Post on 09-Apr-2018
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 1/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter Chapter Chapter Chapter
Sports and Entertainment
Means Business
2.1 Sports and Entertainment2.1 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
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 2/52
Sports and Entertainment Marketing© Thomson/South-WesternChapter 2Slide 2
Winning Strategies
one of the largest music content providers
cost savings achieved through outsourcingof manufacturing
in 2005, income grew due to legitimatesales of digital music
the music industry embraces ever-changingtechnology and helps drive the economy
EMI
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 3/52
Sports and Entertainment Marketing© Thomson/South-WesternChapter 2Slide 3
Lesson 2.1
Sports and Entertainment
Economics
Goals
Define profit and explain the profitmotive.
Describe types of economic utility.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 4/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 4
Terms profit
profit motive
economics
economic utility
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 5/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 5
THE PROFIT MAKERS profit
the amount of money remaining fromrevenues after all expenses are paid
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 6/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 6
the money a business receives from thesales of goods and services
profit motive making decisions to use resources in ways
that result in the greatest profit
revenue
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 7/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 7
Cultural Opportunities for
Profits
Worldwide distribution revenue iscritical for movie profits.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 8/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 9/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 9
In addition to U.S. ticket sales, name two
other large sources of revenue for U.S.film studios.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 10/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 10
ECONOMICS economics
the study of how goods and services are
produced, distributed, and consumed
--
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 11/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 11
the study of the economics of the entiresociety
microeconomics
the study of the relationships betweenindividual consumers and producers
Sports and entertainment marketers arefocused on microeconomics.
relationships with consumers
macroeconomics
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 12/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 12
Sports and Entertainment
Economics
economic utility
the amount of satisfaction a person
receives from the consumption of aparticular product or service
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 13/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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 thecustomer wants it
place utility the product is available where it is wanted
possession utility the product or service is available at an affordable
price
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 14/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 14
List four types of economic utility.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 15/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 15
Lesson 2.2
Risk Management
Goals
Define risk and describe the categoriesand classifications of risk.
Name and describe four strategies for risk management.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 16/52
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 17/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 17
RISKING IT ALL risk
the possibility of financial gain or loss or
personal injury
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 18/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 19/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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 onlyresult in a loss
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 20/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 20
if a loss can be prevented or the likelihoodof its occurrence reduced
uncontrollable risk
nothing can be done to prevent the risk
controllable risk
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 21/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 21
a pure risk for which the chances of lossare predictable and the amount of the losscan be estimated
uninsurable risk the chance that a dollar loss could occur
the amount of the loss cannot beestimated
insurable risk
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 22/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 22
What is meant by a controllable risk?
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 23/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 23
MANAGING RISK risk management
preventing, reducing, or lessening thenegative impacts of risk by using thestrategies of risk avoidance, risk insurance,risk transfer, and/or risk retention
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 24/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 24
Risk Avoidance Sports and entertainment marketers
need to plan to avoid risky situations.
liable
the business is legally responsible for damages that occur
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 25/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 25
Risk Insurance risk insurance
pays for predictable losses
premium
cost of insurance
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 26/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 27/52
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 28/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 28
Briefly describe four strategies for managing risk.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 29/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 29
Lesson 2.3
Business Ethics
Goals
D
efine ethics. Discuss the impacts of unethical
behavior.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 30/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 30
Terms ethics
principles
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 31/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 31
DO ETHICS COUNT? ethics
a system of deciding what is right or wrong
in a reasoned and impartial manner
Business should be conducted withintegrity, trust, and fairness.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 32/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 32
Ethics and Character Matter principles
high standards of rules and guidelines
character development
a progression in behavior where peopleadvance from childish behavior to mature
behavior based on principles Young people need good role models.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 33/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 33
How does a person¶s character develop?
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 34/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 34
BUSINESS BEHAVIOR People and businesses should act
ethically while pursuing a profit.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 35/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 35
Seeking an Advantage Sometimes it is hard to continue to act
ethically when you observe people
who receive a benefit from actingunethically.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 36/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 36
When Being Bad ProfitsOnly fans can really influence the
behavior of ethically challenged
athletes and celebrities.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 37/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 37
Effective and EthicalGood decisions are both ethical and
effective.
Good decisions are the right choices for the long term.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 38/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 38
How can the bad behavior of celebritiesbe controlled?
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 39/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 39
Lesson 2.4
Financial Analysis
Goals
Discuss sources of funding andrevenue for sports and entertainmentbusinesses.
Describe four tools for financial
analysis.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 40/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 40
Terms return on investment
forecast
budget balance sheet
income statement
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 41/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 41
IT TAKES MONEY Profit is the primary purpose of sports
and entertainment marketing.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 42/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 43/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 43
the income from a venture that isdistributed to investors
return on investment
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 44/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 44
Money Sources Funds to repay investors are raised
through
ticket sales
broadcast rights
licensing
facilities
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 45/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 45
Name three sources of revenue fromsports and entertainment.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 46/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 46
WHERE IS THE MONEY? forecast
a plan that predicts the expenses to be
incurred and the revenues to be received
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 47/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 47
BUDGETS budget
a plan for how available funds will be spent
The purpose of a budget is to controlcosts so they do not exceed the fundsavailable.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 48/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 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
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 49/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 49
What is the purpose of a forecast?
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 50/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 50
PERFORMANCE INDICATORS
EVALUATED
Communicate pricing strategies for supplyand demand.
Analyze relevant data to determine varyingticket prices for home games.
Explain the need for and use of additionalrevenue from higher-priced tickets.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 51/52
Sports and Entertainment Marketing© Thomson/South-Western
Chapter 2
Slide 51
Explain the benefits of increased revenuefor consumers of foot-ball tickets.
Demonstrate knowledge of appropriatepricing strategies.
8/8/2019 SEM Chap 02
http://slidepdf.com/reader/full/sem-chap-02 52/52