1. Sports and Entertainment Means Business2
Sports and Entertainment Means Business
2.1 Sports and Entertainment Economics
2.2 Risk Management
2.3 Business Ethics
2.4 Financial Analysis

2. Winning Strategies EMI 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
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3. Lesson 2.1 Sports and Entertainment Economics
Goals
Define profit and explain the profit motive.
Describe types of economic utility.
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4. Terms
profit
profit motive
economics
economic utility
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5. THE PROFIT MAKERS profit
the amount of money remaining from revenues after all expenses are paid
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6. revenue
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
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7. Cultural Opportunities for Profits
Worldwide distribution revenue is critical for movie profits.
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8. Marketers must understand the markets in which sales occur.
China has a tremendous movie market.
the government censors movies for content
pirated movies diminish theater sales
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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
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10. ECONOMICS
economics
the study of how goods and services are produced, distributed, and consumed
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11. Sports and entertainment marketers are focused on microeconomics.
macroeconomics
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
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12. Sports and Entertainment Economics
economic utility
the amount of satisfaction a person receives from the consumption of a particular product or service
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13. Types of Utility form utility time utility place 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
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14. List four types of economic utility.
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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.
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16. Terms
risk
risk management
liable
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17. RISKING IT ALL
risk
the possibility of financial gain or loss or personal injury
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18. Categories of Risk natural risk human risk economic risk
occurs from unavoidable weather conditions
human risk
dishonest customers and employees
inadequately trained employees
economic risk
occurs due to changes in the economy
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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
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20. controllable risk uncontrollable risk
if a loss can be prevented or the likelihood of its occurrence reduced
uncontrollable risk
nothing can be done to prevent the risk
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21. insurable risk uninsurable risk
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
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22. What is meant by a controllable risk?
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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
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24. Risk Avoidance
Sports and entertainment marketers need to plan to avoid risky situations.
liable
the business is legally responsible for damages that occur
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25. Risk Insurance risk insurance premium pays for predictable losses
cost of insurance
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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
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27. Risk Retention risk retention risk retention groups
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
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28. Briefly describe four strategies for managing risk.
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29. Lesson 2.3 Business Ethics
Goals
Define ethics.
Discuss the impacts of unethical behavior.
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30. Terms
ethics
principles
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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.
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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.
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33. How does a person’s character develop?
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34. BUSINESS BEHAVIOR
People and businesses should act ethically while pursuing a profit.
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35. Seeking an Advantage
Sometimes it is hard to continue to act ethically when you observe people who receive a benefit from acting unethically.
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36. When Being Bad Profits
Only fans can really influence the behavior of ethically challenged athletes and celebrities.
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37. Effective and Ethical Good decisions are both ethical and effective.
Good decisions are the right choices for the long term.
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38. How can the bad behavior of celebrities be controlled?
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39. Lesson 2.4 Financial Analysis
Goals
Discuss sources of funding and revenue for sports and entertainment businesses.
Describe four tools for financial analysis.
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40. Terms return on investment forecast budget balance sheet
income statement
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41. IT TAKES MONEY
Profit is the primary purpose of sports and entertainment marketing.
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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.
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43. return on investment
the income from a venture that is distributed to investors
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44. Money Sources Funds to repay investors are raised through ticket sales
broadcast rights
licensing
facilities
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45. Name three sources of revenue from sports and entertainment.
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46. WHERE IS THE MONEY? forecast
a plan that predicts the expenses to be incurred and the revenues to be received
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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.
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48. Financial Statements balance sheet income statement
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
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49. What is the purpose of a forecast?
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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.
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51. Demonstrate knowledge of appropriate pricing strategies.
Explain the benefits of increased revenue for consumers of foot-ball tickets.
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52. THINK CRITICALLY
Why have an increasing number of universities varied ticket prices to games based upon the opponent?
Why must universities consider the consumer before raising ticket prices?
If games become to expensive to attend, what other options do consumers have to watch the games?
How much revenue would be generated from the seven games if ticket prices were $40 all season long?
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