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2. Sports and Entertainment Means Business. 2.1 Sports and Entertainment Economics 2.2 Risk Management 2.3 Business Ethics 2.4 Financial Analysis. Winning Strategies. EMI. one of the largest music content providers cost savings achieved through outsourcing of manufacturing

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Sports and entertainment means business

2

Sports and Entertainment Means Business

2.1 Sports and Entertainment Economics

2.2 Risk Management

2.3 Business Ethics

2.4 Financial Analysis


Winning strategies
Winning Strategies

EMI

  • one of the largest music content providers

  • cost savings achieved through outsourcing of manufacturing

  • in 2005, income grew due to legitimate sales of digital music

  • the music industry embraces ever-changing technology and helps drive the economy

Chapter 2


Lesson 2 1 sports and entertainment economics
Lesson 2.1Sports and Entertainment Economics

Goals

  • Define profit and explain the profit motive.

  • Describe types of economic utility.

Chapter 2


Terms
Terms

  • profit

  • profit motive

  • economics

  • economic utility

Chapter 2


The profit makers
THE PROFIT MAKERS

  • profit

    • the amount of money remaining from revenues after all expenses are paid

Chapter 2


  • 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

  • Chapter 2


    Cultural opportunities for profits
    Cultural Opportunities for Profits

    • Worldwide distribution revenue is critical for movie profits.

    Chapter 2


    • China has a tremendous movie market.

      • the government censors movies for content

      • pirated movies diminish theater sales

    Chapter 2


    Chapter 2


    Economics
    ECONOMICS sources of revenue for U.S. film studios.

    • economics

      • the study of how goods and services are produced, distributed, and consumed

    Chapter 2


    • 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

  • Chapter 2


    Sports and entertainment economics
    Sports and Entertainment Economics sources of revenue for U.S. film studios.

    • economic utility

      • the amount of satisfaction a person receives from the consumption of a particular product or service

    Chapter 2


    Types of utility
    Types of Utility sources of revenue for U.S. film studios.

    • form utility

      • when the physical characteristics of a product or service are improved

    • time utility

      • making the product or service available when the customer wants it

    • place utility

      • the product is available where it is wanted

    • possession utility

      • the product or service is available at an affordable price

    Chapter 2


    Chapter 2


    Lesson 2 2 risk management
    Lesson 2.2 sources of revenue for U.S. film studios.Risk Management

    Goals

    • Define risk and describe the categories and classifications of risk.

    • Name and describe four strategies for risk management.

    Chapter 2


    Terms1
    Terms sources of revenue for U.S. film studios.

    • risk

    • risk management

    • liable

    Chapter 2


    Risking it all
    RISKING IT ALL sources of revenue for U.S. film studios.

    • risk

      • the possibility of financial gain or loss or personal injury

    Chapter 2


    Categories of risk
    Categories of Risk sources of revenue for U.S. film studios.

    • 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

    Chapter 2


    Additional classification of risk
    Additional Classification of Risk sources of revenue for U.S. film studios.

    • gain or loss 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

    Chapter 2


    • if a loss can be prevented or the likelihood of its occurrence reduced

  • uncontrollable risk

    • nothing can be done to prevent the risk

  • Chapter 2


    • 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

  • Chapter 2


    Chapter 2


    Managing risk
    MANAGING RISK sources of revenue for U.S. film studios.

    • 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

    Chapter 2


    Risk avoidance
    Risk Avoidance sources of revenue for U.S. film studios.

    • Sports and entertainment marketers need to plan to avoid risky situations.

    • liable

      • the business is legally responsible for damages that occur

    Chapter 2


    Risk insurance
    Risk Insurance sources of revenue for U.S. film studios.

    • risk insurance

      • pays for predictable losses

    • premium

      • cost of insurance

    Chapter 2


    Risk transfer
    Risk Transfer sources of revenue for U.S. film studios.

    • 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

    Chapter 2


    Risk retention
    Risk Retention sources of revenue for U.S. film studios.

    • 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

    Chapter 2


    Chapter 2


    Lesson 2 3 business ethics
    Lesson 2.3 sources of revenue for U.S. film studios.Business Ethics

    Goals

    • Define ethics.

    • Discuss the impacts of unethical behavior.

    Chapter 2


    Terms2
    Terms sources of revenue for U.S. film studios.

    • ethics

    • principles

    Chapter 2


    Do ethics count
    DO ETHICS COUNT? sources of revenue for U.S. film studios.

    • 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.

    Chapter 2


    Ethics and character matter
    Ethics and Character Matter sources of revenue for U.S. film studios.

    • 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.

    Chapter 2


    Chapter 2


    Business behavior
    BUSINESS BEHAVIOR sources of revenue for U.S. film studios.

    • People and businesses should act ethically while pursuing a profit.

    Chapter 2


    Seeking an advantage
    Seeking an Advantage sources of revenue for U.S. film studios.

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

    Chapter 2


    When being bad profits
    When Being Bad Profits sources of revenue for U.S. film studios.

    • Only fans can really influence the behavior of ethically challenged athletes and celebrities.

    Chapter 2


    Effective and ethical
    Effective and Ethical sources of revenue for U.S. film studios.

    • Good decisions are both ethical and effective.

    • Good decisions are the right choices for the long term.

    Chapter 2


    Chapter 2


    Lesson 2 4 financial analysis
    Lesson 2.4 sources of revenue for U.S. film studios.Financial Analysis

    Goals

    • Discuss sources of funding and revenue for sports and entertainment businesses.

    • Describe four tools for financial analysis.

    Chapter 2


    Terms3
    Terms sources of revenue for U.S. film studios.

    • return on investment

    • forecast

    • budget

    • balance sheet

    • income statement

    Chapter 2


    It takes money
    IT TAKES MONEY sources of revenue for U.S. film studios.

    • Profit is the primary purpose of sports and entertainment marketing.

    Chapter 2


    Finding funding
    Finding Funding sources of revenue for U.S. film studios.

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

    Chapter 2


    • the income from a venture that is distributed to investors

    Chapter 2


    Money sources
    Money Sources sources of revenue for U.S. film studios.

    • Funds to repay investors are raised through

      • ticket sales

      • broadcast rights

      • licensing

      • facilities

    Chapter 2



    Where is the money
    WHERE IS THE MONEY?

    • forecast

      • a plan that predicts the expenses to be incurred and the revenues to be received

    Chapter 2


    Budgets
    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.

    Chapter 2


    Financial statements
    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

    Chapter 2



    Performance indicators evaluated
    PERFORMANCE INDICATORS EVALUATED

    • Communicate pricing strategies for supply and demand.

    • Analyze relevant data to determine varying ticket prices for home games.

    • Explain the need for and use of additional revenue from higher-priced tickets.

    Chapter 2


    • Explain the benefits of increased revenue for consumers of foot-ball tickets.

    Chapter 2


    Think critically
    THINK CRITICALLY

    • Why have an increasing number of universities varied ticket prices to games based upon the opponent?

    • Why must universities consider the consumer before raising ticket prices?

    • If games become to expensive to attend, what other options do consumers have to watch the games?

    • How much revenue would be generated from the seven games if ticket prices were $40 all season long?

    Chapter 2


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