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Market Case Study Final: Maximizing Revenue in the Minor Leagues

This presentation is a component of a team MBA final project at Northwest University. The primary data is based on a Harvard case study regarding minor league baseball entry to a small town. Much of the research has been condensed and simplified.
by

Devin Cabanilla

on 27 June 2013

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Transcript of Market Case Study Final: Maximizing Revenue in the Minor Leagues

from the numbers,
RUNNING the BASES:
Home Base: can we play?
Pitcher's Mound
Survey Research
First Base
let's calculate stuff!
Second Base
Third Base
to the bleachers,
1. Springfield, MA
- pop 55k
2. Market Segments
-show different lifestyles
show table w/#'s
Where? Who? What?
RIGHT Field
SHORTSTOP
FOUL Ball
FOUL Ball
3. Minor League Venue
- 3600 seats
- 38 game season
segments
The Nor'easters Team
The People of Springfield
Springfield
Median Income
Springfield families
Springfield households
Springfield Seniors
Springfield Singles
-only $31k

-below U.S. median
-25% under poverty line
- 60% with children
-10% are part of pop.
- 25% live alone
the Springfield Nor'easters
how much is a
minor league
team?
Team Expenses
- Salaries & Equipment*

- Team Costs

- Local Sponsors


--------------------------
Total Remaining
Expenses:
$909,500.00

$(1,051,879.00)

$46,000.00
$(1,005,879.00)
$(1,005, 879) !!!
can they
break even?
"Are you a
baseball fan?
Potential Customers
Town pop > 55,338
x
Fan Survey > 38%
---------
Town Fans = 21,028
Is this it?
Those Who are interested matter!
Survey shows price matters
"Get ready for a presentation
from out of Left Field..."
If willing to buy at $14 bucks...
...then $14 buyers are also willing
to buy for $12 tickets...
... so the $14 buyers and $12 buyers are willing to pay lower price points ...
a buyer's willingness to pay is really an
Our factors are:
- pop. > 55,338
- % willing to buy
- $ per ticket set
- #games per season
Let's find the revenue for $14 single tix
MULTIPLY
...but wait
pop. 55,338
x 21%
------------#people=11,621
AGGREGATE RANGE.
"Actual people" who go need to be calculated!

(not just the interested)
How?
factor in that
aggregate range
#people 11,621
x aggr. 22%
-----------------
#actually going=2557
#people 2557
x price $14
-----------------
x games 38
-----------------
single tix revenue= $35,792.62
now to calculate
ticket revenue...
similarly, we can find revenue for every ticket type this season
Can Springfield lifestyles support baseball?
LEFT Field
CENTER Field
DUGOUT:
"Let's cut the calculations SHORT,and...
the final pitch
"Git yer PEANUTSSS! PeaNuts! Peanuts!"
remaining revenue
- baseball Marketing Directors see concessions as critical
- they give 39% margin

- concessions can get us
to Break Even

- or even profit
Q7: "If a minor league baseball team came to Springfield, is it likely you would attend?
details matter, and...
Ticket Revenue & Attendees
Let's lower prices instead
New Total: $765,258.13
more people too
12,010 MORE!
So here's
where we're at...
Tix Revenue:$765,258.13
-----------------------------
Exp $(1,005,879.00)
Remaining: $(240,620.87)
these are %people within a ticket price
Did we pick the right prices?
$10
$8
$6
$4
Old Total:$526,242.24
one more revenue source...
"...we'll STOP here to summarize all our data factors..."
"...then we'll move to steal third base with simpler info."
here's a recap
and more factors...
A. Town population
B. %people interested
C. #who go once/yr
D. %who actually go
E. #who actually go
A(B)=C
C(D)=E
and here's revenue
P. $Ticket Price
Q. #who actually go
R. #seats per person
S. $Revenue per person
T. #seats sold per person
P(R)=S
Q(R)=T
Q(S) or P(T) = Tix Revenues
there yah go...
now with these results, let steal third
Total Tix Revenue: $526,242.24
for questions or data details
data to
chew on
First Concessions pitch, "BALL!"
-we calculated a weighted average
for concession prices
- $8.83 average for all attendees
*except no shows
Total Concessions: $137,380.86
We're in a pricing pickle!
back to the survey...
aggregate!
81%
who will buy
Here's the concession nuts!
A. Concession Price
B. %who show up
C. #who show up
D. %who buy at price
E. #who buy at price
F. $Gross Revenue/Season
G. Profit Margin
H. Revenue per season
#seats|season(B)=C


C(D)=E

A(E)=F

F(G)=H
Total $10 Concessions:
$367,870.69
Outfield Summary
Tix are: $10, $,8, $6, $4
Concessions are: $10

Tix Revenue: $765,258.13
Conc. Revenue: $367,870.69
------------------------------------
Expenses: $(1,005,879.00)
--------------------------------
PROFIT MARGIN!: $127,249.82
we're ready to run the big league
THE END
so let's work out $10
as the price point
Announcers: Wu, Stephanie
Statisticians: Goran, Cortney
Copy Writers: Shruti, Monica
Production Design:Erika, Devin

let's run to second
we exceeded the break even!
Full transcript