Version 4E
Sports and Entertainment Marketing Class – Mr. Sherpinsky
Council Rock School District




 profit profit motive economics economic utility


 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

The greatest reason for being in business!


Worldwide distribution revenue is critical for movie profits.
 Movie ticket sales in the United States have increased each year for more than a decade.


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


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.
--

 Macroeconomics
 the study of the economics of the entire society (big picture or global)
 Microeconomics

 the study of the relationships between individual consumers and producers
Sports and entertainment marketers are focused on microeconomics.
 relationships with consumers


Economic Utility
 the amount of satisfaction a person receives from the consumption of a particular product or service





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



 risk risk management liable


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




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

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

 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

 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


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




Risk Insurance
 pays for predictable losses
Premium cost of insurance



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


 ethics principles


Ethics
 a system of deciding what is right or wrong in a reasoned and impartial manner





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





 return on investment forecast budget balance sheet income statement


Profit is the primary purpose of sports and entertainment marketing.

 return on investment
 the income from a venture that is distributed to investors

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


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.




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




Review pages 51, 52, 53
Class Discussions, pages 54, 55
Case Study, pages 56