1. Sports and Entertainment Marketing Risk Management Copyright © Texas Education Agency, 2011. All rights reserved.

2. Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1) 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee. 2 Copyright © Texas Education Agency, 2011. All rights reserved.

3. Risk Management  Risk-possibility of financial gain or loss or personal injury  Financial Loss business does not make a profit and has to close business does not make a profit and has to close loss of all of the money from owners and investors loss of all of the money from owners and investors personal injuries can occur if businesses do not take the appropriate safety precautions personal injuries can occur if businesses do not take the appropriate safety precautions 3 Copyright © Texas Education Agency, 2011. All rights reserved.

4. Categories of Risk  Natural Risk-storms, hurricanes, floods, droughts, ice storms Hurricane Katrina Hurricane Katrina Greatly decreased the population of New OrleansGreatly decreased the population of New Orleans Hotels, restaurants, and other tourist attractions lost months of businessHotels, restaurants, and other tourist attractions lost months of business Ice Storms, Blizzards, Tornadoes Ice Storms, Blizzards, Tornadoes People stay homePeople stay home Outdoor events are cancelledOutdoor events are cancelled 4 Copyright © Texas Education Agency, 2011. All rights reserved.

5. Human Risk  Customer dishonesty  Employee theft  Employee incompetence  Shoplifting, credit card fraud, bad checks  Sports and entertainment events have special security personnel to monitor events. 5 Copyright © Texas Education Agency, 2011. All rights reserved.

6. Economic Risks  Changes in the Economy Unemployment rateUnemployment rate InflationInflation Discretionary incomeDiscretionary income 6 Copyright © Texas Education Agency, 2011. All rights reserved.

7. Three Classifications of Risk  Gain or Loss Risk speculative risk-could result in a gain or a loss speculative risk-could result in a gain or a loss pure risk-chance of an event occurring that could result only in a loss (flood-golf resort) pure risk-chance of an event occurring that could result only in a loss (flood-golf resort)  Controllable Risk loss can be prevented loss can be prevented likelihood of the risk occurrence is reduced likelihood of the risk occurrence is reduced tornado-uncontrollable risk tornado-uncontrollable risk 7 Copyright © Texas Education Agency, 2011. All rights reserved.

8. Insurable Risk  Pure risk  Chances of loss are predictable  Amount of loss can be estimated  Look at statistics for similar losses 8 Copyright © Texas Education Agency, 2011. All rights reserved.

9. Managing Risk  Preventing, reducing, or lessening the negative impacts of risk by using risk avoidance, risk insurance, risk transfer, and/or risk retention 9 Copyright © Texas Education Agency, 2011. All rights reserved.

10. Risk Avoidance  Avoiding risky situations takes planning on the part of sports and entertainment marketers. 10 Copyright © Texas Education Agency, 2011. All rights reserved.

11. Risk Insurance  Sports and entertainment businesses contract with insurance companies and other financial institutions to cover their risk of financial loss. 11 Copyright © Texas Education Agency, 2011. All rights reserved.

12. Risk Transfer  Contracting another company  Statement on ticket saying the promoter is not responsible for any harm to the ticket holder  Attendee agrees to be responsible for the risks 12 Copyright © Texas Education Agency, 2011. All rights reserved.

13. Risk Retention  Unpredicted low attendance at an event=loss  Unplanned bad weather 13 Copyright © Texas Education Agency, 2011. All rights reserved.