1.0 Executive Summary
1.1 What our Organization Is
Portland Baseball Now, Incorporated (PBN, Inc.) is an organization which
exists solely to move an already existing Major League Baseball team to the
Portland/Vancouver area.
Our organization will be a critical factor in the
influence of private investors, the Portland/Oregon government, and the potential
fans. In order to better define what our organization is we have broken it down
into four essential factors:

Organizational Identity

Capital Factors

Why Major League Baseball is not already in Portland

Where we will get the money
1.2 Organizational Identity
The organizational identity of our company is very important.
Our
organization’s goal is to bring Major League Baseball to Portland. As for the
actual identity of the team, PBN, Inc. would like to involve the community in
building the actually identity of the team.
Through contests and other such
means we will include the city in picking the team’s name, logo, mascot and
essentially allowing the new fans to identify with their team.
1.3 Capital Factors
Our main source of capital will be from our organizational head, Paul
Allen. With Paul Allen’s capital investment of funds for both the team, as well as
a stadium, we will be able to take care of two major factors in acquiring a
professional baseball team. With other possible big names investors, such as
Nike founder Phil Knight, joining the PBN, Inc.’s list of supporters, capital
investment support will be easily taken care of.
contributions will also be helpful.
The state of Oregon’s
They have already passed a House
amendment which would allow Oregon to contribute a direct $100 million to any
professional baseball team which triggers economic development.
Partial
funding will come from the Oregon’s state lottery revenue, which was already
determined to be used for economic development projects. No taxes will be
increased nor will there by any allocation of funds from education, healthcare, or
other services. In addition, we would like to issue stock to raise capital and find
investors to purchase an already existing team.
1.4 Why Portland Now?
The Portland/Vancouver area is one of the fast growing areas in the
nation.
Of the top 34 markets in the nation today, all have at least two
professional team franchises, except Portland. As the 22 nd largest market itself,
and with bordering city, Vancouver, in the fastest growing county in the United
States, it isn’t until now that Portland seems to be the answer for a professional
baseball team. Portland is a rapidly growing city, which is why past consideration
for a major league baseball team has failed.
growing.
Furthermore, Portland is still
Portland has a population of 570,000, while the metro area has 2
million citizens. Seattle, who has a Major League Baseball team, does not have
many more people than Portland. Seattle is home to 575,000 people and their
metro area has around three million. Portland is has a booming economy and
fast growing population.
1.5 Sources of Income
With virtually no other competition, Major League Baseball in Portland will
be a success. With ticket sales alone we are looking at a very likely chance that
we will bring in a profit in our first year of operations. Furthermore, based on
research in Seattle, Phoenix and Denver, all comparable to Portland, a
professional baseball team would generate $150-$300 million in economic
development.
We will offer season ticket packages special offers to local
community groups, day of sales, family ticket sales specials and many more
offers to promote affordable fun and a lucrative price. We will also generate a
good portion of our income from vendors inside and outside of our stadium
grounds.
Furthermore, we will look into a whole new clothing line featuring
everything from game jerseys and signed bats to colorful fleeces and supportive
T-shirts.
2.0 MARKET SUMMARY
Our market is extremely vast. We are looking at a sport that is appealing to the
majority of Americans and is America’s past time.
As the only professional
baseball team in the Portland area, are demographics have widened up to
include more and more people from all over the state of Oregon. In other words,
there is a definite opportunity in this market.
TARGET MARKETS
Target Markets
Season Ticket
Holders
Combo Game
Packages
Website
Purchases
Single Game
Purchases
Day of Sales
2.1 MARKET DEMOGRAPHICS
2.1.1 MARKET GEOGRAPHICS
We have decided to operate in the Portland/Vancouver area because of
the great exposure to a market that has not been exposed to major league
baseball. We feel that there is a need and a want for such baseball in this
geographic region which is why we have chosen Portland as the home of
the first major league baseball team in the state of Oregon.
2.1.2 MARKET DEMOGRAPHICS
 AGE: We are not going to focus on age as a major demographic. We
would like to think that baseball is a game for all ages. A great outing
for pre-schoolers to senior citizens alike. We will focus the majority of
our season ticket sales to those between the ages of 25-55. We find
that these ages have expendiable income and would most likely spend
their money on season tickets.
 GENDER: Even though we have reached the 21st century, sports is
still dominated by males. As a result, we will market more towards the
male audience offering exiting and ruthless fun.
 FAMILY LIFE CYCLE: Again, the same as age, in almost any time of
your life you will most likely see a baseball game. But in terms of
season ticket holders and those who would buy ticket packages, we
will focus on the young, married or single, with no children; older,
married with older children; older, married, with no children.
 INCOME:
We looking at those with any income.
From college
students with no income to corporations and high paid executives.
2.1.3 MARKET BEHAVIOR
We will divide our market into different segments concerning psychographics.
We’ll look at the different social classes, focusing on affordable good family fun
for the lower to middle classes and great, status-enhancing perks for uppermiddle to upper classes. Baseball is a game for the young and old alike to
dream about. We will focus on the appreciation of hard work and success of our
athletes for the achivers, the inspiration of the athletes hard work for the strivers
and how anyone can achieve what our athletes have achieved for the strugglers.
2.2 MARKET FORECASTS
Market Forecast
Day of Sales
Year
2007
2006
2005
2004
Single Game
Purchases
Website
Purchases
2003
Ticket
Sales
100%
80%
60%
40%
20%
0%
Combo Game
Packages
Season Ticket
Holders
2.3 MARKET GROWTH
2.4 MARKET NEEDS
We are offering the first and only professional Major League Baseball team in the
Portland area. As a result, we are automatically fulfilling the needs and wants of
our market right off the bat.
In order to maintain the satisfaction of our
customer’s needs we will continue to offer clean, good, affordable athletic
entertainment. Our athletes will provide stories of inspiration and achievement,
while they contribute to the community in ways of community service and
outreach. We are not only providing a good source of spring/summer/fall fun, but
we are offering an opportunity for our customers, the fans, to come together to be
a part of a major league franchise and to watch great baseball.
2.5 MARKET TRENDS
We are looking at offering good, affordable family entertainment, while
maintaining the rush and excitement of the game. Portland citizens, and Oregon
citizens at that, do not have a team to call their own. There will be an instant
trend to jump on the band wagon and join the fun.
Popularity will rise as others see the excitement and experience the realization of
having a major league team to cal their own.
2.6 MARKET ANALYSIS
With no other competition, our customers will not be faced with the
challenge of choosing what to buy, or in the case of baseball, who to
support. Because of baseball’s vast appeal to so many different people it
will be difficult to pinpoint and segment our market. As a result, we will, in
many cases, use the level of marketing with the least amount of
segmentation. In most cases we will attempt to avoid mass marketing, but
not try to run ourselves too thin with running too many promotions to too
few segments.
Our heavy marketing will target consistent ticket buyers, such as season
ticket holders and package ticket buyers, but overall we will market to
baseball fans in general.
3.0 SWOT ANALYSIS
3.1 STRENGTHS
The following are the strengths of the Portland Pioneers
 Portland Oregon has never had a baseball team.
 There are many baseball fans in the state of Oregon that currently support the
Seattle Mariners.
 The state of Oregon will contribute $100 million to a major league baseball
facility.
 Paul Allen is a large supporter of professional sports and is respected in the
Northwest.
 The climate during the baseball season in Portland is perfect for outdoor
sports.
 Nike’s home is Portland Oregon.
 Economic impact for Portland is $150 - $300 million.
 Baseball is the most affordable sport.
3.2 WEAKNESSES
The following are the weaknesses of the Portland Pioneers
 The Portland Pioneers do not have a large cash balance at this time.
 The current stadium will require renovations.
 The new stadium will not be completed for the first year the acquired team will
play.
 The Portland Pioneers need to purchase a professional baseball team.
3.3 OPPORTUNITIES
The following are opportunities the Portland Pioneers must take advantage of.
 Vancouver is one of the fastest growing cities in the nation and just over the
Columbia River from Portland.
 Portland Ranks between 1st and 7th among 11 potential Major League
markets for 13 key demographic variables.
 Portland currently ranks #1 for most favorable place to live.
 Portland is home to eight Fortune 500 companies that will entertain existing
and potential clients.
3.4 THREATS
The following are threats to the Portland Pioneers.
 Seattle Mariner’s are just three hours north of Portland and currently many
fans support the Seattle Mariners.
 Portland currently has two minor league squads, the Portland Rockies and
the Portland Seadogs.
4.0 Marketing Mix
A good way to generate revenue (directly and indirectly) is through utilizing as
much of the Marketing Communication Mix as possible. Portland Baseball Now
will take part in advertising, public relations, and sales promotions.
4.1 Advertising
Advertising is a crucial aspect of the Marketing Mix.
PBN plans on using
advertising to its advantage. They will advertise early on and they will allow other
companies to advertise through their ball club.
3.1.1 Portland Baseball Now Advertising
Portland Baseball Now will do a limited amount of advertising themselves. Once
the sale is announced, PBN will run spots on local television and radio stations to
help create a buzz for the new team.
3.1.2 Companies Advertising through Portland Baseball Now
Advertising will draw in a large amount of money from local companies. We will
be selling advertising spots in the outfield, behind the plate, and around the
inside of both of the ballparks.
Seattle has signs in Safeco field from local
Seattle companies such as Boeing, Tully's, Eddie Bauer, and Microsoft.
Advertising at the stadium connects companies to local fans, and therefore
companies are attracted to this prospect. PBN will also sell sponsorships. For
example, Nike will be the official shoe of the Portland baseball team. Exclusive
sponsorships mean big money and both sides of the deal win.
4.2 Public Relations
One of the biggest events that PBN is planning won't cost any money. PBN is
letting the community name their baseball team. A contest will be held in the
Portland/Vancouver area and fans will be asked to submit their choice for the
name of the team. Several local figures will then narrow the selection to five
possibilities. Fans will then select the name. There are a few reasons why this
will work. First, the contest will make the local fans feel involved in the team.
This promotes a feeling of goodwill towards the team. Next, the person who
submitted the winning name will win season tickets for four. If more than one
person submitted the same name, the first one received will be the one that wins.
Finally, once the field has been narrowed to five, one of the votes will be
randomly picked and the winner will get to go down to Spring Training in Arizona
for a week.
4.3 Sales Promotion
Portland Baseball Now will offer different promotions from game to game. There
will be promotions at about 2/3 of the games. That means that each series, on
average, will have two different promotions. Generally promotions work best
during weeknight/-day games against not as good teams. For instance, PBN will
not have to offer many promotions when Seattle comes to town because there
will be a perceived rivalry there.
Companies normally sponsor promotions;
therefore this generates money in itself. Promotions also drive up ticket sales.
An effective tool in promotions is to offer the promotion to the first X,000 kids. A
limited offer promotes a sense of urgency in the buyer. Also, kids do not come to
games by themselves, so you will sell at least one more ticket to a guardian.
5.0 MARKETING MIX
5.1 PRODUCT
The Portland Pioneer will offer baseball fans of Oregon a major league baseball
team. The sport of baseball is an American tradition. We will offer sport and
entertainment to all fans. Going to a professional baseball team will be a great
experience. A new stadium will be built to entertain baseball fans. It will have
unique design and quality. A variety of seating choices will be available. The
Montreal Expoes will be purchased and brought to Portland. Season ticket and
suite packages will be available.
5.2PRICE
There will be a variety of different ticket prices available for baseball fans.
Baseball is the most affordable of professional sports and our prices will reflect
this.
Children starting at $5.00 and increases depending on seat section and level.
Adults starting at $15.00 and increasing depending on seat section and level.
Senior Citizens starting at $10.00 and increasing depending on seat section and
level.
5.3 PLACE
Temporarily the baseball team will play in the existing stadium until the new
stadium is built. The new stadium should be ready for games in the second
season. The location of the new stadium has not yet been settled.
guarantee that the new stadium will be located in Portland.
We do
5.4 PROMOTION
Advertising will be very important. We will need to make sure that we acquire all
baseball fans in the area. We would like to win over baseball fans that currently
travel to Seattle. There will be offerings of discount ticket prices for the initial
season ticket purchases. Also, business in the area will be encouraged to take
advantage of the suites available for entertainment of clients and personnel. The
local radio stations, television channels and a franchise web page will be used to
promote sales.
6.0 SALES FORECAST
Portland Baseball Now, Incorporated sees significant sales growth in the next 4
years, in a market long deprived of a major league baseball team. This sales
growth can be divided into several segments:

Ticketing

Merchandise sales

Advertising

Rights

Stadium Operations
Although baseball has made a significant comeback since the 1994 strike, the
looming strike in the 2001 season could have adverse effects on all of the above
segments. Each relies on a team in Portland, but that that team will in fact play.
Although the strike could cause significant problems with the current forecast, it
is like any other risk, and should be taken at par value.
6.1 Ticketing
Selling tickets has been a significant source of revenue for most teams in the
past, and the livelihood of Portland Baseball Now, Incorporated relies on the
same income model.
However, with the new stadium not yet complete, the circumstances have
somewhat changed. Although playing the first year in a temporary home at the
23,500 seat Civic stadium could in fact cost the PBN Inc of additional revenue
based on the “hype” of a new baseball team, the outlook is rather good.
With the limited number of seats at Civic stadium, and industry the industry
standard of 90% of stadium filled for each game, we are currently forecasting
ticket sales of 95-100% per game. With the current ticket prices being below the
industry, as well as cheaper then the next closest team, the Seattle Mariners, we
can expect to see first year ticket sales topping the $16 million mark, and could
come close to $17 million depending on team performance.
The ticket revenue model is based on the following ticket prices:
Seating
Number of Seats
Price
Lower Level
8,000
$ 12
Upper Deck
10,000
$7
Bleachers
4,500
$5
Box
1000
$ 25
After first year at Civic Stadium, team will then move into their permanent home.
The newly built stadium will have over double the seating then Civic, with 40,700
seat capacity, and will include a much greater seating options.
With additional seats, and a new stadium, we can expect to fill the new stadium
at the industry standard of 90% capacity per home game. Teams that had low
attendance ratings in the past (Such as the Seattle Mariners and San Francisco
Giants) saw immediate returns when moving into their new stadiums. We expect
the same, with
A ticket-pricing model of:
Seating
Number of Seats
Price
Field Club
3,000
$ 36
AAA Club Level
5,400
$ 32
Lower Box
12,300
$ 23
View Box
3,000
$ 18
View Reserved
11,000
$ 15
Bleachers
5,000
$ 10
Seeing a jump in ticket revenue the second year in the new stadium, due largely
in part not only to the new stadium, but also the feature that it offers, we can
predict ticket sales to top the $60 million mark, figuring a 90% capacity per game.
In year three of operation, we can expect to see ticket sales fall slightly, on
capacity of 80-85% per game to $53 million.
Ticket Sales (In Millions)
75
60
60
53
45
30
16
15
0
Year 1
Year 2
Year 3
Note: These ticket forecast numbers do not include the possibility of post season
ticket sales.
Ticket sales, although larger based on fan support for Portland baseball, could in
fact be significantly lower, due to several other factors. This includes overall
team performance. If the team does not fair well in Portland, fan support could
wavier. Case in point, the National Basketball Association Portland Blazers saw
significantly lower numbers during poor seasons. This is not out of the question
for Portland Baseball, and should be kept in mind.
6.2 Merchandise sales
In 1998, sales of clothing with professional sports team logos topped $1.4 billion,
according to the National Sporting Goods Association.
Sales of merchandise falls into several places of sale. These include:

Stadium

Internet

Retail Stores
First year sales look promising, as the team moves in the Portland area, fans will
need new gear.
Like the expansion teams before them (most recently the
Arizona Diamondbacks and Tampa Bay Devil Rays), first year sales can be
expect in the 5.5 to 7 million dollar range. Distribution of first year sales would be
as such:
Merchandise
Sales
(In
Millions)
6
5
4
4
3
2
1.5
1
1
0
Stadium
Retail
Internet
Using a Cleveland Indians/Arizona Diamondbacks model, with heavy marketing
blitz and team owned dugout stores, we should see merchandise sales to stay on
pace with first year predictions
Based on our marketing mix, and local economic factors, merchandise sales can
in fact stay in the 5 million dollar range, with a steady movement to club-owned
retail stores, cutting costs by offering merchandise direct, including on the
Internet.
By offering products at a slightly lower price because costs can be lowered, this
should drive sales in the Portland area. Nationwide, we can expect on par sales
as with the rest of the industry.
Merchandise Sales (In Millons)
5
5
4.8
4
4
Year 1
3
Year 2
Year 3
2
1
0
1
1
1.5
1.2
Stadium
1
Retail
1
Internet
6.3 Advertising
Revenues for advertising have been decreasing in Major League Baseball since
the early 1990’s. This is due to largely in part to decreasing attendance, and the
wealth of more direct advertising both on television and on the Internet. While
teams bringing in low attendance are reporting low advertising revenue, others
are again beginning to make significant revenues from advertising.
The Seattle Mariners advertising skyrocketed in 1999, nearly tripling from 4.7
million in 1998 to over 13 million in 1999. This is largely in part to the opening of
their new stadium. The San Francisco Giants saw similar advertising increase
with the opening of Pac Bell Park in 2000.
Portland Baseball can expect to see limited advertising revenue’s in year one,
with the limited space for advertising at Civic Stadium. However, by partnering
with some of baseball official sponsors, including Nike and Amtrak, a fair amount
of revenue could be made in year one.
However, advertising will become a major boon for Portland baseball with the
opening of the new stadium, offering increased advertising area and more fan
attendance.
Advertising (In Millions)
14
15
12.2
10
5
1.9
0
Year 1
Year 2
Year 3
6.4 Rights
Television and Radio rights’ have been an increasing revenue channel for Major
league baseball teams since the 1980’s. Television revenue have rose from a
mere 3.3 million in 1980 to 14 million in 1990. While the revenue’s have not
significantly jumped in the past 10 years, revenues have begun to fall, largely in
part to low television ratings. The average television revenue in 1995 was 18.4
million.
While television seems to be bringing in little money for teams in small markets
(The Oakland Athletics signed a 5-year, 3 million television contract in 1999,
while the New York Yankee’s reported Television revenue’s upwards of 50
million for a single year in 1995), Portland baseball expects medium revenues in
the Portland market, with a television right’s being sold for upwards of 5 million
for a five year deal.
National television rights will be shared per the revenue sharing model of Major
League Baseball.
6.5 Stadium Operations
Stadium operations will bring a new experience to the fan. This area can be
broken into several different areas:

Concessions

Parking

Entertainment
Each of these areas bring in a significant amount of revenue. While parking will
not bring in a massive revenue stream at Civic Stadium, it will bring in a fair
amount at the new stadium. The same is true for entertainment. While the old
ballpark will not have the games and other things to do, the new stadium will,
such as with Safeco Field or Pac Bell Park.
Concessions will bring in a significant amount of revenue, with the average fan
spending anywhere from 5 to 10 dollars on food. Given favorable conditions,
with expected attendance in the first year, estimates on concession sales are in
the 2 million range, and will grow to 12 million by year three.
Concessions (In Millions)
7.5
8
7
6
6
5
4
3
2
2
1
0
Year 1
Year 2
Year 3
Overall stadium operations will bring in substantional revenue once the new
stadium is built. With additional parking, games and entertainment, coming to
the ball park will not only be a baseball experience, but also an experience.
7.0 Financials-Budget Analysis
We get the Average Per-Unit Revenue from the amount we receive from ticket
sales per person. The Average-Per-Unit Variable Cost comes from how much it
costs to operate the ballpark for each home game per person.
7.0.1 Break Even Analysis
Average Per-Unit Revenue
$1,638
Average Per-Unit Variable Cost
$2.15
Estimated Fixed Costs
$30,000,000
Yearly Units Break-even
18,339
Yearly Revenue Break-even
$30,039,282
This analysis concludes that we will break even at 18,339 units sold, which are
the tickets.
7.1 Funding Forecast
Our expected revenue for the first year is estimated to be $28 million.
It is
estimated to grow substantially to $90 million by the second year due to a new
stadium, which will have more seats and parking available.
Other forms of
entertainment will be available and therefore, it will produce more funds. Also,
due to the grand opening of the new stadium, advertising revenues are expected
to grow from $2 million, the first year to $14 million, the second year.
Funding
Forecast
Season
2001
2002
2003
$16,000,00 $60,000,00 $53,000,00
Ticket Sales
0
0
0
Stadium
Operations
$2,500,000 $7,800,000 $6,300,000
Merchandise
Sales
$6,500,000 $7,000,000 $7,000,000
$14,000,00 $12,200,00
Advertising
$1,900,000 0
0
Rights
$1,000,000 $1,000,000 $1,000,000
$27,900,00 $89,800,00 $79,500,00
Total Funding
0
0
0
Graph
7.2 Expense Forecast
Our variable costs include the baseball expenses and ballpark expenses. Such
costs would include the quantity of hot dogs sold during a game or tickets
produced for a game.
Variable costs are approximately 14% of revenues.
These costs are expected to increase the second year and slightly decrease the
following years. These costs should correlate with expected revenue.
Expense
Forecast
Season
2001
2002
2003
Operating
Expenses
Baseball
Operations
$3,091,000 $3,247,000 $3,177,000
Ballpark
Operations
$865,000
$3,122,000 $2,802,000
Total Expenses $3,956,000 $6,369,000 $5,979,000
These expenses do not include the players’ salaries
Graph
8.0 Controls
This plan will initially go into action at the end of the year 2000. We expect little to
no revenue or growth until we place a product in the market for public
consumption. There will be a monthly analysis conducted by a group of financial
advisors who will inform us of any stipulations that might occur during our first
few stages. There will also be an analysis conducted one year after the baseball
program, and the logo have been placed on the market for public consumption.
We will discuss any improvements that could be made to continue to make the
professional baseball program a financial success for the owners, and the city of
Portland.
Milestones
Plan
End
start
date
Budget
date
Acquisition of
Nov-
baseball
00/Dec-
$89,000,000.0
program
00
0
Introduction
Jan-00
of team logo
Additions
to
NA
31-Jan01
Nov-00
1-Mar-01
current
$115,000,000.
stadium
00
First
home
20-Apr-
NA
game
01
Construction
1-Sep-
15-Aug-
of
01
02
Stadium
Total
New
$600,000,000.
00
804,000,000.0
0
8.1 Implementation
The following table maps out our milestones for the programs we want to start
implementing towards the end of the year 2000. It is likely that the costs of
adopting and introducing a team logo could change. This number is a statistical
average taken from the introduction of previous expansion teams. The value
does not include inflation and taxes which are varied from location to location.
Our financial advisors will provide us with an update of our budget once we can
better determine the costs of various items needed to manufacture and distribute
items which have our team logo on them. If the construction team finishes the
stadium early we will be able to move the team to the new stadium prior to the
specified date. We will remove the old stadium located next to it and be able to
provide the fans with additional parking. Everyone in the Portland Baseball
Program, including the citizens of Portland, are aware of our intentions and are
helping us to reach our goal by the predetermined date.
8.2 Marketing Organization
The Portland Baseball Program has a very large marketing organization. We
have divided the marketing program into six segments. There is one manager for
each of the six segments. The six managers meet twice a week, and often stay in
contact through emails to discuss their segments progress.
8.3 Contingencies
The worst-case scenario that our organization faces is a lack of community
support. A disinterest in our community would slow profits and hinder further
growth of the Portland Baseball Organization. Our organization can maintain
strong community support through the correct advertising channels. The best
local advertising channel in the Portland area is to be active in community
growth. Expressing our concern for the growth of the community would allow the
citizens of Portland to see that we are not solely focused on profits from ticket
sales. With such a central location there are several rivalries that could spark
interest amongst the teams’ fans. Another concern that is always mentioned
when there is a project of this magnitude is funding. There should be little to no
concern for this matter since we have strong financial backers, who have proven
to be successful in prior investments in professional athletic teams. Portland has
a very bright economic future, the addition of a professional baseball team could
help spark even more financial growth in the area.