1. Pricing and Financing in SEM
Unit 5 Intro to Sports and Entertainment

2. EQ: What is revenue? What are expenses? What is profit?
How do sports/entertainment generate revenue?

3. What Sports Bring to the Economy
The sports industry as a whole brings roughly $14.3 billion in earnings a year
The industry also contributes 456,000 jobs with an average salary of $39,000 per job

4. Local Economies and Sports
Super bowl 2018— Minneapolis Net $278 million
UGA Football:
$11.2 million just from away fans in local economy
$26,325,257.00

5. Where does the money come from?
Sports Revenue Sources
Ticket Sales
TV Contracts and Sponsorships
NFL: Money is split between all clubs
NBC, Fox and CBS through $3 billion
ESPN through 2021 $1.9 billion annually for “Monday Night Football”
DirecTV’s $ 1 billion annually on average
Sales in stadium
Investors: owners, banks, corporations
Brand Licensing deals for merchandise

6. The Importance of Venue
Stadiums
Can make the team money in a number of ways
Corporate sponsors
Braves and Suntrust—previously Turner
Concessions
Parking
In stadium advertising
Example: Cowboys Stadium
Concessions and Parking: $30,000,000 (profits shared)
1/3rd goes to hospitality partner Legends Hospitality Management
In stadium marketing and sponsorship: $90,000,000

7. Where does the money go? Major Expenses for Sports
Salaries—for professionals
Blue Chip Athletes are PRICEY!
Scholarships—for college
Venues
Travel

8. Paying for Athletes Professional College—NCAA Coaches Contracts
Signing bonuses
Bonuses for playoffs
College—NCAA
NCAA Athletes are not allowed to be “paid”
Receive scholarships as compensation
Coaches
Contract with salary both collegiate and professional

9. NFL Financing Green Bay Packers $171 Millions—players
$131 Million—TV time
$20 million from the visitors’ share of ticket sales
The NFL takes one-third of teams’ ticket-sales revenue and pools it to divide equally among the 32 clubs
The remaining $38.7 million
nationally generated revenue
including sponsorships, licensing and NFL Network distributions

10. Financing Entertainment
Financing for entertainment productions is typically fronted by….
Studios and Production Companies
Producers
Executive Producers typically in charge of finances
Example: Star Wars: Episode VII
Studios and Companies: LucasFilm, Walt Disney Pictures, Bad Robot Productions
Producers: Bryan Burk, J.J. Abrams, Kathleen Kennedy

11. Pricing Products: Tickets

12. Average Ticket Prices NFL-$113.42 NHL-$84.05 NBA-$74.67 MLB-$48.34
What do you think contributes to these prices?

13. What is in a ticket? Pricing sporting tickets Season Tickets
Most teams want to sell the most season tickets possible
Secures tickets even if team performs poorly or key players injured
Majority of revenue is from season ticket holders
Individual Tickets
Secondary Market
Professional Ticket and Brokers
Often times season ticket holders participate in secondary markets

14. What is in a Ticket? Factors that contribute to price
Performance in the most recent season
Player movement (retirements, drafts, and free agency)
Coaching
Similar to new players, a team bringing in a well-known coach is often expected to produce more wins

15. Strategies to Increase Profit
Variable Face Value :
Team varies the face value of the tickets based market value. 
desirable games have a higher face value, and less desirable games have lower face values
This approach gives the team more flexibility in dealing with “distressed inventory”
protecting the value of high-value games, and capturing value that is otherwise lost to speculators.
Dynamic Individual Ticket Pricing 
varies the price of individual tickets based on market demand – and can change the price from the initial face value
requires more complex systems to determine optimal pricing and manage ticket prices.
Participating in the Secondary Market
Some teams and leagues have created their own ticket exchanges

16. Ethical Dilemma of Pricing
Season Tickets v. Individual Tickets
Seating Category
Season Ticket  Per Game Price
Full Season  Ticket Price
Individual  Game Price
Full Season  Savings
Courtside - Club Row AA
$400
$16,800
$450
$2,100
Courtside - Rows BB-CC
$150
$6,300
$175
$1050
Club - Sec
Contact Your Customer Service Executive
Club - Sec. 104, Rows A-B
$115
$4,830
$125
$420
Baseline - Row AA
Baseline - Rows BB-DD
$77
$3,234
$85
$336
Sideline - Lower Level
$65
$2,730
$75
Baseline - Rows EE-NN
Corner Lower Level
$55
$2,310
Mezzanine Sideline - Rows A-H
$50
$210
Baseline Lower Level
Mezzanine Baseline
$40
$1,680
$45
Mezzanine Sideline - Rows J-M
Terrace Sideline
$35
$1,470 $0
Terrace Baseline
$25
$1,050
Hawks Nest
N/A
$10

17. Promotions & Sponsorship Revenue

18. EQ
How do sponsorships and promotions create revenue?

19. Corporate Sponsors
Sponsorships are partnerships between teams and corporations
Sponsorships bring in millions for the simple agreement to feature their brand only
Example:
NFL and Microsoft
Current $400 million dollar deal for only Microsoft Surface tablets to be used on sidelines

20. Sponsoring the Arts
Most fine arts entertainment organizations rely heavily on sponsorship
Theater, dance, orchestras, and venues
Biggest sponsors tend to be banks with Bank of America as the leader
Target Market audience for performing arts—upper class, “cultured”—this is a desired segment by banks

21. Sponsoring the Music Industry
The music industry receives the most sponsorships out of all sports and entertainment entities
These sponsorships generate revenue for
Concerts, tours
Venues
Awards shows , television events
Most likely to be sponsored by beverage companies

22. What is in it for the Sponsor?
Increased awareness and brand recognition
Examples:
All major sponsors of MLB saw a 0.7% increase in brand awareness from fans
Anheuser-Busch Sponsoring MLB
49.6% of fans ID as official beer of the league—increase of 11.8% in recent years
Through increased in-park promotions and product
&

23. In Stadium Advertising
Sponsors buy advertising space in stadium
Most effective in stadium advertising media is score boards and LED screens
Score boards get the most direct attention
Purpose of in stadium marketing is to increase recognition and sales

24. Promotions The goal of ticket sales promotions
Maximize revenue
Fill seats—increase concession/merchandise sales
Build “hype”
A unique example: Minnesota Gophers and AudienceView 2013
Golden Ticket
Buy a Golden Ticket for $75. Attend as many Big Ten home games as you want (retail value: $315), but if the Gophers lose when you're scanned in, your run is over. The pass is deactivated. 

25. Mark Ups in SEM

26. Marking Up Ticket Prices
Face Value
Determined by event officials and promoters
Directly impacted by demand
Many teams and promoters are intentionally underpricing prices to allow for secondary market mark up
StubHub and Ticket Master
Minimum 20% mark up
Finding the mark up---
Mark Up=(Price-Cost)/Cost
Example—CONCERT TICKETS
Face Value --$ Price--$153.00
What is the mark up?
49%

27. Marking Up Merchandise
Merchandise and concessions sales make up a large part of revenue for teams
Markups vary
Concessions—up to 800%
Example: Beer that costs $0.99 marked up 700% to $8.75
Apparel
A T-shirt that costs $2.50 marked up to $25.00
What is the mark up?