Vocabulary Review PPT Chapter 3 Version 4E Sports and Entertainment Marketing Class – Mr. Sherpinsky Council Rock School District

 profit  profit motive  economics  economic utility

 Profit  the amount of money remaining from revenues after all expenses are paid

 the money a business receives from the sales of goods and services  making decisions to use resources in ways that result in the greatest profit  The greatest reason for being in business! revenue profit motive

 Worldwide distribution revenue is critical for movie profits.  Movie ticket sales in the United States have increased each year for more than a decade.

 Typically a studio’s average cost of marketing a film is roughly fifty (50%) of the costs to producing a film  Results: Movie tickets sales increased every year for last decade

 Economics  the study of how goods and services are produced, distributed, and consumed  Why is it important? ▪ Because people have limited time and money to spend on entertainment, they must make specific decisions about how to spend their limited resources.

 the study of the economics of the entire society (big picture or global)  the study of the relationships between individual consumers and producers  Sports and entertainment marketers are focused on microeconomics.  relationships with consumers Macroeconomics Microeconomics

 Economic Utility  the amount of satisfaction a person receives from the consumption of a particular product or service

 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

 risk  risk management  liable

 Risk  the possibility of financial gain or loss or personal injury  Risk can be controlled!  Risk can be classified as: ▪ Controllable ▪ Insurable ▪ Involving gain or loss

 Natural Risk  occurs from unavoidable weather conditions (tornados, blizzards, etc)  Human Risk  dishonest customers and employees  inadequately trained employees  Economic Risk  occurs due to changes in the economy

Gain or Loss Risk  speculative risk ▪ either a gain or loss could result ▪ purchase of a new sports franchise would be considered speculative  pure risk ▪ a chance of an event occurring that could only result in a loss

 if a loss can be prevented or the likelihood of its occurrence reduced  nothing can be done to prevent the risk controllable risk uncontrollable risk

 a pure risk for which the chances of loss are predictable and the amount of the loss can be estimated  the chance that a dollar loss could occur  the amount of the loss cannot be estimated insurable risk uninsurable 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

 Risk Insurance  pays for predictable losses  Premium  cost of insurance

 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

 ethics  principles

 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.

 Principles  high standards of rules and guidelines  “Don’t Kill” or “Don’t Steal” or “Don’t Cheat”  Character Development  a progression in behavior where people advance from childish behavior to mature behavior based on principles Young people need good role models.

 return on investment  forecast  budget  balance sheet  income statement

 Profit is the primary purpose of sports and entertainment marketing.

 the income from a venture that is distributed to investors return on investment Return On Investment

 Forecast  a plan that predicts the expenses to be incurred and the revenues to be received

 Budget  a plan for how available funds will be spent  purpose of a budget is to control costs so they do not exceed the funds available.

 A=L+O or Assets = Liabilities + Owner’s Equity  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

 Review pages 51, 52, 53  Class Discussions, pages 54, 55  Case Study, pages 56