Springfield Northwesters Case

Springfield Nor’easters
Group 9
Larry Buckingham, Marketing director for Nor’easters, a new Class A minor league baseball team in Springfield, Massachusetts had been to come up with the pricing strategy for tickets. Challenge for him is to achieve break even on the first year, also by handling the marketing strategies for the team, and all above the following.
1. Springfield is more economical, they are concerned about their spending.
2. Ticket revenue should be from mix of season tickets, group sales and individual ticket sales
3. Consider group ticket sales with special promotions to Little League teams, summer camp programs, family days out etc.
4. Since snacks, souvenirs and arcade games generate revenue as well, they should also be considered in his ticket pricing.
This study summaries the ticket price to be offered for different segments and if this doesn’t fetch break even then, what should Larry Buckingham do with concessions to achieve it.
Explanation:
To understand better of Springfield, Larry Buckingham conducted a survey to analyse the minor league baseball audience view. The potential audience would attend the upcoming baseball match would be 39%. The tickets to this minor league baseball is classified into four products such as single game ticket, 5 game ticket, half season 20 game ticket and full season 38 game ticket. For example, single game ticket, willingness to pay by customer for $14 is 22%, which obliviously means when the price is less than $14 same 22% of customers will be willing to go for the single match, since they get more consumer surplus. Similarly, for 5 games ticket 5%, for half season 1% and full season 1%.

Expected Market Size

Population of Springfield 55,338
39% of the people are likely to see at least one game 21,582
Among the people likely to see the game 21% will attend just one game 11,621
Among the people likely to see the game 11% will subscribe for 5 game 6,087
Among the people likely to see the game 5% will subscribe for half season 2,767
Among the people likely to see the game 2% will subscribe for full season 1,107

Optimum Price for Just one game

WTP of people Just Attend one game $14 $12 $10 $8 $6 $4
% of people at the respective WTP
22%
27%
31%
13%
5%
2%
# of people attending at particular WTP 2,557 10,575 17,265 20,071 21,150 21,582
Revenue at each WTP point $35,793 $126,901 $172,655 $160,569 $126,901 $86,327
Maximum Revenue is at WTP of 10$

Optimum Price for 5 game package

WTP of people 5 package game $14 $12 $10 $8 $6 $4 less than 4$
% of people at the respective WTP
5%
34%
36%
19%
3%
2%
1%
# of people attending at particular WTP 304 2,374 4,565 5,722 5,905 6,026 6,087
Revenue at each WTP point for 5 games $21,305 $142,440 $228,269 $228,878 $177,137 $120,526
#VALUE!
Maximum Revenue is at WTP of 8$

Optimum Price for half season

WTP of people for half season $14 $12 $10 $8 $6 $4 less than 4$
% of people at the respective WTP
1%
15%
25%
28%
23%
7%
1%
# of people attending at particular WTP 28 443 1,134 1,909 2,546 2,739 2,767
Revenue at each WTP point for 20 games $7,747 $106,249 $226,886 $305,466 $305,466 $219,138
#VALUE!
Maximum Revenue is at WTP of 6$

Optimum Price for full season

WTP of people for full season $14 $12 $10 $8 $6 $4 less than 4$
% of people at the respective WTP
1%
10%
11%
14%
20%
26%
18%
# of people attending at particular WTP 11.07 121.74 243.49 398.43 619.79 907.54 1,106.76
Revenue at each WTP point for 38 games $5,888 $55,515 $92,525 $121,124 $141,311 $137,947
#VALUE!
Maximum Revenue is at WTP of 6$

Revenue from Seats $848,309
Total Expenses
1005879
Profit or loss $(157,570)

Number of total Games 38.00
Seats Per Game
3600
Total seat available for a season 136,800.00
Total Seat willing to be booked is 131,272.80
Hence with in Capacity

Concession Prices:
Concession tickets are when customers buy tickets along with snacks, souvenirs and arcade games, he will get extra discount. Since, there would be around 50% of the margin which adds up to the revenue.
To simplify, consumer aggregate for concession tickets 45% of 6-10 and 36% of 11-15 which lands up at 81% of 10.
The below table shows that revenue generated solely from concession tickets is $362,006
This sums up with revenue generate from tickets as per WTP of the consumer is $848,309.
Therefore as per breakeven analysis, the firm will surpass the breakeven point on very first year, gaining $ 204,436 profit. Single tic
5 Games
20 Games
38 Games

Concession Price
$10
$10
$10
$10
% of people who show up
100%
97%
95%
90%
# People who show up per season 17,265 5,550.00 2,418.00 558.00
%People who will be buying concession tic at set price
81%
81%
81%
81%
#People who will buy concessions at set price 13,985.00 4,496.00 1,959.00 452.00
Gross concession revenue per session
139850
44960
19590
4520
Profit margin
39%
39%
39%
39%
Revenue from concession per session
54542
17534
7640
1763
Total reveue for whole game from concession tickets
54542
87670
152800
66994
Total reveue for whole game from concession tickets $ 362,006
BreakEven
$ 204,436