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Vocabulary Review PPT Chapter 3 Version 4E Sports and Entertainment Marketing Class – Mr. Sherpinsky Council Rock School District
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profit profit motive economics economic utility
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Profit the amount of money remaining from revenues after all expenses are paid
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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
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Worldwide distribution revenue is critical for movie profits. Movie ticket sales in the United States have increased each year for more than a decade.
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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
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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.
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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
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Economic Utility the amount of satisfaction a person receives from the consumption of a particular product or service
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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
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risk risk management liable
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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
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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
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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
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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
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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
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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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Risk Insurance pays for predictable losses Premium cost of insurance
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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
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ethics principles
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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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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.
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return on investment forecast budget balance sheet income statement
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Profit is the primary purpose of sports and entertainment marketing.
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the income from a venture that is distributed to investors return on investment Return On Investment
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Forecast a plan that predicts the expenses to be incurred and the revenues to be received
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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.
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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
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Review pages 51, 52, 53 Class Discussions, pages 54, 55 Case Study, pages 56
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