Sport Finance Test 2

Where did UGA get the “Power G” from

The Green Bay Packers

Who wanted UGA to adopt the Power G

Vince Dooley

Subliminal Messaging

Words, images, or sounds in television, commercials, music, and digital media–to boost sales of products and services

8 UGA Brand Attributes

1. Innovation
2. Tradition
3. Pride
4. Excellence
5. Championship
6. Class
7. Family


1. Competitive

PICTCFC

What dfoes every team and individual athlete need?

Competitors

**What was the one thing that changed everything about sports and how owners, coaches, and AD's think about sports?**

HD TV; Incentivizes fans to watch at home

Conjoint Production

Requires at least two producers

Conjoint Consumption

Sports fans commonly engage in this sport experience is usually far better when one watches a game with others

What is a challenge for sport business leaders?

Understanding **what will maximize the benefits received by fans (consumers)**

(Fill in the Blank) Sport Managers must create a (Public/Private) experience to satisfy (Luxury/Non-Luxury) seating while ensuring other fans are willing to attend in (Luxury/Non-Luxury) seating

Private;Luxury;Non-Luxury

What happens when general seating gets pushed too far away from the field of play?

The value of those seats reduces

What do individuals and corporate fans want to see and enjoy?

Want to see a winning team and want to enjoy amenities of new and well maintained facilities

**Will fans pay to see a marquee player, even if past prime?**

Yes

Demand

Defined as the relationship between price and quantity of product

Law of Demand

States that when prices increase, consumers will want less of a good

What do movements upward on the demand curve indicate?

Imply there is more demand for good or services

What do movements downward on the demand curve indicate?

Highlights less consumer interest

(T/F) Sport Organizations will focus on things besides price that help teams increase DEMAND

True

What do teams produce?

Produce games, merchandise, and fan experiences. Focusing on demand for games which is reflected in attendance and TV ratings

What categories can overall attendance be broken down to?

Victories, exciting games, and fan experiences inside the stadium

(T/F) The Cubs fan experience is not great enough where they still sell plenty of tickets when the team is not performing well

False, they sell lots of tickets regardless of team performance

What is a nickname of the Cubs when they do not play well?

Lovable Losers

5 Factors that Affect Demand

1. Fan Tastes and Prefrences
2. Fan income level
3. Population size
4. Price of subsititutes
5. Future expectations for the team

What is the biggest long-term factor of demand for a team?

It’s location

What is the fundamental question of long-term demand?

What will the market bear?

How do you go about answering the fundamental question of long-term demand?

**First understand how much wealth exists to buy tickets, then place that demand in the context of the total supply of sports and entertainment produced for the region**

Are recessions and booms easy or hard to predict?

Hard

What do wealth measurements indicate?

The size of the market and its potential to support teams and events required to pay for a venue

How much is the supply of tickets in New York?

13\.7 Million

Given New York’s ticket supply, how many tickets do teams need to sell to each resident to ensure sellouts?

Less than 1

(T/F) Championship teams only sell out in certain markets

False; they sell out in all markets

How many tickets must cities with one team (jacksonville, san antonio) sell per resident to sellout their entire supply?

Fewer than .5 per resident

Who are the primary clients when teams look to sell luxury seating?

Businesses

Where are corporate payrolls the highest? (4 cities)

NY, LA, Chicago, DC

What cities have the highest average hossehold spending? (4 Cities)

Minneapolis, San Diego, Seattle, Denver

What city is best suited to sell general and luxury seating?

Chicago

Three definitions of market peneration rates

1.  **looking at its ticket sales relative to all tickets sold to sport and entertainment events in their market**
2. **looking at team’s total ticket sales as a percent of a measure of population (total population or sport fans, etc). Then would compare their region vs other teams in the same league in other regions**
3. Helps illustrate the value of large markets. Large markets tend to have lower penetration rates than small markets, but often sold more tickets

What metric can be useful in understanding demand?

Market Penetration Analysis

What factors affect total sales?

Differences in tourism, historic ballparks, new facilities

What is market penetration analysis used to assess?

Popularity of a single product

(T/F) Higher population allows a lower price to be charged

False; higher price

Do large markets or small markets tend to have a higher penetration rate?

Large markets

Do MLB teams have more or less attendance if another team is nearby?

Less

Short-Term Demand Factors (6)

1. Attendance
2. Winning
3. Other factors


1. Superstars, offense
4. Marketing
5. Competitive Balance
6. Television

MWCOAT

What are differences in demand related to?

Number of games played and day of the week

Are MLB or NFL teams more likely to play before a sellout crowd

NFL

What is the fastest way to increase demand for tickets in the short term?

Winning

What does winning create for the next season?

High expectations, so more tickets sold at the beginning of the next season

What type of fan does winning create

A loyal fan

Is a win worth more for a good team or bad team

Good team

Is fandom for women more or less dependent on age?

Less

Fan loyalty for males is created from what ages?

8-12

Does a big name player have a big or small effect on attendance

Small

What is the exception to teams with superstars not performing well not selling many tickets

Michael Jordan on the Wizards

What leagues limit foreign players due to decreasing attendance?

CFL and European Basketball

NHL example of increasing offense

Reducing goalie pad size

Basketball example of increasing offense

Adding the shot clock

NFL example of increasing offense

Limiting touchbacks for more returns

Do teams with the same players have higher attendance than teams that turn over players more often?

Yes

Who is the father of sport marketing

Bill Veeck

Examples of Bill Veeck’s marketing genius

\-Played a 3 foot 7 player

\-Fans voted on managerial decisions

\-Started fireworks after hr’s

Who implemented marching bands at what school?

Newt Rockne, Notre Dame

If a home team’s winning percentage increases by .1, how much do their TV ratings increase by?

1\.8

What is the most important decision organizations need to make?

Pricing

What two SEC schools overbuilt premium seatings to try to make more money, but were hit with the recession?

Tennessee and Florida

How do teams price tickets?

Estimate demand and then price tickets accordingly to be sure that the maximum number of fans will attend

By what % did Red Sox tickets increase by over nearly 20 years?

470%

What company produces the Fan Cost Index

Team Marketing Report

Fan Cost Index

Measures average cost to take a family of four to a single, regular season game in an average seat

Who sets the price of tickets

The team

Who brokers TV deals for NFL teams

The NFL

Who brokers TV deals for college football

THe conferences

Is ticket revenue shared in the NFL

YEs

Is ticket revenue shared in CFB

No

3 Effects of Raising Ticket Prices on Profit

1. Increase in price increases the cash inflow per ticet sold
2. At higher prices, teams will sell fewer tickets, which decreases cash inflow


1. Higher prices will decrease costs because there are fewer fans

What factors do teams weigh when considering raising ticket prices

Per ticket gain and feared decrease in number of tickets sold

Until what point will teams raise ticket prices

Until the benefit of increasing price equals the cost of raising prices

Does raising ticket price affect attendance

Not really

What game did a ticket seller claim to have tickets but fans never recieved them

UGA Rose Bowl

When is ticket pricing inelastic

**When prices are too low, say a price increase will have a relatively small effect on quantity sold**

When is ticket pricing elastic

**When prices are too high, a price increase will have a large effect on quantity sold**

Unit Elastic

If the price is such that a 1% increase causes a 1% decrease in quantity

Factors that make ticket prices inelastic (5)

1. Concessions
2. Advertising/Sponsorship Sales
3. Larger Fan Base
4. Increase Television Ratings


1. Team Image, Reputation, and Goodwill

CTAIL

Price Discrimination

***When firms change different customers different prices for identical goods***

Benefits of Student TIcket Discounts (4)

1. University model. Not fair to pay on top of tuition
2. Students develop deeper allegiance to university when go to games
3. Have less disposable income, so have lower demand


1. They are future season ticket holders

What school was the first to implement 10 a year?

Clemson

Product Bundling

Sellers are willing to sell at a discount if the buyers commit to buying multiple items

Example of a perishable good in sports

An empty seat

Most common items to bundle

Parking and concession

What MLB team has all you can eat

Dodgers

Does product bundling have strong or weak marketing advantages

Strong

What does the best approach depend on

 **the price elasticity of consumers who buy tickets early vs those who do it late**

Is demand elastic on inelastic: **If fans who buy tickets early are your most dedicated and don’t want to miss**

**Demand is inelastic and change in price won’t change quantity sold**

What MLB team rewards fans for buying tickets in advance with lower prices

Orioles

Dynamic Pricing

* Prices shift depending on shifts in demand
* If sales are high for a game and there are few seats left, prices for that game will increase. If sales are lagging, price will decrease

Drawback to Dynamic Pricing

some fans resent the fact that others paid less for their tickets

What University has auction pricing and what do they call it?

Northwestern; Purple Pricing

PSL

* **Fans have the right to future season ticket packages and sometimes a discounted ticket price. Those who do not buy a PSL pay a higher price**

When are PSLs often sold

Before a new facility is built so a team has more upfront money

What league are PSLs most common in

NFL