1. Sports and Entertainment Marketing © Thomson/South-Western ChapterChapter Sports and Entertainment Means Business 2.1 Sports and Entertainment Economics 2.2 Risk Management 2

2. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 2 Lesson 2.1 Sports and Entertainment Economics Goals Define profit and explain the profit motive. Describe types of economic utility.

3. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 3 Do Now Discuss with your neighbor the reasons to run a business, including sports teams and concerts.

4. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 4 THE PROFIT MAKERS profit the amount of money remaining from revenues after all expenses are paid 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

5. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 5 Cultural Opportunities for Profits Worldwide distribution revenue is critical for movie profits. China has a tremendous movie market. The government censors movies for content Pirated movies diminish theater sales

6. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 6 ECONOMICS economics the study of how goods and services are produced, distributed, and consumed

7. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 7 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

8. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 8 Sports and Entertainment Economics economic utility the amount of satisfaction a person receives from the consumption of a particular product or service

9. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 9 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

10. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 10 List four types of economic utility.

11. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 11 Do Now What is risk? What does Harbor Yard or Bluefish Stadium do to reduces the risk of injury to an attendee during a concert or game?

12. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 12 Lesson 2.2 Risk Management Goals Define risk and describe the categories and classifications of risk. Name and describe four strategies for risk management.

13. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 13 RISKING IT ALL risk the possibility of financial gain or loss or personal injury

14. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 14 Three Categories of Risk 1.Natural risk occurs from unavoidable weather conditions 2.Human risk dishonest customers and employees inadequately trained employees 3.Economic risk occurs due to changes in the economy

15. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 15 Three Additional Classification of Risk 1.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

16. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 16 2.controllable or uncontrollable risk controllable risk if a loss can be prevented or the likelihood of its occurrence reduced uncontrollable risk nothing can be done to prevent the risk Three Additional Classification of Risk

17. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 17 3.Insurable or Uninsurable risk insurable 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 Three Additional Classification of Risk

18. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 18 What are four steps a sports venue could take to avoid risk of injury to fans attending games?

19. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 19 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

20. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 20 Strategies to Manage Risk 1.Risk Avoidance – precautions to avoid risky situations 2.Risk Insurance – buy insurance for predictable risk 3.Risk Transfer – put the liability on another company or even the customer 4.Risk Retention – retain money to cover the cost of a given risk

21. Sports and Entertainment Marketing © Thomson/South-Western ChapterChapter Sports and Entertainment Means Business 2.3 Business Ethics 2.4 Financial Analysis 2

22. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 22 Lesson 2.3 Business Ethics Goals Define ethics. Discuss the impacts of unethical behavior.

23. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 23 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.

24. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 24 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.

25. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 25 Prepare a 3 minute skit to show what ethics is. be sure you can explain the relevance make sure it is appropriate

26. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 26 BUSINESS BEHAVIOR People and businesses should act ethically while pursuing a profit.

27. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 27 Seeking an Advantage Sometimes it is hard to continue to act ethically when you observe people who receive a benefit from acting unethically.

28. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 28 When Being Bad Profits Only fans can really influence the behavior of ethically challenged athletes and celebrities.

29. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 29 Effective and Ethical Good decisions are both ethical and effective. Good decisions are the right choices for the long term.

30. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 30 How can the bad behavior of celebrities be controlled?

31. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 31 Lesson 2.4 Financial Analysis Goals Discuss sources of funding and revenue for sports and entertainment businesses. Describe four tools for financial analysis.

32. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 32 IT TAKES MONEY Profit is the primary purpose of sports and entertainment marketing.

33. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 33 Finding Funding Investors generally provide the funding for an event to cover all the costs that must be incurred before tickets are ever sold.

34. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 34 the income from a venture that is distributed to investors return on investment

35. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 35 Money Sources Funds to repay investors are raised through ticket sales broadcast rights licensing facilities

36. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 36 Name three sources of revenue from sports and entertainment.

37. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 37 WHERE IS THE MONEY? forecast a plan that predicts the expenses to be incurred and the revenues to be received

38. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 38 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.

39. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 39 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

40. Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 40 What is the purpose of a forecast?