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

Sports and Entertainment Marketing© Thomson/South-Western

Chapter Chapter

Sports and Entertainment Means Business 2.1 Sports and Entertainment

Economics

2.2 Risk Management

2.3 Financial Analysis

2


Chapter 2Slide 2

Lesson 2.1

Sports and Entertainment EconomicsGoals Define profit and explain the profit

motive. Describe types of economic utility.


Chapter 2Slide 3

Terms profit profit motive economics economic utility


Chapter 2Slide 4

THE PROFIT MAKERS

profit the amount of money remaining from

revenues after all expenses are paid


Chapter 2Slide 5

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 6

Cultural Opportunities for Profits Worldwide distribution revenue is

critical for movie profits.


Chapter 2Slide 7

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 2

All time (domestic)

All time (international)

All time (adjusted for inflation)

Slide 8

http://www.boxofficemojo.com/alltime/domestic.htm

http://www.boxofficemojo.com/alltime/domestic.htm

http://boxofficemojo.com/alltime/world/

http://boxofficemojo.com/alltime/world/

http://boxofficemojo.com/alltime/adjusted.htm


Chapter 2

Profit Calculations In 2008, the average feature film

cost the major studios $72 million to produce and $37 million to promote.

$2,788,000,000 (Avatar Revenue -Domestic and International)

- $ 109,000,000 (average movie expenses in 08’)

$ 2,679,000,000 (Avatar’s Profit)

Slide 9


Chapter 2Slide 10

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


Chapter 2Slide 11

ECONOMICS

economics the study of how goods and services are

produced, distributed, and consumed

--


Chapter 2Slide 12

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 13

Sports and Entertainment Economics economic utility

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


Chapter 2Slide 14

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 2

Movie Business form utility

time utility

Slide 15


Chapter 2

Movie Business

place utility

possession utility

Slide 16

Only $8.99 a month $20


Chapter 2Slide 17

Go to page 35 in your book and read the example there of Types of Utility and Three Ring Utilities.


Chapter 2Slide 18

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 19

Terms risk risk management liable


Chapter 2Slide 20

RISKING IT ALL

risk the possibility of financial gain or loss or

personal injury


Chapter 2Slide 21

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 22

Natural

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=F2evm4Lk_a_GtM&tbnid=Z2NaNH620DiS2M:&ved=0CAcQjRw&url=http://en.wikipedia.org/wiki/Flood&ei=7IY6VOuSENGqyASstIHwCA&bvm=bv.77161500,d.aWw&psig=AFQjCNGYhtBzoPPx5p7WhYqvZLMgy09_ew&ust=1413208027657296


Chapter 2

Human

Slide 23

https://www.google.com/imgres?imgurl&imgrefurl=http://www.cnn.com/2012/09/28/health/youth-football-no-tackling/&h=0&w=0&tbnid=817Nxn52io3LYM&zoom=1&tbnh=168&tbnw=300&docid=SQHfKgOC6e59RM&tbm=isch&ei=o4k6VJ-ZBJKqyAS18IHAAg&ved=0CAcQsCUoAQ


Chapter 2

Economic Changes in the business environment,

such as the economy

Peak =

Trough =

Slide 24


Chapter 2

Risk in Disasters

Top 10 Disasters that Affected Sports

Slide 25

http://www.realclearsports.com/lists/disasters_affecting_sports/intro.html?state=stop


Chapter 2Slide 26

Additional Classification of RiskExample: Theater Controllable Risk

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

Theater manager made sure fire exits were available and well lit, sprinkler systems working, and employees were trained for fire emergencies.


Chapter 2Slide 27

Additional Classification of RiskExample: Theater uncontrollable risk

nothing can be done to prevent the risk

Tornado blows theater away, weather can not be controlled.


Chapter 2Slide 28

What steps could a venue like The Times Union Center take to reduce or prevent loss or risk (controllable risk)?


Chapter 2

Can someone have too much risk? Along Came Polly

Slide 29

https://www.youtube.com/watch?v=NXbCJil7lJs


Chapter 2Slide 30

MANAGING RISK risk management

preventing, reducing, or lessening the negative impacts of risk by using the strategies of

1. risk avoidance

2. risk insurance

3. risk transfer


Chapter 2Slide 31

1. Risk Avoidance Sports and entertainment marketers need to

plan to avoid risky situations. liable

the business is legally responsible for damages that occur.

A business does not want to be held liable, so they take extra steps to reduce liability through controllable risks, such as ____________, ______________, and ____________.


Chapter 2Slide 32

2. Risk Insurance

risk insurance pays for predictable losses

premium cost of insurance


Chapter 2

3. Risk Transfer

Transferring risk to another company or to the consumer Ex: Statement on the back of event tickets

Statement says promoter is not responsible for any harm to ticket holder.

By accepting ticket attendee agrees to accept liability for possible risks.

Slide 33


Chapter 2Slide 34

Briefly describe the 3 strategies for managing risk.


Chapter 2Slide 35

Lesson 2.3

Financial Analysis

Goals Discuss sources of funding and

revenue for sports and entertainment businesses.

Describe four tools for financial analysis.


Chapter 2Slide 36

Terms return on investment forecast budget balance sheet income statement


Chapter 2Slide 37

IT TAKES MONEY

Profit is the primary purpose of sports and entertainment marketing.


Chapter 2Slide 38

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 2

Costs that must be incurred before tickets are ever sold Salaries for cast and crew (play or

concert) Facilities maintenance costs Promotion/marketing costs

Slide 39


Chapter 2Slide 40

the income from a venture that is distributed to investors

In return for taking a chance(investing $$) to cover costs of a business the investor seeks return on investment (ROI).


Chapter 2Slide 41

Money Sources Funds to repay investors are raised through

ticket sales broadcast rights - television contracts are

increasing, therefore advertising (commercial) fees are increasing

Licensing - Legal right to reproduce a team’s logo in exchange for payment

Facilities - sponsor advertisers(signage), rental of concession stands and % of sales, rental of luxury boxes, and parking fees.


Chapter 2Slide 42

Name three sources of revenue from sports and entertainment.

Read Money Source paragraph on pg.49 in textbook.


Chapter 2

Assets and Liabilities

Assets =Items of value Cash Property Equipment

Liabilities= amounts owed for purchases made on credit or loans

Slide 43


Chapter 2Slide 44

WHERE IS THE MONEY?

forecast a plan that predicts the expenses to be

incurred and the revenues to be received

In 2008, the average feature film cost the major studios $72 million to produce and $37 million to promote. A forecast would help a movie studio predict ahead of time the expenses of the movie in comparison to their compared (believed earnings the film will make).


Chapter 2Slide 45

BUDGETS

Forecast helps plan the budget!! 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 46

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

Difference between assets and

liabilities…ideal to have more assets

Investors will want to look at a forecast, budget, and the

financial statements before making a

decision.


Chapter 2Slide 47

What is the purpose of a forecast?

Forecast helps plan the budget!!

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

Documents

service slide

paid slide

consumed slide

entertainment marketers

greatest profit revenue

producers sports

consumers macroeconomics

entertainment economics