Sports & Entertainment Management - Flashcards

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Management

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The process of accomplishing the goals of an organization through the effective use of people and other resources

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Profit

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Typically the goal for sports and entertainment events as they're businesses. Profit = revenue - expenses

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4 functions of management

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Planning, organizing, implementing, and controlling

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Planning

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Involves analyzing information and making decisions about what needs to be done.

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Factors to consider for sports/entertainment planning:

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Date and time Target markets Customer potential Competition Marketing strategies Sponsorships Security Facilities Community support ???

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Organizing

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Concerned with accomplishing tasks most effectively and arranging resources to complete all necessary work.

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Factors to consider sports/entertainment organizing:

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Event specialists / Committees Security Concessions Parking lot management Maintenance Attendance optimization Event planning Schedules ???

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Implementing

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Involves carrying out plans and making sure that adequate personnel are available to accomplish all the necessary tasks.

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Factors to consider for sports/entertainment implementing:

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Taking care of details Extra police for traffic Ingress/egress capacity Sufficient number of bathrooms ???

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Controlling

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Involves evaluating results to determine if objectives have been accomplished as planned.

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Factors to consider for sports/entertainment controlling:

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Was the event a success? What worked / what didn't? Is competition too fierce to run an event again? If we run it again, how can we improve the plan? ???

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Business Management Principles

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Business information management Management responsibilities Financial management Production management Marketing management Human resources management

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Management Responsibilities

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Managers accomplish an organization's goals through the effective use of people and other resources. Unplanned interruptions, events, and problems will always occur, but regular duties must still be preformed. Mangers gather, review, and process information to make decisions and revise plans to improve performance.

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Business Information Management

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All managers need information about target markets, the economy, competition, and business operations to make sound decisions. Information comes in many forms and from many sources. Business information management uses technology to effectively gather, organize, protect, and make information available to people in a form they can use.

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Financial Management

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Good financial management is crucial for business successes. Financial management involves obtaining funds to finance the business, manage the funds carefully, and keeping financial records accurately. All managers must understand finance and financial record to use them for both day-to-day planning and long-term planning.

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Production Management

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Production is all the activities involved in creating products for sale. In sports and entertainment, the products are the events as well as the many related products such as posters, CDs/mp3s, and apparel sold at the even or used in event promotion. Production management works with others to determine the products to be produced, obtains needed resources, organizes production facilities and personnel, and develops and maintains a production schedule and quality control.

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Marketing Management

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Marketing involves all the activities used to plan, price, promote, and sell the event. These activities include customer and competitor research, event development, scheduling, pricing, and managing all the marketing activities prior to, during, and after the event.

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Human Resources Management

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Managing human resources involves determining the number and type of employees needed, recruiting, and hiring the best people, offering needed training, and providing adequate compensation and benefits as well as a motivational work environment. Personnel is often the most important resource for the successful sports and entertainment organization.

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Managers

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Responsible for making things happen

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Higher-level managers

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Usually complete planning and organizing activities

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Lower-level managers

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Preform implementing and controlling tasks.

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Authority

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The right to make decisions about assigned work and to delegate assignments to others.

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Who is Responsible for what?

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Well-managed organizations possess a sense of teamwork in which all individuals work together for the benefit of the entire team.

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Employee empowerment

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Individuals have the authority to solve problems with available resources or to develop new strategies for the betterment of the organizations.

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Making the Tough Decisons

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When managers identify the problem, such as declining attendance, business research provides the information needed to correct the problem. Managers commonly follow the five steps of the decision-making process.

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The decision-making process

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1. Identify the problem 2. List possible solutions 3. Analyze possible solutions 4. Select and implement the plan 5. Evaluate the plan.

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Price

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The amount of money charged for one unit. Ticket prices should reflect what customers are willing to pay.

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Revenue

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The money collected in sales. Revenue is equal to (number of unit sales) × (price of each unit). A sports franchise has a number of revenue sources, including ticket sales, concessions, licensing, and sponsorships.

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Demand

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The amount of goods or services that customers want to buy. Ticket prices for a sporting event should be determined by the demand that exists for that event.

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Yield management pricing

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Setting different prices for goods or services in an effort to maximize revenue when limited capacity is a factor.

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Dynamic pricing

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A system of fluid not fixed ticket prices that increase or decrease due to small and/or short-term changes in supply and demand. Dynamic pricing is facilitated by the Internet and mobile technology.

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Marginal cost

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The cost of producing one additional good or making one more of a commodity (like a seat at a stadium) available.

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Ticket brokers

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Individuals or companies who purchase tickets in bulk to artificially constrict demand and drive up prices.

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Ticket agencies

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Companies that stadium owners use to manage their ticket sales.

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If it costs $85,000 to put on an event and total revenue is $110,000, what is the profit as a percentage of revenue? (Round to the nearest percent.)

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SOLUTION: $110,000 - $85,000 / $110,000 = .227 = 23 percent

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A stadium sells 500 tickets at $20 and 1,000 tickets at $10. What is the average ticket price for the event?

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SOLUTION: Because more tickets are sold at $10 than at $20, you cannot just average $10 and $20 Average ticket price = total revenue / tickets sold = 500 x $20 + 1,000 x $10 / 500 + 1,000 = $10,000 + $10,000 / 1,500 = $13.33

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Grounds crew

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The team that maintains a property's grounds, especially the athletic field. Proper field maintenance is important because improper maintenance can lead to player injuries and league fines.

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Security

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Personnel responsible for the security and well-being of the fans, stadium property, and workers. A security shortage can lead to unruly crowds.

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Usher

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Personnel responsible for making sure fans sit in and stay in their assigned seats. Fans will move to better seats if they are available and there is no one to stop them.

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Gate greeter

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Staff members who check tickets of customers entering the stadium. They play the vital role of ensuring that only paying customers enter.

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Information specialist

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Information specialists walk around the stadium before, during, and after an event to direct customers to facilities and serve as the first line of support to customers with medical emergencies.

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Concession staff

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Team members who prepare and serve food and drinks (often alcoholic) to customers.

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Stage crew

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The crew that helps set up and test a band's staging and equipment. They are either part of the band's road crew or local contractors hired by the tour promoter.

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Sound crew

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The crew that runs a venue's sound system. They are either part of the band's road crew or local contractors hired by the tour promoter.

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Cleaning crew

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The crew responsible for stadium cleanliness before, during, and after events.

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Ticket takers

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Staffers who check tickets at stadium entrances.

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Ticket sellers

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Staffers who sell tickets to fans at the stadium.

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Parking cashiers

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Personnel who man booths at stadium parking lots and garages to take money from fans before or after an event.

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Parking attendants

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Personnel who help fans find parking spots and navigate through parking areas.

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Parking security

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Staffers who make sure that fans' vehicles, and the personal belongings in them, are safe. They work with law enforcement to address cases of larceny and other unruly behavior.

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Crowd control

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A term for the various techniques used by security personnel to ensure a peaceful event for ticketholders.

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Spectator violence

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Violence perpetrated by spectators against fans of the opposing team or even opposing players.

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Jim hires parking attendants. They work an average of 40 hours per month. If twenty parking attendants are hired at $10/hour, what is the monthly labor cost for parking attendants?

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SOLUTION: 20 attendants x $10/hour/attendant x 40 hours/month = $8,000/month

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If the total yearly labor cost is $735,000 and $57,000 is for parking attendants, what percentage of the yearly labor cost is for the parking attendants? (Round to the nearest percent.)

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SOLUTION: $57,000 / $735,000 = .078 = 8%

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If staff salaries were $42,000/month last year and $57,000/month this year, what is the percentage labor cost increase? (Round to the nearest percent.)

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SOLUTION: $57,000 - $42,000 / $42,000 = .357 = 36%

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If the labor costs were $1,300,000 last year and $1,000,000 this year, what percentage decrease was achieved? (Round to the nearest percent.)

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SOLUTION: Use the beginning cost as the basis $1,300,000 - $1,000,000 / $1,300,000 = .231 = 23%

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Ingress

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The flow of fans into a venue.

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Egress

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The flow of fans out of or away from a venue.

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Bottlenecks

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A restriction of optimal traffic throughput. In Virtual Business—Sports, you may see bottlenecks occur in the parking lot because of overloaded traffic situations due to the inability of the parking and security staff to support the traffic load.

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Satellite Parking

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Any parking lot that is offsite from the stadium. Shuttle buses are often required to transport fans to and from the stadium.

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Ticket sellers

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Those who sell tickets to the general public, often at the stadium itself.

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Ticket takers

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Those who take the tickets from patrons wishing to enter the stadium.

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Public transportation

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Methods of transport other than driving, such as the subway and the commuter rail.

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Americans with Disabilities Act (ADA)

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A federal law requiring, in part, that new stadiums be handicapped accessible.

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Five roads lead into a stadium's parking areas. Each road has four lanes (two in each direction) with a capacity of 1,500 vehicles/lane/hour. If 12,000 vehicles are expected for a game, how long will it take for all of them to enter the parking areas?

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SOLUTION: Inbound capacity = 5 roads x 2 inbound lanes/road x 1,500 vehicles/lane/hour = 15,000 vehicles/hour 12,000 vehicles / 15,000 vehicles/hour = 0.8 hours = 48 minutes

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If the roads leading to an arena can together handle 2,500 vehicles/hour of arena-only traffic, at what time should the roads be closed to other vehicles to ensure that the projected 7,500 vehicles can get to the arena for the 8 p.m. start?

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SOLUTION: Time needed to enter = 7,500 vehicles / 2,500 vehicles per hour = 3 hours 8 p. m. - 3 hours = 5 p.m.

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Tiger Stadium is an older venue and has only three gates with four ticket booths at each gate. The stadium recommends that fans arrive at least two hours before games to ensure they can get to their seats by the start of the game. If each ticket booth can process 400 fans/hour, what is the stadium's maximum ingress throughput?

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SOLUTION: 3 gates x 4 booths/gate x 400 fans/hour/booth = 4,800 fans/hour

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Based upon statistical studies, it takes about one-third less time for fans to exit a game as it does for them to enter and find their seats. If the ingress for the stadium is 6,000 fans per hour, what is the egress?

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SOLUTION: Ingress rate = 1 - 1/3 x Egress rate = 2/3 Egress rate Egress rate = 3/2 ingress rate = 3/2 x 6,000 = 9,000 fans per hour

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On-street parking

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Parking along the street, as opposed to in a parking lot.

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Tailgating

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The practice of grilling food, drinking, and socializing around cars and trucks in a stadium parking lot. Lots of sports fans enjoy arriving early to games, parking, and then partying before the game.

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Dynamic pricing

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Fluid, not fixed, parking prices that can increase or decrease due to small and/or short- term changes in supply and demand. Dynamic pricing for parking is facilitated by the Internet and mobile technology.

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Fixed costs

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Costs incurred by a business regardless of how much goods and services are produced. These might include, for example, salaries. These costs are not connected to profit and loss but must be paid on a regular basis, as stipulated in a contract.

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Variable costs

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Costs incurred by a business that vary from month to month or year to year. These might include the cost of food, snow removal, and so on.

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Tonight's game is expected to draw 100,000 fans. Of these, 60 percent will drive. Each car will bring two fans. How many vehicles need to be parked?

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SOLUTION: 100,000 fans x 0.60 = 60,000 fans driving 60,000 / 2 fans/car = 30,000 cars

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A stadium must have 10 attendants at the stadium parking lot and three each at the satellite lots. Each attendant makes $12/hour. If the stadium lot and all five satellite lots open two hours before the game, which lasts three hours, and close two hours after the game, what is the labor cost for parking?

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SOLUTION: Hours per attendant = 2 + 3 + 2 = 7 Pay per attendant = $12/hour x 7 hours = $84 per attendant Attendants = 10 + 3 attendants/satellite lot x 5 satellite lots = 25 attendants Total labor cost = 25 attendants x $84 per attendant = $2,100

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A stadium buses fans to the game from satellite lots. Three buses shuttle between each of the four satellite lots. Each bus is leased for $150/hour, and each bus driver is paid $18/hour. What is the cost for busing if the drivers work for six hours each?

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SOLUTION: Cost = 3 buses/lot x 4 lots x 6 hours x $150 lease cost/hour + $18 driver pay/hour = $12,096

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If a stadium's revenue is $460,000 and its costs are $100,000, what is the stadium's profit as a percentage of its revenue? (Round to the nearest percent.)

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SOLUTION: Profit = $460,000 - $100,000 = $360,000 Profit as percentage of revenue = $360,000 / $460,000 = 0.782 = 78%

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Concessions

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Areas on stadium property, both inside and outside, where food and drink are available for fans to purchase and enjoy while they're at a game or a music event.

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Concessionaire

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The owner or operator of a concession stand.

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Game-day experience

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The quality of the fan experience during an event, including the concession experience.

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Concession pricing

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The various methods stadium owners and managers use to price concessions, including all-you-can-eat seats and discounts for season ticket holders.

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Concession price

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The amount a concessionaire charges for food and drink items.

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Concession cost

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The amount a food item costs the concession owner plus the amount paid to workers to prepare and serve the item.

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Profit margin

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The total cost of the item including labor, etc. subtracted from the price charged.

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Concession Inventory

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The on-hand supplies of food and drink a concession stand has.

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Ordering

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The process by which concessionaires purchase raw materials for their concession stands from food suppliers, often wholesalers.

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A crowd of 70,000 fans is expected to attend the homecoming football game. If the typical vendor can serve 2,500 customers per hour and the game will last for four hours, how many vendors are needed to ensure that each fan can be served during the game? (Round to the nearest whole number.)

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SOLUTION: Capacity = 2,500 fans/hour/vendor x 4 hours = 10,000 fans/vendor 70,000 fans / 10,000 fans/vendor = 7 vendors

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Five vendors are selling at an event, and an attendance of 34,000 is projected. It is anticipated that 75 percent of the attendees will make purchases. Assuming that each vendor has an equal chance of having an attendee prefer their products, what is the average number of customers each will serve?

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SOLUTION: 34,000 fans x 0.75 purchasing customers / 5 vendors = 5,100 purchasing customers/vendor

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Bob sells cookies only in packages of 5. It costs him $2.50 in materials per package. Additionally, he has overhead costs of $1,000 per month. In order to pay himself a monthly salary of $4,000, how many packages of cookies does Bob need to sell per month at $5.00 per package?

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SOLUTION: Bob's goal = $4,000/month = $5 - $2.50 x cookies - $1,000/month Solving for cookies C, we get: 4000 = 5 - 2.5 C - 1000 5000 = 5 - 2.5 C 5000 = 2.5C C = 5000/ 2.5 = 2000 cookies

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Four concession stands are selling snacks at the game. Total projected concession sales are $25,000. One vendor needs to recoup supply costs of $2,000 and pay her three employees $10/hour for the three-hour event before she makes a profit. If she captures 20 percent of the total sales, what will her profit be?

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SOLUTION: Revenue = $25,000 x 0.20 = $5,000 Profit = Revenue - Expenses $5,000 - $2,000 (supply costs) - (3 employees x 3 hours x $10/employee/hour) = $2,910

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