?

Chapter 2Slide 23


MANAGING RISK risk management

preventing, reducing, or lessening the negative impacts of risk by using the strategies of risk avoidance, risk insurance, risk transfer, and/or risk retention

Chapter 2Slide 24


Risk Avoidance

Sports and entertainment marketers need to plan to avoid risky situations.

liable the business is legally responsible for

damages that occur

Chapter 2Slide 25


Risk Insurance

risk insurance pays for predictable losses

premium cost of insurance

Chapter 2Slide 26


Risk Transfer

Some risks can be transferred to another company or even to the consumer. contracting with third parties for services including releases from liability on event

tickets

Chapter 2Slide 27


Risk Retention

risk retention assuming the cost of an uninsurable risk

risk retention groups similar businesses facing similar risks pool

resources resources are distributed to members that

have a loss

Chapter 2Slide 28


Briefly describe four strategies for managing risk.

Chapter 2Slide 29


Lesson 2.3

Business Ethics

Goals Define ethics. Discuss the impacts of unethical

behavior.

Chapter 2Slide 30


Terms ethics principles

Chapter 2Slide 31


DO ETHICS COUNT?

ethics a system of deciding what is right or wrong

in a reasoned and impartial manner

Business should be conducted with integrity, trust, and fairness.

Chapter 2Slide 32


Ethics and Character Matter

principles high standards of rules and guidelines

character development a progression in behavior where people

advance from childish behavior to mature behavior based on principles

Young people need good role models.

Chapter 2Slide 33


How does a person’s character develop?

Chapter 2Slide 34


BUSINESS BEHAVIOR

People and businesses should act ethically while pursuing a profit.

Chapter 2Slide 35


Seeking an Advantage

Sometimes it is hard to continue to act ethically when you observe people who receive a benefit from acting unethically.

Chapter 2Slide 36


When Being Bad Profits

Only fans can really influence the behavior of ethically challenged athletes and celebrities.

Chapter 2Slide 37


Effective and Ethical

Good decisions are both ethical and effective.

Good decisions are the right choices for the long term.

Chapter 2Slide 38


How can the bad behavior of celebrities be controlled?

Chapter 2Slide 39


Lesson 2.4

Financial Analysis

Goals Discuss sources of funding and

revenue for sports and entertainment businesses.

Describe four tools for financial analysis.

Chapter 2Slide 40


Terms return on investment forecast budget balance sheet income statement

Chapter 2Slide 41


IT TAKES MONEY

Profit is the primary purpose of sports and entertainment marketing.

Chapter 2Slide 42


Finding Funding

Investors generally provide the funding for an event to cover all the costs that must be incurred before tickets are ever sold.

Chapter 2Slide 43


the income from a venture that is distributed to investors

return on investment

Chapter 2Slide 44


Money Sources

Funds to repay investors are raised through ticket sales broadcast rights licensing facilities

Chapter 2Slide 45


Name three sources of revenue from sports and entertainment.

Chapter 2Slide 46


WHERE IS THE MONEY?

forecast a plan that predicts the expenses to be

incurred and the revenues to be received

Chapter 2Slide 47


BUDGETS

budget a plan for how available funds will be spent

The purpose of a budget is to control costs so they do not exceed the funds available.

Chapter 2Slide 48


Financial Statements

balance sheet net worth = assets – liabilities shows net worth at a specific point in time

income statement shows revenues and expenses for a

specific period of time reveals company’s profit or loss

Chapter 2Slide 49


What is the purpose of a forecast?

Chapter 2Slide 50


PERFORMANCE INDICATORS EVALUATED Communicate pricing strategies for supply

and demand. Analyze relevant data to determine varying

ticket prices for home games. Explain the need for and use of additional

revenue from higher-priced tickets.

Chapter 2Slide 51


Explain the benefits of increased revenue for consumers of foot-ball tickets.

Demonstrate knowledge of appropriate pricing strategies.

Chapter 2Slide 52


THINK CRITICALLY1. Why have an increasing number of

universities varied ticket prices to games based upon the opponent?

2. Why must universities consider the consumer before raising ticket prices?

3. If games become to expensive to attend, what other options do consumers have to watch the games?

4. How much revenue would be generated from the seven games if ticket prices were $40 all season long?

sports and entertainment marketing © thomson/south-western chapterchapter sports and entertainment...

Documents

loss slide

service slide

risk controllable risk

insurable risk slide

paid slide

consumed slide

consumers macroeconomics

economy emi slide