2012 London Olympics
1) What broad tradeoffs does Williamson face as he thinks about his ticket prices?
Some of the main factors that need to be taken into consideration when pricing the tickets and the associated tradeoffs that come with each are:
• Maximizing Revenues: Per estimate, ticket revenues ($650MM) account for 21.5% of LOCOG’s forecasted budget ($3B). Any drop in revenue generation either due to pricing or total number of tickets sold (Revenue = Price/ticket x Quantity) will add undue stress on the remaining three buckets namely broadcast revenues and international sponsorships, domestic sponsorships, and licensing fees. It is even questionable whether the other streams of revenues have the capability to make up the deficit due to drop in ticket prices revenue.
The Games were meant to stimulate the vital economic and social regeneration of the area surrounding East London. Part of this transformation would come during the games with visitors attending and enabling the local economy. All this would be possible by drawing people at affordable but also at revenue maximizing prices. This indirect revenue streams were difficult to quantify but also incorrect to neglect due to the additional revenue potential the games had to offer to London and U.K as a whole.
• Maximizing Game Attendance: Just maximizing ticket revenues alone was insufficient to the success of the London Olympics due to this being pegged “Everybody’s Games”. If bottom lines were realized with lack luster attendance at some of the non-popular sporting events then it would be deemed a failure. Having house full attendance at popular sporting events such as swimming and gymnastics was easy but insufficient crowd turn-out at wrestling or table tennis would show poorly on the hosts as well as demoralize participating sportsmen and women.
Determining which had more weight between revenue and attendance in the success of the games was extremely important. (i.e. ticket revenue targets exceed by $50MM but with 70%
Some of the main factors that need to be taken into consideration when pricing the tickets and the associated tradeoffs that come with each are:
• Maximizing Revenues: Per estimate, ticket revenues ($650MM) account for 21.5% of LOCOG’s forecasted budget ($3B). Any drop in revenue generation either due to pricing or total number of tickets sold (Revenue = Price/ticket x Quantity) will add undue stress on the remaining three buckets namely broadcast revenues and international sponsorships, domestic sponsorships, and licensing fees. It is even questionable whether the other streams of revenues have the capability to make up the deficit due to drop in ticket prices revenue.
The Games were meant to stimulate the vital economic and social regeneration of the area surrounding East London. Part of this transformation would come during the games with visitors attending and enabling the local economy. All this would be possible by drawing people at affordable but also at revenue maximizing prices. This indirect revenue streams were difficult to quantify but also incorrect to neglect due to the additional revenue potential the games had to offer to London and U.K as a whole.
• Maximizing Game Attendance: Just maximizing ticket revenues alone was insufficient to the success of the London Olympics due to this being pegged “Everybody’s Games”. If bottom lines were realized with lack luster attendance at some of the non-popular sporting events then it would be deemed a failure. Having house full attendance at popular sporting events such as swimming and gymnastics was easy but insufficient crowd turn-out at wrestling or table tennis would show poorly on the hosts as well as demoralize participating sportsmen and women.
Determining which had more weight between revenue and attendance in the success of the games was extremely important. (i.e. ticket revenue targets exceed by $50MM but with 70%