Chapter 5

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Chapter 5

  1. 1. CHAPTER 5 DISCUSSION QUESTIONS 1) What is the goal of any facility manager? 2) What is the lifeblood of sport & entertainment facilities? 3) What is the most important marketing concept that any business should remember? 4) What are mini-plans? 5) What reasons are a season ticket beneficial to the organization? 6) What does the underground luxury suites at The Palace of Auburn Hills lack? 7) What do club seats offer the patron? 8) What is often the most important revenue source for many facilities? 9) What is a per cap analysis? 10) What do some teams charge fans in addition to the fee for entering the parking lot? 11) What is one of the most important revenue sources for most facilities? 12) One of the critical components of maximizing the answer to Question 11 is to police the facility for illegal sales of what? 13) What can sport & entertainment facilities provide a sponsor access to? 14) What was the company, team, & year the first time a company agreed to pay to have its name attached to a professional sport facility? 15) What was the issue with SF Candlestick Park agreeing to naming rights? 16) What was the issue with the Houston Astros selling the naming rights to its stadium?
  2. 2. <ul><li>FACILITY REVENUE STREAMS & FINANCING </li></ul><ul><li>THERE ARE 3 CATEGORIES OF FACILITY REVENUE SOURCES: </li></ul><ul><li>PUBLIC </li></ul><ul><li>PRIVATE </li></ul><ul><li>PUBLIC & PRIVATE COMBINATION </li></ul><ul><li>-PUBLIC REVENUE: TAXES </li></ul><ul><li>-PRIVATE REVENUE: OUTSIDE COMPANIES </li></ul><ul><li>-PUBLIC & PRIVATE: COMBINATION OF REVENUE STREAMS </li></ul>
  3. 3. 1) WHAT IS THE GOAL OF ANY FACILITY MANAGER? -TO GENERATE REVENUES THAT EXCEED EXPENSES. -PROJECTING REVENUE & EXPENSES IS ONE OF THE MOST IMPORTANT ASPECTS OF MANAGING A SPORT/ENTERTAINMENT FACILITY.
  4. 4. THE 4 AREAS OF FACILITY RETAIL OPERATIONS 1) CONCESIONS 2) PARKING 3) MERCHANDISING 4) TICKETS -TICKET OFFICE IS THE HEART OF SPORTS ENTERPRISE & KEY TO FINANCIAL SUCCESS.
  5. 5. 2) WHAT IS THE LIFEBLOOD OF SPORT/ENTERTAINMENT FACILITIES? TICKETS
  6. 6. 2011 NFL ATTENDANCE 1) 684,096 2) 635,800 3) 631,888 16) 550,048
  7. 7. 2011 MLB ATTENDANCE 1) 3,680,718 2) 3,653,680 3) 3,387,303 8) 3,054,001
  8. 8. 3) WHAT IS THE MOST IMPORTANT MARKETING CONCEPT THAT ANY BUSINESS SHOULD REMEMBER? THE MOST DIFFICULT & EXPENSIVE THING TO DO IS MAKE THE FIRST SALE. -A CONSIDERABLE INVESTMENT OF TIME & MONEY IS REQUIRED TO TO GET A CONSUMER TO OVERCOME INITIAL RESISTANCE TO BUYING INTO A PRODUCT/SERVICE, BUT… -ON AVERAGE IT COSTS 5X MORE TO GET A NEW CUSTOMER THAN IT DOES TO KEEP AN EXISTING ONE. -IF CUSTOMERS HAVE A POSITIVE EXPERIENCE DURING THEIR FIRST VISIT THEY ARE MUCH MORE LIKELY TO BE REPEAT CUSTOMERS.
  9. 9. 4) WHAT ARE MINI-PLANS? A SERIES OF TICKETED EVENTS DURING THE SEASON. RED SOX 2012 MINI-PLANS “SOX PAX”
  10. 10. -A SALES APPROACH THAT ATTEMPTS TO MOVE A CUSTOMER UP THE “TICKET ESCALATOR” ONE STEP AT A TIME (SINGLE GAME TO MINI-PACKS TO FULL SEASON). ESCALATOR APPROACH
  11. 11. 5) WHAT REASONS ARE A SEASON TICKET BENEFICIAL TO THE ORGANIZATION? -USUALLY PURCHASED PRIOR TO THE START OF THE SEASON SO THE ORGANIZATION RECEIVES ALL OF THE MONEY FOR THE TICKET SALES PRIOR TO PAYING EXPENSES FOR THE GAMES. -SINCE THE TICKET IS SOLD FOR THE ENTIRE SEASON, THE SALES STAFF DOES NOT NEED TO WORRY ABOUT SELLING THE SEAT WHEN IT IS SELLING SINGLE-GAME TICKETS. -ASSIST THE GAME OPERATIONS STAFF TO PREPARE FOR ANTICIAPTED CROWDS
  12. 12. RED SOX SEASON TICKET WAITING LIST -ACCORDING TO THE RED SOX TICKET SERVICES THERE ARE CURRENTLY OVER 7,000 PEOPLE ON THE RED SOX SEASON TICKET WAITING LIST. -THE RENEWAL RATE FOR RED SOX SEASON TICKET HOLDERS HAS BEEN ABOUT 98%, AMONG THE HIGHEST IN MLB. -AT THAT RATE, ABOUT 400 RED SOX SEASON TICKETS ARE NOT RENEWED EACH YEAR. -SINCE MOST PEOPLE BUY SEASON TICKETS IN PAIRS, ABOUT 200 FANS ADVANCE THROUGH THE WAITING LIST YEARLY. -THAT MEANS IT COULD TAKE UP TO 20 YEARS FOR A PERSON ON THE WAITING LIST -CHICAGO CUBS HAVE LARGEST SEASON TICKET WAITING LIST IN MLB AT ABOUT 120,000.
  13. 13. PERSONAL SEAT LICENSES (PSL) AN ADVANCED PAYMENT FOR THE RIGHT TO PURCHASE A SEASON TICKET FOR THE SEAT. COWBOYS STADIUM -$4,000-50,000/SEAT -MOST EXPENSIVE CLUB SEATS: -30 YEAR, $50,000 PSL/SEAT -$340/SEAT METLIFE STADIUM -$1000-20,000/SEAT. -52% OF SEATS WILL COST $5K. -EST. REVENUE: $317 MILLION
  14. 14. LUXURY SUITES -MOST SIGNIFICANT AMOUNT OF TICKET REVENUE FOR FACILITY. -NEW YANKEE STADIUM: 51. -FENWAY PARK: 40.
  15. 15. HOUSTON ASTRODOME “ THE 8TH WONDER OF THE WORLD” -FIRST STADIUM TO HAVE LUXURY SUITES (53). -FIRST DOME STADIUM. -OFFICIALLY OPENED ON 04/12/1965.
  16. 16. THE PALACE OF AUBURN HILLS -180 TOTAL LUXURY SUITES. -OFFERS 13 UNDERGROUND LUXURY SUITES. -5 OPENED IN 2005 (450 SQUARE FEET RENTING FOR $450,000/YEAR). -8 OPENED IN 2006 (800-1,200 SQUARE FEET RENTING FOR $350,000/YEAR). 6) WHAT DOES THE UNDERGROUND SUITES LACK? A DIRECT VIEW OF THE BASKETBALL FLOOR
  17. 17. PETERSEN EVENTS CENTER -12,508 SEAT MULTI-PURPOSE ARENA ON CAMPUS OF UNIVERSITY OF PITTSBURGH. -FEATURES 18 LUXURY SUITES. -5 COURTSIDE LUXURY SUITES (ONLY COLLEGE ARENA WITH COURTSIDE LUXURY SUITES). -ONE 193 SEAT SUPERSUITE.
  18. 18. CLUB SEATS 7) WHAT DO CLUB SEATS OFFER THE PATRON? -THE OPPORTUNITY TO SIT IN THE MAIN SEATING SECTIONS OF THE FACILITY BUT IN A MORE EXPENSIVE SEAT. -WAITER SERVICE. -SEPARATE CONCESSIONS. -VIDEO SCREENS.
  19. 19. 8) WHAT IS OFTEN THE MOST IMPORTANT REVENUE SOURCE FOR MANY FACILITIES? CONCESSIONS
  20. 20. <ul><li>CONCESSIONS </li></ul><ul><li>2 ND IN IMPORTANCE TO FINANCIAL SUCCESS. </li></ul><ul><li>(#1: TICKETS) </li></ul><ul><li>CONCESSION MANAGERS MUST UNDERSTAND: </li></ul><ul><li>HOW TO SERVE GOOD FOOD AT REASONABLE PRICE </li></ul><ul><li>DEVELOPMENT O FMARKETING STRATEGY </li></ul><ul><li>FINANCIAL MANAGEMENT </li></ul><ul><li>BUSINESS PLANNING </li></ul><ul><li>PURCHASING </li></ul><ul><li>INVENTORY CONTROL </li></ul><ul><li>BUSINESS LAW </li></ul><ul><li>HEALTH CODES </li></ul><ul><li>OSHA REGULATIONS </li></ul><ul><li>CONVENIENCE FOODS </li></ul>
  21. 21. WHAT ARE CONCESSION SHORTCOMINGS <ul><li>NOT ENOUGH STANDS </li></ul><ul><li>INADEQUATE KITCHEN LOCATION & SPACE </li></ul><ul><li>NO INSTALLATION OF FLOOR DRAINS IN KITCHEN & STAND AREAS </li></ul><ul><li>NO COMMISSARY FOR EMPLOYEES </li></ul><ul><li>SERVCE ELEVATORS LOCATED AWAY FROM STORAGE </li></ul><ul><li>NO PROVISIONS FOR EXHAUST </li></ul><ul><li>LOADING DOCKS & STOREROOMS ON DIFFERENT FLOORS </li></ul><ul><li>INADEQUATE VENTILATION </li></ul><ul><li>INSUFFICIENT ENERGY & WATER AVAILABILITY </li></ul><ul><li>CONCOURSES TOO NARROW </li></ul>
  22. 22. CONCESSION STANDS SHOULD BE 1) CONVENIENTLY LOCATED (40-60 SEC) 2) WELL ORGANIZED LINE DIRECTIONS 3) BRIGHT, SIGNS, ATTRACTIVE 4) GENERATE AROMA TO CONCOURSE 5) BE ABLE TO BE SERVED BY SINGLE PERSON IN EACH SELLING STATION 6) MENU BOARDS (PRODUCTS & PRICES) 7) ATTENTION GRABBERS
  23. 23. HAWKERS -SELL CONCESSIONS/MERCHANDISE IN STANDS
  24. 24. <ul><li>ALCOHOL MANAGEMENT </li></ul><ul><li>-BEARMAN V. UNIVERSITY NOTRE DAME </li></ul><ul><li>-ARAMARK LAWSUIT </li></ul><ul><li>-MLB ALCOHOL IN CLUBHOUSES </li></ul><ul><li>DRAM SHOP STATUTES: </li></ul><ul><li>SOCIAL HOST LIABILITY: </li></ul>ALLOW INJURED PLAINTIFFS TO BRING SUIT AGAINST ESTABLISHMENTS THAT ALLOW DEFENDANT TO GET DRUNK ALLOWS INJURED PLAINTIFF TO SUE DEFENDANT WHO KNOWINGLY SERVED ALCOHOL TO MINOR THAT CAUSED INJURY OR DAMAGE TO PROPERTY
  25. 25. ALCOHOL SALES STRATEGIES <ul><li>TO SELL OR NOT TO SELL </li></ul><ul><li>PROCEDURES TO PREVENT OUTSIDE ALCOHOL FROM ENTERING VENUE </li></ul><ul><li>CROWD MANAGEMENT PROCEDURES </li></ul><ul><li>STRONG EJECTION POLICY </li></ul><ul><li>SUPERVISE TAILGAITING </li></ul><ul><li>DESIGNATED DRIVER PROGRAM </li></ul><ul><li>CONSUMPTION POLICIES </li></ul>
  26. 26. 9) WHAT IS A PER CAP ANALYSIS? DIVIDES THE TOTAL CONCESSION SALES BY THE NUMBER OF ATTENDEES IN ORDER TO DETERMINE THE AVERAGE ATTENDEE PURCHASE.
  27. 27. FOOD & BEVERAGE SERVING RIGHTS EXCLUSIVITY = REVENUE 2008 SPORTS FACILITY POURING RIGHTS MARKET SHARE COKE VS PEPSI
  28. 28. $500 MILLION TO BE EXCLUSIVE SOFT DRINK OF NCAA
  29. 29. PARKING 2 ND TO THE BOX OFFICE IN TERMS OF DIRECT CONTACT BETWEEN THE FACILITY & THE PATRON.
  30. 30. <ul><li>THE PARKING OPERATION </li></ul><ul><li>-2 MAIN GOALS FOR A WELL DESIGNED & MANAGED PARKING OPERATION: </li></ul><ul><li>INCREASE ATTENDANCE </li></ul><ul><li>EASE CROWD TENSION </li></ul>
  31. 31. 10) WHAT DO SOME TEAMS CHARGE FANS IN ADDITION TO THE FEE FOR ENTERING THE PARKING LOT? TAILGATE FEE
  32. 32. 11) WHAT IS ONE OF THE MOST IMPORTANT REVENUE SOURCES FOR MOST FACILITIES? LICENSED MERCHANDISE
  33. 33. 3 KEYS TO EFFECTIVE STORE LAYOUT 1) MAXIMIZING THE SPACE -“DEAD SPOTS” 2) CONTROLLING & DIRECTING TRAFFIC FLOW -“THE DECOMPRESSION ZONE” 3) MAXIMIZING EXPOSURE -45 DEGREE ANGLES
  34. 34. 12) ONE OF THE CRITICAL COMPONENTS OF MAXIMIZING MERCHANDISE REVENUE IS TO POLICE THE FACILITY FOR ILLEGAL SALES OF WHAT? BOOTLEGGED MERCHANDISE
  35. 35. SPONSORSHIP 13) WHAT CAN SPORT & ENTERTAINMENT FACILITIES PROVIDE A SPONSOR ACCESS TO? A TARGET MARKET AUDIENCE (I KNOW THE BOOK SAID SOMETHING DIFFERENT.)
  36. 36. NAMING RIGHTS -KEY ELEMENTS: LENGTH OF CONTRACT, CONSIDERATION($), SIGNAGE RIGHTS & LIMITATIONS, RENEWAL OPTION. CITIGROUP: 20 YEARS, $400 MILLION
  37. 37. EARLY EXAMPLES OF NAMING RIGHTS
  38. 38. WRIGLEY FIELD -WEEGHMAN PARK FROM 1914-1920. -CUBS PARK FROM 1920-1926. -RENAMED WRIGLEY FIELD IN 1926 FOR TEAM OWNER & CHEWING GUM MAGNATE, WILLIAM WRIGLEY JR.
  39. 39. BUSCH STADIUM -SPORTSMAN’S PARK (1920-1953) HOME OF THE ST. LOUIS CARDINALS. -RENAMED BUSCH STADIUM IN 1953 FOR TEAM OWNER GUSSIE BUSCH.
  40. 40. 14) THE FIRST TIME A COMPANY AGREED TO PAY FOR NAMING RIGHTS TO A PROFESSIONAL SPORT FACILITY (THE COMPANY, TEAM, & YEAR)? TEAM: BUFFALO BILLS COMPANY: RICH PRODUCTS CORPORATION YEAR: 1973
  41. 41. <ul><li>BROADCAST RIGHTS </li></ul><ul><li>MAJOR REVENUE SOURCE FOR PROFESSIONAL & INTERCOLLEGIATE SPORTS. </li></ul><ul><li>BROADCASTING EXECS LINK AUDIENCE SIZE & REVENUE TOGETHER. </li></ul><ul><li>THE CONTRACT FOR BROADCASTING RIGHTS IS BASED ON THE POTENTIAL FOR GENERATING ADVERTISING & GAINING HIGH TV RATINGS. </li></ul><ul><li>THE LARGER THE AUDIENCE THE HIGHER THE POTENTIAL FOR REVENUE FROM ADVERTISING. </li></ul><ul><li>BROADCASTERS SEEK PROGRAMMING THAT WILL APPEAL TO LARGER MORE VALUABLE AUDIENCES. </li></ul>
  42. 42. 1999-2013 $6 BILLION FOR EXCLUSIVE BROADCAST RIGHTS OF NCAA BASKETBALL TOURNAMENT
  43. 43. -SINCE 1990 EXCLUSIVE BROADCAST RIGHTS WITH NOTRE DAME FOOTBALL. -CURRENT CONTRACT ENDS AFTER 2015 SEASON. -CONTRACT TERMS HAVE NEVER BEEN PUBLICLY RELEASED.
  44. 44. -STARTING IN JANUARY 2011 THROUGH JANUARY 2014, EXCLUSIVE BROADCAST RIGHTS FOR BCS GAMES. -CONTRACT: $125 MILLION/YEAR.
  45. 45. -BECAME OFFICAL BROADCASTER OF NHL IN 2005. -CONTRACT: $72.5 MILLION/YEAR. -CONTRACT ENDED AFTER 2010-11 SEASON. -NBC SPORTS RENEWED DEAL AFTER IT PURCHASED VERSUS. -THE DEAL GOES THROUGH THE 2020-21 SEASON & IS WORTH NEARLY $2 BILLION. -VERSUS HAS BEEN RENAMED NBC SPORTS NETWORK.
  46. 46. BIG $ OPPORTUNITIES = NEW BROADCAST FORUMS REGIONAL CABLE TV CHANNELS OWNED BY TEAMS

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