Maximizing Revenues in Minor Leagues - Case Study Example

? Maximizing Revenues in Minor Leagues Task: Maximizing Revenues in Minor Leagues In order to prevent the falcons’ ice hockeyteam from leaving Springfield, Larry Buckingham had to do something. He carried out a research that would help him come up with the most convenient ticket-pricing plan that would help them meet the required number of ticket sales of 300 tickets, enough to prevent the falcons from leaving. He carried out a research to plan on how he would come up with a ticketing system that was convenient for sports fans in Springfield. The Customer Profiles The association found out that most of the people in Springfield were not fans of professional sporting events, despite the fact that the neighboring Boston city is home to some of the world’s best professional sport teams such as basketball’s Celtics and baseball’s Red Sox. Residents attended sporting events at local schools and college events. This is surprising considering the fact that Springfield is the worldwide basketball hall of fame and the birthplace of basketball. It has no professional basketball club and only one ice hockey team. Most of the diehard sports fans go to Boston to watch their favorite sport clubs playing. so for a fact Buckingham knew that there were sports fans in Springfield only that there were no enough sporting events for them to watch in Springfield so they opted for Boston. There were also the college students and little leaguers who were eager to experience professional sporting events in Springfield hence would attend matches to experience the thrill. Buckingham learnt from the general managers of sport teams in other small cities that the keys to selling the Nor’easters to Springfield residents were professionalism, fun, simplicity, and flexibility. One of the general managers called it a family fun business since it aims at both entertaining and generating enough income to maintain the teams and to pay the players. This is as opposed to how he had thought, that games won and lost would affect the attendance of the next matches, as was the case in Major League Baseball. He also knew that the reason why most of Springfield’s college populations do not attend professional sporting events is due to the pricing of the tickets, since large populations of Springfield’s residents live below the average standards of living. He then had to know the charges that would be affordable to the local baseball fans. Pricing In the survey, he realized most of the MDs in other cities prefer the pricing to be like that of other entertainment events like movies, bowling and other sporting events, it should not be so high because most of the residents mind about their usage of money and would rarely pay for expensive tickets. Buckingham also got the idea of season tickets, group sales, and individual tickets. He learnt that the three helped balance the ticket revenue. Group tickets made the most sales if they priced reasonably lower than individual tickets hence the need for prompting them with little promotions to attract local customers. The promotions would include summer camp programs and family days out. One way of keeping the ticket prices low was securing corporate sponsorship to sell stadium banner ads. Another way of increasing revenue and profits was by the use of concession sales, this include snack sales, souvenirs and arcade games, though he was not quite convinced with this offer so he decided to shed more light on it in his research. By the time, Buckingham was through with the questionnaire, there were two categories of information he decided to major on. These are price sensitivity, and sports attendance. These were the key factors that would determine the success of the ticketing process. The pricing that he would come up with would determine the attendance, which is a key issue in getting revenue. There should be keenness in setting the ticket prices to suit all the target audience. Single Tickets and Season Ticket Packages Single tickets are those which sell for every match an individual watches watch and mostly they do not have any offers, one books to watch only one match. In season ticket packages, one pays to watch all or many matches in a season at a certain arena, this in most cases is cheaper than opting for single ticket packages and is popular with the diehard sports fans who would like to watch most of the matches in a season. There are three types of season ticket packaging; there are full season tickets, half season tickets, and five-ticket multi game packages, Buckingham wondered what type of fans would prefer each of the season ticketing packages, and who would prefer either the grandstand admission or the bleacher seats section of the stadium. This would be necessary to prepare a good ticket-pricing plan. The prices of season ticketing differ with the number of teams in a certain league since this determines the number of games that will play in the league. In the case of the minor league at Springfield, have 38 teams. Factors for an Optimal Pricing Policy After the research, Buckingham drafted a ticket-pricing plan in which he explains the ticket prices would be so high that anyone who could and would pay a lot to get them was going to buy them and at the same time, the prices would not scare anyone who wanted to come along. The pricing would be able to put the Nor’easters a place higher than the pricing of tickets in the local college teams but low enough to lure fans from driving off town to watch other matches. His main aim was to maximize on both ticket income and attendance since he knew that pricing the tickets so low would lead to fully paid for seats with many no shows, since most people would not mind missing a match that they had paid cheaply for. Therefore, he priced them reasonably, so high to avoid people missing games that they had paid expensively for. A Ticket-pricing Plan The following is a probable ticket-pricing plan that Buckingham would have used to make his sales become most profitable. Ticket type Pricing for adults ($) pricing for kids ($) single ticket 20 6 5-game ticket 90 30 20-game half-season 350 100 38-game season 600 200 From the table above, the ticket pricing reduces with increasing number of seasonal ticketing with a trend. Such that the larger the seasonal ticket you buy, the lesser you pay per match. It is also observable that the prices are relatively expensive than those of college sport events, but slightly cheaper than those of the major league teams. The pricing is also close to that of other recreational avenues, the average prize for watching a movie in a cinema in Springfield is 15 dollars per movie. The assumption in this pricing plan is for a neutral seat, there are no exceptions for either upper bleacher seats of for dug out box seats. in the pricing above those who are will endowed financially will pay to watch a match in the Nor’easters playground while those who are not willing to spend too much will also attend since the price is worth the entertainment, which is obviously better than the local college matches that the residents are used to. Assuming a 97% turnout for all the matches in the season, which has a high chance due to the expected huge sale of 5-match seasonal tickets, which is well within the affordability of many residents in Springfield. The high turnout is because of good ticket pricing and the excitement of hosting a professional sporting event in Springfield hence a promising result for the next seasons. There is also the assumption that there will not be unnatural occurrence that may affect the attendances of the matches negatively. Coupled with concessional sales, income for the season will reach breakeven in the first year. The expected turnout is 97% of which the better half will be families looking for chill spots hence it is obvious that the sale of snacks would be great. Owing to the fact that Springfield is the hall of fame for basketball, a professional sporting event would attract many foreign fans who would take souvenirs in large numbers these sales, combined with those from snacks and tickets would help the team reach breakeven in the first year. Environmental Factors that may affect the Forecast Above There might be rare occasions when unprecedented environmental occurrences affect the turnout of certain matches, for example, the turnout of matches on a sunny day would be higher than that in chilly days hence there will be a larger match turnout in the summer than in winter. Low peak season of tourism would also affect the turnout. Tourists who arrive in Springfield buy the souvenirs sold; hence, if there were no many tourists’ arrivals, the sales would be low. This might hinder the goal to reach breakeven within the first year. Unnatural occurrences like hurricanes and tornadoes might negatively affect the outcome of ticket sales and bring about huge losses. There is also the possibility of match postponing due to erratic weather conditions like huge rainfalls; this might positively affect ticket sales when postponed match move to a less busy day and many people will have the time and chance to purchase the tickets. The outcome might also be negatively if the match moves to a busier day than it had been previously set. Most of the forecasts made have not taken into consideration the event of environmental factors that may affect the outcome Recommended Changes in Ticketing in the Future In the future, when the minor league is more developed, there will be need to increase the ticket prices to cub the supply and demand issue, where possibly there will be large turnouts for matches, increasing the prices would increase the revenue. One also expects that there will be many teams in the league hence tickets reserved for the visiting team will increased a great deal, hence the need for expansion of the venue to accommodate more fans, this will increase the number of ticket sales hence an increase in the revenue. If possibly the number of teams in the league increase, the pricing for seasonal ticketing will definitely increase due to increased number of matches played. As a way of subsidizing the cost, the charges per match will reduce to satisfy regular fans who cannot pay for the seasonal tickets. Reducing the number of single ticket sales and replacing them with season ticket packages will make people purchase more season tickets. This will increase the revenue since most of the matches will be booked in advance leaving little space for single tickets. This, as Buckingham saw in his research is the trend with teams in the major league, like the red sox sold tickets for a whole season in advance long before it had begun. This is possibly because of the sale of season tickets. Generally, the living standards will become high due to increased cost of living with the developing world hence the ticketing will in one way or another increase to match those standards. It would be a good idea to increase the number of offers in the ticket packages such that if one purchases a given number of tickets, they get an offer, not necessarily related to sports, they could get a tour package to visit a certain tourist destination in the world. This would motivate fans to purchase more tickets in advance. The minor teams can also invite big teams from the major league for friendly matches, this would attract large crowds, and with little increase in the cost of tickets, there would be so much revenue earned from such matches. The sports association should also help sponsor some of the good players and help them to the major leagues where they would the managers of big clubs to come looking for players with potential in the minor league. This increases the football standards and would in the long run lead to an increment in the ticket prices hence more revenue. Read More