Sports and Entertainment Marketing Thomson/South-Western ChapterChapter Sports and Entertainment Means Business 2.1 Sports and Entertainment Economics

Sports and Entertainment Marketing© Thomson/South-Western

Chapter Chapter

Sports and Entertainment Means Business 2.1 Sports and Entertainment 2.1 Sports and Entertainment

EconomicsEconomics2.2 Risk Management2.2 Risk Management

2


Chapter 2Slide 2

Lesson 2.1

Sports and Entertainment EconomicsGoals Define profit and explain profit motive Describe types of economic utility


Chapter 2Slide 3

Do NowDiscuss with the person next to you the

reasons to run a business (this includes sports teams and concerts).


Chapter 2Slide 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 greatestprofit


Chapter 2Slide 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 theatersales


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ECONOMICS economics

the study of how goods and services are produced, distributed, and consumed

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Chapter 2Slide 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


Chapter 2Slide 8

Sports and Entertainment Economics economic utility

the amount of satisfaction a person receives from the consumption of a particular product or service


Chapter 2Slide 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


Chapter 2Slide 10

List the four types of economic utility


Chapter 2Slide 11

Do NowWhat is risk?

What does Turner Field or Phillips Arena do to reduces the risk of injury to an attendee during a concert or game?


Chapter 2Slide 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.


Chapter 2Slide 13

RISKING IT ALL risk

the possibility of financial gain or loss or personal injury


Chapter 2Slide 14

Three Categories of Risk1. 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


Chapter 2Slide 15

Three Additional Classification of Risk1. 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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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


Chapter 2Slide 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


Chapter 2Slide 18

What are four steps a sports venue could take to avoid risk of injury to fans attending games?


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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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Strategies to Manage Risk1. Risk Avoidance – precautions to avoid

risky situations2. Risk Insurance – buy insurance for

predictable risk3. Risk Transfer – put the liability on

another company or even the customer4. Risk Retention – retain money to cover

the cost of a given risk


Chapter Chapter

Sports and Entertainment Means Business 2.3 Business Ethics2.3 Business Ethics2.4 Financial Analysis2.4 Financial Analysis

2


Chapter 2Slide 22

Lesson 2.3

Business Ethics

Goals Define ethics. Discuss the impacts of unethical

behavior.


Chapter 2Slide 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.


Chapter 2Slide 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.


Chapter 2Slide 25

Prepare a 3 minute skit to show what ethics is. be sure you can explain the relevance make sure it is appropriate


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BUSINESS BEHAVIOR People and businesses should act

ethically while pursuing a profit.


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Seeking an Advantage Sometimes it is hard to continue to act

ethically when you observe people who receive a benefit from acting unethically.


Chapter 2Slide 28

When Being Bad Profits Only fans can really influence the

behavior of ethically challenged athletes and celebrities.


Chapter 2Slide 29

Effective and Ethical Good decisions are both ethical and

effective. Good decisions are the right choices for

the long term.


Chapter 2Slide 30

How can the bad behavior of celebrities be controlled?

Bell Ringer: October 12, 2015Start a new bell ringer document for this week!


Chapter 2Slide 31

Lesson 2.4

Financial Analysis

Goals Discuss sources of funding and

revenue for sports and entertainment businesses.

Describe four tools for financial analysis.


Chapter 2Slide 32

IT TAKES MONEY Profit is the primary purpose of sports

and entertainment marketing.


Chapter 2Slide 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.

Would you be willing to provide funding to boost someone’s career? Why or Why not?


Chapter 2Slide 34

the income from a venture that is distributed to investors

return on investment


Chapter 2Slide 35

Money Sources Funds to repay investors are raised

through ticket sales broadcast rights licensing facilities


Chapter 2Slide 36

Name three sources of revenue from sports and entertainment.


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WHERE IS THE MONEY? forecast

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


Chapter 2Slide 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.


Chapter 2Slide 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


Chapter 2Slide 40

What is the purpose of a forecast?


Bell Ringer October 13, 2015

What types of documents does an investor want to see before making an investment?

Chapter 2Slide 41



Name 3 sources of revenue from sports and entertainment.

Chapter 2Slide 42



What are the four strategies for managing risk?

Chapter 2Slide 43



Review for test.

Chapter 2Slide 44

Documents

Sports and Entertainment Marketing Thomson/South-Western ChapterChapter Sports and Entertainment Means Business 2.1 Sports and Entertainment Economics