Sports and Entertainment Means Business

Transcription

1 2 Sports and Entertainment Means Business

2 Lesson 2.1 Sports and Entertainment Economics

3 THE PROFIT MAKERS Profit The amount of money remaining from revenues after all expenses are paid

4 THE PROFIT MAKERS 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

5 Cultural Opportunities for Profits Worldwide distribution revenue is critical for movie profits.

6 Cultural Opportunities for Profits Marketers must understand the markets in which sales occur. China has a tremendous movie market. The government censors movies for content Pirated movies diminish theater sales

7 P. 34 In addition to U.S. ticket sales, name two other large sources of revenue for U.S. film studios. Chapter 2 Slide 7

8 ECONOMICS Economics The study of how goods and services are produced, distributed, and consumed

9 ECONOMICS Macroeconomics 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

10 Sports and Entertainment Economics Economic Utility The amount of satisfaction a person receives from the consumption of a particular product or service

11 Types of Utility Form Utility When the physical characteristics of a product or service are improved Releasing a film on DVD Time Utility Making the product or service available when the customer wants it Movie theater schedule showings at different times.

12 Types of Utility Place Utility The product is available where it is wanted NetFlix, Blockbuster, On Demand Possession Utility The product or service is available at an affordable price Renting vs. Buying

13 P. 35 List four types of economic utility.

14 Lesson 2.2 Risk Management

15 RISKING IT ALL Risk The possibility of financial gain or loss or personal injury

16 Categories of Risk Natural risk Occurs from unavoidable weather conditions Human risk Dishonest customers and employees Inadequately trained employees Economic risk Occurs due to changes in the economy

17 Additional Classification of 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

18 Additional Classification of 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

19 Additional Classification of 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

20 P. 39 What is meant by a controllable risk?

21 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

22 Risk Avoidance Sports and entertainment marketers need to plan to avoid risky situations. Liable The business is legally responsible for damages that occur

23 Risk Insurance Risk insurance Pays for predictable losses Premium Cost of insurance

24 Risk Transfer Some risks can be transferred to another company or even to the consumer. contracting with third parties for services including releases from liability on event tickets

25 Risk Retention 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

26 P. 40 Briefly describe four strategies for managing risk.

27 Lesson 2.3 Business Ethics

28 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.

29 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.

30 P. 44 How does a person s character develop?

31 BUSINESS BEHAVIOR People and businesses should act ethically while pursuing a profit.

32 Seeking an Advantage Sometimes it is hard to continue to act ethically when you observe people who receive a benefit from acting unethically.

33 When Being Bad Profits Only fans can really influence the behavior of ethically challenged athletes and celebrities.

34 Effective and Ethical Good decisions are both ethical and effective. Good decisions are the right choices for the long term.

35 P. 45 How can the bad behavior of celebrities be controlled?

36 Lesson 2.4 Financial Analysis

37 IT TAKES MONEY Profit is the primary purpose of sports and entertainment marketing.

38 Finding Funding Investors generally provide the funding for an event to cover all the costs that must be incurred before tickets are ever sold.

39 Finding Funding Return on investment The income from a venture that is distributed to investors

40 Money Sources Funds to repay investors are raised through ticket sales broadcast rights licensing facilities

41 P. 49 Name three sources of revenue from sports and entertainment.

42 WHERE IS THE MONEY? Forecast A plan that predicts the expenses to be incurred and the revenues to be received

43 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.

44 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

45 P. 50 What is the purpose of a forecast?

46 Chapter Review p. 36 Encore # s 1-2 p. 41 Encore # s 1-2 p. 46 Encore # s 1-2 p. 51 Encore # s 1-2 p. 52 Chapter 2 Assessment # s 1-13

47 Collecting Chapter 2 Intermission Questions (8)