SPMA 2P27 SPORT FINANCE MIDTERM #2
QUESTIONS
What is willingness to pay (WTP)? - Answer -- measures the maximum amount of
money that a consumer or individual is willing and able to spend or pay for a particular
product or service
Why do we care about (WTP) ? - Answer -- important for pricing strategies and helps
sport organizations determine optimal price points
What are the six important influencing factors of (WTP)? - Answer -1. Product quality
2. Customer preferences
3. Reference price
4. Context and situation
5. Brand image
6. Customer relationship
How can we measure WTP? If it's subjective - Answer -- Questionnaire (most common)
- market research (external, secondary sources)
- Auctions (less often used)
What is pricing? - Answer -- amount of money an organization chargers for a product or
service
- product, price, place, promotion
What is price elasticity? - Answer -- the percentage change in seat demand divided by
the percentage of change in price of the seat
- if PE is greater than 1, lowering the price will increase revenue
If PE is less than 1, increasing price will increase revenue
Profit generation vs revenue generation - Answer --PG considers total revenue from
ticket sales as well as costs
- RG considers total revenue from ticket sales
What is ticket pricing market research? - Answer -- the systematic process of collecting,
analyzing, and interpreting information about a market
- creates more revenue
What are the different characteristics categories for ticket pricing? - Answer -1.
Geographic
2. Demographic
3. Behavioural
4. Psychological
, What are the three strategies for ticket pricing? - Answer -1. Value-based pricing
(perceived benefit)
2. Competition-based pricing (competitors charge)
3. Cost-based pricing (mark up costs)
What are the three advanced ticket pricing strategies? - Answer -1. Variable ticket
pricing (different price for same seat based on factors)
2. Dynamic ticket pricing (real-time pricing based on demand)
3. Option ticket pricing-personal seat license
What are the two market types? - Answer -1. Primary - tickets are sold for the first time
at the face value (ticketmaster)
2. Secondary - a third party business or individual purchased tickets at the face value
cost from the event provider
What is sponsorship? - Answer -- cash or in-kind fee paid to a property in return for
access to the exploitable commercial potential associated with that property
Sponsor vs sponsee - Answer -- sponsor - providing financial capital for the
sponsorship
- Sponsee - receiving financial capital for the sponsorship
What are the three sponsorship strategies? - Answer -1. Cost-plus strategy (commonly
used, focused on costs and profit margins to product sponsorship)
2. Competitive strategy (market research, benchmarking, unique value, pricing strategy,
customization)
3. Relative-value strategy (not focused on costs/profits, more emphasis on bench and
returns the sponsor expects to receive)
What is the golden rule for sponsorships? - Answer -- spend 1-3 times more to active
sponsorship
What is licensing? - Answer -- leasing rights that are legally protected from a particular
purpose and time within a given area that is negotiated according to a payment
Licensor vs licensee - Answer -licensor = owner of the rights
Licensee = renter of the rights
What are the five important areas of sport licensing? - Answer -1. Royalty/payment
2. Guarantees
3. Investments
4. Volume/Distribution
5. Counterfeits
Broadcasting rights sport organizations sell their rights in one of which two ways -
Answer -1. Selling rights through the league itself
QUESTIONS
What is willingness to pay (WTP)? - Answer -- measures the maximum amount of
money that a consumer or individual is willing and able to spend or pay for a particular
product or service
Why do we care about (WTP) ? - Answer -- important for pricing strategies and helps
sport organizations determine optimal price points
What are the six important influencing factors of (WTP)? - Answer -1. Product quality
2. Customer preferences
3. Reference price
4. Context and situation
5. Brand image
6. Customer relationship
How can we measure WTP? If it's subjective - Answer -- Questionnaire (most common)
- market research (external, secondary sources)
- Auctions (less often used)
What is pricing? - Answer -- amount of money an organization chargers for a product or
service
- product, price, place, promotion
What is price elasticity? - Answer -- the percentage change in seat demand divided by
the percentage of change in price of the seat
- if PE is greater than 1, lowering the price will increase revenue
If PE is less than 1, increasing price will increase revenue
Profit generation vs revenue generation - Answer --PG considers total revenue from
ticket sales as well as costs
- RG considers total revenue from ticket sales
What is ticket pricing market research? - Answer -- the systematic process of collecting,
analyzing, and interpreting information about a market
- creates more revenue
What are the different characteristics categories for ticket pricing? - Answer -1.
Geographic
2. Demographic
3. Behavioural
4. Psychological
, What are the three strategies for ticket pricing? - Answer -1. Value-based pricing
(perceived benefit)
2. Competition-based pricing (competitors charge)
3. Cost-based pricing (mark up costs)
What are the three advanced ticket pricing strategies? - Answer -1. Variable ticket
pricing (different price for same seat based on factors)
2. Dynamic ticket pricing (real-time pricing based on demand)
3. Option ticket pricing-personal seat license
What are the two market types? - Answer -1. Primary - tickets are sold for the first time
at the face value (ticketmaster)
2. Secondary - a third party business or individual purchased tickets at the face value
cost from the event provider
What is sponsorship? - Answer -- cash or in-kind fee paid to a property in return for
access to the exploitable commercial potential associated with that property
Sponsor vs sponsee - Answer -- sponsor - providing financial capital for the
sponsorship
- Sponsee - receiving financial capital for the sponsorship
What are the three sponsorship strategies? - Answer -1. Cost-plus strategy (commonly
used, focused on costs and profit margins to product sponsorship)
2. Competitive strategy (market research, benchmarking, unique value, pricing strategy,
customization)
3. Relative-value strategy (not focused on costs/profits, more emphasis on bench and
returns the sponsor expects to receive)
What is the golden rule for sponsorships? - Answer -- spend 1-3 times more to active
sponsorship
What is licensing? - Answer -- leasing rights that are legally protected from a particular
purpose and time within a given area that is negotiated according to a payment
Licensor vs licensee - Answer -licensor = owner of the rights
Licensee = renter of the rights
What are the five important areas of sport licensing? - Answer -1. Royalty/payment
2. Guarantees
3. Investments
4. Volume/Distribution
5. Counterfeits
Broadcasting rights sport organizations sell their rights in one of which two ways -
Answer -1. Selling rights through the league itself
