Sports & Entertainment Marketing
Economics in Sports & Entertainment
Name: ______________________________
Directions: Please complete the following outline during the class discussion of this unit.
I. The Economic Impact of Sports & Entertainment
A. ___________ won the 2010 FIFA World cup by beating the Netherlands 1-0 in extra time.
B. The country of _____________ _____________ hosted the FIFA World Cup in 2010.
1. The South African economy was impacted by 373,000 visitors who traveled to the
country to participate in World Cup events. These sports teams and fans stayed an
average of 18 days.
2. The gross economic impact on the country’s economy has been estimated at R93 billion
(R = rand). (One US dollar equals 8.7 rand.)
C. The 2011 World Series brought about 10,000 visitors to _________________. These
tourists spent $2,655,00 per game in St. Louis. The Regional Chamber and Growth
Association estimated $3.1 million in direct spending per game.
D. Hosting the FIFA World Cup, the Olympics, the MLB World Series, or the Super Bowl all
have a direct and indirect impact on the local economy.
E. The _________ __________ is the total of new spending resulting from the event.
1. There are approximately 100,000 people who visit the Super Bowl city each year. These
visitors stay an average of 3.5 days.
2. The 2013 host city New Orleans predicts a direct economic impact of $434 million and
an additional $223.1 million in secondary or indirect spending.
F. The _____________ ____________ is determined by the multiplier effect, meaning the
portion of the money spent by visitors on local goods and services that is in turn spent
locally by employers and employees.
1. Approximately 590,000 people visited England for the 2012 London Olympics.
2. The sustained long term impact on the economy of Great Britain is expected to be over
5 billion pounds.
G. The state of ________________offers some of the best film and TV tax incentives in
the country.
1. Georgia offers an income tax credit of ________ for qualified production expenses.
2. This leaves the movie producers with more money for production.
3. The filming of movies and television programs are often done on _______________
around the country and the world.
4. The location shooting of these entertainment services have significant ____________
on local economies.
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II. Producers and Consumers in Sports & Entertainment
A. __________________ are businesses that use resources to develop products and
services and provide them to consumers. The 32 owners of the NFL are producers
responsible for providing consumers with professional football.
B. __________________ purchase goods and services to satisfy their own needs and wants.
1. The National Football League is the largest live _________________ sport in the world
in terms of average attendance.
2. The NFL averaged 67,509 live spectators per game, and 17,282,225 total for the
season.
C. Finding a ______________ between what producers are willing to produce and what
consumers are willing to buy is one of the major challenges of marketing.
III. The Economic Resources in Sports & Entertainment
A. _______________ resources, also known as natural resources, includes anything in its
natural state.
B. _______________, also known as human resources, includes the employees of the
business who complete the work.
C. ________________ includes the money, tools, buildings, and equipment needed for
production of products or services.
D. ______________________ refers to the individual who takes the risk of owning and
operating the business.
IV. The Laws of Supply and Demand
A. ______________ is the relationship between the quantity of a product that consumers
are willing and able to ________________and the price.
B. ______________ is the relationship between the quantity of a product that producers
are willing and able to ________________ and the price.
C. The ___________ ___ _____________ states that when price goes ups demand goes
down, and when price goes down demand goes up.
1. The average price for a ticket to a New York Yankees game is now $72.97 dollars. The
league average is $26.74.
2. Will the high cost of tickets reduce the attendance at New York Yankees games?
D. The __________ _____ ______________ states that when price goes up supply goes
up, and when the price goes down the supply produced goes down.
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1. Producers must pay attention to what is selling at profitable prices and what is not and
adjust production accordingly.
2. Television programs that are popular will attract more advertising revenue for the
network airing the program.
3. Consumers have limited money to spend on sports and entertainment.
4. When prices rise, producers are encouraged to produce more.
5. However, consumers will generally buy more at lower prices.
6. When prices are too high, consumers will choose other alternatives or do without the
goods.
E. _________________ is created by the difference between our limited resources
(money) and our unlimited needs and wants. Scarcity forces everyone, people, businesses,
and nations, to make economic choices.
F. The economics of supply and demand can be illustrated by curves on a ______________.
G. ___________________ is the point where the supply and demand curves intersect.
Equilibrium is rarely ever achieved. In economics it is more common to have either a
surplus or a shortage of goods or services.
H. A ____________________occurs when demand is greater than supply. When a shortage
occurs producers can charge more for their products and still sell all they produce.
I. A ____________________ occurs when supply is greater than demand. Consumers will
generally pay less for products that are considered to be surplus.
V. The Three Basic Economic Questions
A. All economies must answer the 3 basic economic questions of:
1. _____________ goods and services will be produced?
2. _____________will they be produced?
3. ________ _________ will they be produced?
B. A country’s ________________ system is classified based on how the country satisfies
needs and how resources are distributed.
1. Controlled/Command Economy – the government answers the questions.
2. Free Enterprise/Market Economy – the individuals interact in the marketplace to
answer the questions.
3. Mixed Economy – all economies are mixed.
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VI. The Economic Systems
A. _________ ______________ (or private-enterprise) is an economic system that allows
the interaction of supply and demand to drive the economy. Free Enterprise is based on
independent decisions by businesses and consumers with limited government regulation.
B. Characteristics of Free Enterprise:
1. Laws encourage __________________ - the rivalry between 2 or more businesses for
customer dollars.
a. _______________ competition – focuses on factors that are not related to what
the product sells for.
b. ____________________ competition - focuses on the selling price of a product or
service.
2. Competition encourages businesses to develop _________ products and services.
3. Antitrust laws make ________________ illegal – when one business controls the
entire market for a good or service.
4. The ____________ ____________ encourages businesses to efficiently provide
products, at a profit, that consumers need & want.
5. Consumers cast their “economic vote” when they decide what to purchase.
Video: Is Luxottica a Monopoly?
1.
Where is the global headquarters of Luxottica?
2. Name the eye wear retailers owned by Luxottica.
3. Do feel that Luxottica has control over the prices consumers pay for glasses?
4. If monopolies are illegal in the United States does this mean that Luxottica is NOT a monopoly?
C. In a controlled/command economy the government controls all resources.
1.
2.
3.
4.
______________ has a state-controlled planned economy.
Most of the means of production are owned and run by the government.
Most of the labor force is employed by the state.
The Cuban government sets most prices and rations goods.
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5. Any firm wishing to hire a Cuban must pay the Cuban government, which in turn will pay
the employee in Cuban pesos.
6. The average wage for a Cuban is 334 regular pesos per month ($16.70 per month).
D. All economies are ___________ economies.
1. There is some government involvement in all economies.
2. The U.S. economy has many examples of government involvement such as banking
regulations and social services such as Medicare and Medicaid.
3. Canada has an economy which is very similar to that of the United States but provides
more social services such as universal health insurance coverage.
VII. Economic Measurements
A. ___________________ is output per worker hour. In the workplace it can be
difficult to measure productivity. In sports, there are clear-cut measures.
B. _________ ___________ ____________ (GDP) is a measure of the goods and
services produced using labor and property located in a country.
C. __________________ occurs when prices rise faster than consumer income. A low
inflation rate (1-5 percent) shows that an economy is stable.
VIII. The Business Cycles
A. The ______________ ____________, also known as the economic cycle, refers to the
ups and downs of the economy.
B. During the ____________________ phase of the business cycle there is growing
demand for goods and services.
C. The _______________ is the high point of economic growth.
D. During a time of _____________________ the economy slows down, unemployment goes
up, and consumer demand lessons.
E. Depending on the severity of a contraction it may be referred to as a recession or a
depression.
F. A ___________________is a period of economic slowdown. Unemployment begins to
rise, fewer goods and services are produced, and consumer spending decreases. Recessions
usually last 6-8 months.
G. A ___________________ is a period of prolonged and deep recession. Consumer
spending is very low, unemployment is very high, and production of goods and services is
down significantly.
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H. The _______________ is the low point of a contraction just before recovery begins.
I. ________________ occurs when the economy shows signs of improvement.
J. A recovery can result in a period of _________________ when the unemployment rate is
very low and consumer confidence is very high.
K. For some businesses the demand for products and services fluctuates with the seasons.
L. The ___________ ____________ for a ski resort would be during the winter.
M. The ________ _____________ for a theme park would occur during the winter months.
N. Periods of moderate demand are called _______________ _______________.
IX. Economic Utility
A. Economic _____________ is the amount of _________________, or ____________ a
consumer receives from the consumption of a particular product or service.
B. Businesses use economic utility to increase the chances that consumers will buy their
products or services.
C. The four types of utility: Form Utility, Time Utility, Place Utility and Possession Utility.
1. _______________ utility is the type of utility created when the product or service is
physically changed or improved. Taking a movie and changing its format to 3D is an
example of form utility. Customers will pay more to see it in the new format.
2. _______________ utility is created when a product or service is available when it is
needed or wanted by consumers. Allowing customers to watch movies at any time using
VOD (video on demand) is an example of time utility.
3. _______________ utility is created by having a good or service at the location where
it is needed or wanted. Allowing customers to watch movies or sporting events at home
using pay-per view services is an example of place utility. Customers will pay for the
convenience of this service.
4. ___________________ utility is created when ownership of a good or service is
transferred from one person to another, but it may also occur through renting or
borrowing. Allowing customers to rent video games or movies rather than buying them
is an example of possession utility. Allowing customers to more easily purchase
products using their credit or debit cards is also an example of providing possession
utility.
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