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The Springfield Noreasters:
Maximizing revenue at Minor

League
Harvard Business School Case
Quiz: Springfield Noreaster
1) How many games were Noreasters scheduled to play at home?
2) What was the total capacity of the Springfiled College stadium?
3) What was the population of Springfield, MA in 2008?
4) What was the profit margin from concession sales at the statdium?
5) What was the expected game attendance by full season ticket holders?
6) How much stadium rent did Noreasters pay Springfield Colleage?
7) How many total responses did Buckinghams survey generate?
THODI SI MATHS
8) How much money is needed from ticket sales and net concession income to
cover fixed costs? (Hint: Review Page 3 & Exhibit 1)
9) What is consumers cumulative willingness to pay (WTP) by price and ticket type?
(Hint: Prepare a pricing matrix, similar to Exhibit 6)
10) Calculate the expected revenue from snacks, souvenirs and arcade games, per
person? (Hint: Review Exhibit 5)
2
Quiz: Springfield Noreaster
1) How many games were Noreasters scheduled to play at home? 38 (p.2)
2) What was the total capacity of the Springfiled College stadium? 3600 (p.2)
3) What was the population of Springfield, MA in 2008? 55,338 (p.2)
4) What was the profit margin from concession sales at the statdium? 39% (p.4)
5) What was the expected game attendance by full season ticket holders? 90% (p.6)
6) How much stadium rent did Noreasters pay Springfield Colleage? 0 (p.2)
7) How many total responses did Buckinghams survey generate? 625 (p.5)
THODI SI MATHS
1) How much money is needed from ticket sales and net concession income to
cover fixed costs? (Hint: Review Page 3 & Exhibit 1)
2) Calculate the expected revenue from snacks, souvenirs and arcade games, per
person? (Hint: Review Exhibit 5)
3) What is consumers cumulative willingness to pay (WTP) by price and ticket
type? (Hint: Prepare a pricing matrix, similar to Exhibit 6)
3
What are
Noreasters?
Who is
Larry Buckingham?4
Who are the Players?
Larry Buckingham
o Marketing Director for Noreasters
Jimmy Mercante
o Owner of the Noreasters
Bob Cortez
o President and GM
5
What is the present
situation?
6
Situation Analysis (1/3)
A class-A minor league baseball team has started
up in Springfield, MA, a year and a half advance of
the first game
Game dates have already been determined, but

pricing decisions remain
A survey has been run with the expectation of

getting insights to help in pricing season and
single game tickets
Ancillary issues of concession sales also need

evaluation
The Springfield Noreasters: Maximizing Revenue in Minor League

7
Situation Analysis (2/3)
Entertainment Industry: Sports

8
Stadium (3/3)

9
Why study this
case?
10
Objectives of this Case (1/3)
Illustrate the design, implementation, and interpretation of
research surveys
o Evaluate primary research studies,
o Setting research objectives,
o Questionnaire design,
o Data analysis and interpretation.

11
Objectives of the Case (2/3)
To use quantitative analysis methods to develop a
"scaled" pricing strategy for a
perishable service that reflects constant
costs per production unit (in this case, stadium seats)

12
Objectives of the Case (3/3)
Understand the relationship between

pricing and its impact on the sales of
auxiliary products.

13
We will focus on
THREE inter-related
issues
14
Three Issues
1
Evaluate the research surveys
undertaken by the League Sports Association and by
Larry Buckingham:
customer profile?
pricing?
single versus season tickets
15
Three Issues
2
optimal pricing policy?

16
Three Issues
3 Can Noreasters
breakeven?
17
Three Issues
1
Evaluate the research surveys
undertaken by the League Sports Association and by
Larry Buckingham:
customer profile?
pricing?
single versus season tickets
18
Insights from the
League Sports
Association
survey?
19
Attendance / Exposure (1/3)
A. Total Percent Exposed During Past Year by Education
Baseball Football Basketball Hockey

College graduate 2 7 5 2
Some college 12 5 2 2
High school graduate 23 14 6 7
Some high school 39 26 11 13

20
Income-level of Audiences (2/3)
B. Income Composition of Audiences
$75,000 and over 13% 12% 15% 20%
$45,000 to $74,999 40% 37 34 32
$22,500 to $44,999 33% 34 32 30
Up to $22,499 14 17 19 18
100% 100% 100% 100%

21
Education-level of Audiences (3/3)
C. Educational Composition of Audiences of Four Professional Sports
College graduate 18% 21% 20% 18%

Some college 26 18 18 16
High school graduate 23 24 24 26
Some high school 33 37 38 40
100% 100% 100% 100%
Source: League Sports Association.

22
But..
These insights were 3 years old,

anecdotal, limited
I want to be able to tailor the teams offerings based on
knowledge of the local market

23
Insights from
Telephone
Interviews?
24
Telephone Interviews (1/3)
Larry Buckingham conducted
Telephone interviews of six
minor league baseball team Marketing
Directors across USA

25
Insights from Interviews (2/3)
Price Seats on par with the competition
movies, bowling, other sporting events
Season ticket versus Individual ticket

buying
26
Insights from Interviews (3/3)
Promote group ticket sales to Little League
teams, summer camps, promote family
days out
Concession Sales are crucial

27
Online Survey by
Larry Buckingham?
28
Design Objectives? (1/5)

29
Design Objectives (1/5)
Maximum Information Yield for Decision-
Making
Clarity in questions asked
Ease of data analysis

30
Questions on (2/5)
oPrice Sensitivity
oSports attendance patterns

31
Process.. (3/5)
How was the survey

conducted?
32
Process.. (3/5)
Mail 10000 postcards
Fill Online / Telephone Survey
Chance to Win $500 restaurant gift

certificate
33
Budget; Response Rates (4/5)

34
o $3,800 budget
o 10000 postcards
o 625 responses

35
List Cost, per Net
List Source Mail Qty. thousand Response
names Undeliverable
Springfield residents, census tract 5,000 $90 250 5.2%

Minor league hockey team, individual,
and season ticket buyers 2,871 $125 97 6.1%
College football individual and

season ticket buyers 1,380 $125 41 7.6%
Parents of little league baseball players, 441 $130 20 17.3%

2007-08 season
Parents of girls softball players, 2007- 308 $130 12 11.4%
08 season
Total 10,000 420

36
Pretesting (5/5)
?
37
Pretesting (5/5)
o Pretested 3 times on friends, relatives,

business associates

38
Insights from the
Online Survey by
Larry Buckingham?
39
Purchase Likelihood (1/4)
Exhibit 5: Survey Questionnaire and Response Distributions
Question Response
Yes No Not sure
1. Do you consider yourself a baseball fan? 38% 60% 2%
2. In the past year, have you attended a professional baseball game? 28% 72% 0%
3. During the past two or three years, how often have you Never 1-2 times 3-4 times 5 or more times Not sure
attended a major-league game? 76% 20% 1% 3% 0%
4. During the past two or three years, how often have you
attended a minor-league game? 83% 14% 1% 2% 0%
5. During the past two or three years, how often have you
attended a college game? 79% 17% 2% 2% 0%

40
Purchase Likelihood (1/4)
Yes No
6. Have you ever purchased a season ticket for a sporting event? 23% 77%
7. If a minor league baseball team came to Springfield, is it likely you would (select one):
Not attend at all 61%

Probably attend just one game 21%
Probably subscribe to a 5-game package 11%
Probably subscribe to a 20-game half season 5%
Probably subscribe to a 38-game full season 2%

41
Willingness to Pay (2/4)
Less than $4 $4 $6 $8 $10 $12 $14

8. If you were to attend one game, what would you be willing to
pay? 0% 2% 5% 13% 31% 27% 22%
Less than $4 $4 $6 $8 $10 $12 $14

9. If you were to purchase a multi-game package of 5 tickets,
what would you be willing to payper game? 1% 2% 3% 19% 36% 34% 5%
10. If you were to purchase a half-season ticket for 20 games,
what would you be willing to payper game? 1% 7% 23% 28% 25% 15% 1%
11. If you were to purchase a full-season ticket for 38 games, what
would you be willing to payper game? 18% 26% 20% 14% 11% 10% 1%

42
Concession Sales (3/4)
nothing
more 10% more 25% more 50% more
12. What would you be willing to pay, per game, for a grandstand 24% 48% 19% 9%
seat over and above the cost of a bleacher seat?
Less than
Nothing $5 $6-$10 $11-15
13. How much do you expect to spend on snacks, souvenirs and

arcade games, per person, for each game you attend? 8% 11% 45% 36%
18 or under 19-25 26-35 36-45 46-55 56-65+

14. What is your age? 1% 7.00% 30% 21% 19% 19%
Female Male
15. Are you: 56% 44%

43
nothing
Demographics (4/4)
more
12. What would you be willing to pay, per game, for a grandstand 24%
10% more 25% more
48%
Less than
19%
50% more
9%
Nothing $5 $6-$10 $11-15

18 or under 19-25 26-35 36-45 46-55 56-65+

14. What is your age? 1% 7.00% 30% 21% 19% 19%
Female Male
15. Are you: 56% 44%

44
Demographics (4/4)
None One Two Three Four More than 4
16. How many children, ages 5-16, live with you? 34% 38% 18% 7% 2% 1%
Some high High Some

school school college College degree
17. What is the last grade in school or college that you completed? 28 28 31 13
Up to $22,500- $45,000- $75,000 and

$22,499 $44,999 $74,900 over
18. For statistical purposes only, which of the following broad
categories represents your household's annual income? 18% 36% 40% 6%

45
Three Issues
2
optimal pricing policy?

46
How much money is
needed from ticket
sales and
concessions to
cover fixed costs?
47
Annual operating expenses (Exhibit 1)
Fixed expenses
Players' salaries $887,000a
Bats and balls $22,500a
Uniforms $8,000
League dues $175,000
Staff salaries $124,000
Office expenses $110,000
Team travel $455,000
Market research & mailing lists $4,879
Advertising, sales, and marketing $175,000
Total fixed expenses $1,961,379

a These expenses were paid by the major league team with which the Noreasters were affiliated.

48
Noreasters expenses and non ticket revenue
Fixed expensesa
Exhibit 1, Pg. 8
Uniforms $ 8,000
League dues $ 175,000
Staff salaries $ 124,000
Office expenses $ 110,000
Team travel $ 455,000
Market research & mailing lists $ 4,879
Advertising, sales, and marketing $ 175,000
Total fixed expenses $ 1,051,879
Less nonticket revenue:
Advertising and sponsorship $ 25,000 Case, Pg. 3
City of Springfield & university contributions $ 21,000
$ 46,000
Balance needed from ticket and concession sales

to cover fixed costs $ 1,005,879
a Note that expenses for players' salaries and for bats and balls, totaling
$909,500, are excluded as they are paid by the major league team with which
the Noreasters are affiliated. 49
Fixed Costs
Need to recover
$1,005,879
50
Determining the
optimal pricing
strategy from
willingness-to-pay?
51
Pricing (1/7)
Exhibit 6 Buckinghams pricing matrix worksheet
$ per ticket
Less
Ticket Type than $4 $4 $6 $8 $10 $12 $14
Single ticket
5-game ticket
20-game half-season
38-game season

52
WTP (2/7)
o31% are WTP $10

o49% are WTP more than $10
(Exhibit 5, Que 8)

53
WTP by Price & Ticket Type (3/7)
Data from Case Exhibit 5, Consumer willingness to pay by price and ticket type
$ per ticket
Less
Ticket Type than $4 $4 $6 $8 $10 $12 $14
Single ticket 0% 2% 5% 13% 31% 27% 22%
5-game ticket 1% 2% 3% 19% 36% 34% 5%
20-game half-season 1% 7% 23% 28% 25% 15% 1%
38-game season 18% 26% 20% 14% 11% 10% 1%

54
Cumulative Willingness to Pay (4/7)
27 % willing to pay $ 12
+ 22 % willing to pay $ 14
49 % willing to pay at least $ 12
Determine the total percentage of

consumers who are willing to
purchase at each price point
55
Cumulative table of consumer willingness to pay by price and ticket type
$ per
Less ticket
Ticket Type than $4 $6 $8 $10 $12 $14
$4
Single ticket 100% 100% 98% 93% 80% 49% 22%
5-game ticket 100% 99% 97% 94% 75% 39% 5%
20-game half- 100% 99% 92% 69% 41% 16% 1%
season
38-game season 100% 82% 56% 36% 22% 11% 1%

56
Expected Ticket Revenue (6/7)
Optimal prices by ticket type a
$ per
Less ticket
Ticket Type than $4 $6 $8 $10 $12 $14
$4
Single ticket $ $4.00 $5.88 $7.44 $8.00 $5.88 $3.08
5-game ticket $ $3.96 $5.82 $7.52 $7.50 $4.68 $0.70
20-game half- $ $3.96 $5.52 $5.52 $4.10 $1.92 $0.14
season
38-game season $ $3.28 $3.36 $2.88 $2.20 $1.32 $0.14
This is the potential ticket revenue per

game for each ticket type/price pair.
57
Optimal Pricing Schedule (7/7)% of
consume
Ticket interested
Ticket Type Price ticket typ
Single ticket $10 21%
5-game ticket $8 11%
20-game half-season $7 5%
38-game season $6 2%
Total
58
Three Issues
3 Will Noreasters
breakeven?
59
Revenue from
Tickets?
60
Consumers (1/4)
Exhibit 5, Que 7
Tickets and seats sold and total ticket revenue by ticket type
% of
consumers # of % willing to # ticket
Ticket interested in interested buy at this type # seats Total Ticket
Ticket Type Price ticket type consumersa ticket price sold Springfields
sold revenue
Single ticket
5-game ticket
$10
$8
21%
11%
11,621
6,087
80%
94%
9,297
5,722
population
9,297
28,610
=
$ 92,968
$ 228,878
20-game half-season $7 5% 2,767 81% 2,227 55,338$ 311,830
44,547
38-game season $6 2% 1,107 56% 620 23,552
(Case, p.$ 141,311
2)
Total 106,006 $ 774,987
a From Springfield total of 55,338

61
Number of Tickets Sold (2/4)
Tickets
Tickets and
and seats
seats sold
sold and
and total
total ticket
ticket revenue
revenue by
by ticket
ticket type
type From
%
% of
of Cumulative WTP
consumers
consumers ## of
of %
% willing
willing to
to ## ticket
ticket
Ticket
Ticket interested
interested in
in interested
interested buy
buy at
at this
this type
type ## seats
seats Total
Total Ticket
Ticket
Ticket
Ticket Type
Type Price
Price ticket
ticket type
type consumersaa
consumers ticket
ticket price
price sold
sold sold
sold revenue
revenue
Single ticket
Single ticket $10
$10 21%
21% 11,621
11,621 80%
80% 9,297
9,297 9,297
9,297 $$ 92,968
92,968
5-game ticket
5-game ticket $8
$8 11%
11% 6,087
6,087 94%
94% 5,722
5,722 28,610
28,610 $$ 228,878
228,878
20-game half-season
20-game half-season $7
$7 5%
5% 2,767
2,767 81%
81% 2,227
2,227 44,547
44,547 $$ 311,830
311,830
38-game season
38-game season $6
$6 2%
2% 1,107
1,107 56%
56% 620
620 23,552
23,552 $$ 141,311
141,311
Total
Total 106,006
106,006 $$ 774,987
774,987
aa From
From Springfield
Springfield total
total of
of 55,338
55,338

62
Cumulative table of consumer willingness to pay by price and ticket type
$ per
Less ticket
Ticket Type than $4 $6 $8 $10 $12 $14
$4
Single ticket 100% 100% 98% 93% 80% 49% 22%
5-game ticket 100% 99% 97% 94% 75% 39% 5%
20-game half- 100% 99% 92% 69% 41% 16% 1%
season
38-game season 100% 82% 56% 36% 22% 11% 1%

63
Ticket Revenue (4/4)
Tickets and
Tickets and seats
seats sold
sold and
and total
total ticket
ticket revenue
revenue by
by ticket
ticket type
type
% of
% of
consumers
consumers ## of
of % willing
% willing to
to ## ticket
ticket
Ticket
Ticket interested in
interested in interested
interested buy at
buy at this
this type
type ## seats
seats Total Ticket
Total Ticket
Ticket Type
Ticket Type Price
Price ticket type
ticket type consumersaa
consumers ticket price
ticket price sold
sold sold
sold revenue
revenue
Single ticket
Single ticket $10
$10 21%
21% 11,621
11,621 80%
80% 9,297
9,297 9,297
9,297 $$ 92,968
92,968
5-game ticket
5-game ticket $8
$8 11%
11% 6,087
6,087 94%
94% 5,722
5,722 28,610
28,610 $$ 228,878
228,878
20-game half-season
20-game half-season $7
$7 5%
5% 2,767
2,767 81%
81% 2,227
2,227 44,547
44,547 $$ 311,830
311,830
38-game season
38-game season $6
$6 2%
2% 1,107
1,107 56%
56% 620
620 23,552
23,552 $$ 141,311
141,311
Total
Total 106,006
106,006 $$ 774,987
774,987
aa From
From Springfield
Springfield total
total of
of 55,338
55,338

64
Ticket Revenue (4/4)
Tickets and seats sold and total ticket revenue by ticket type
% of
consumers # of % willing to # ticket
Ticket interested in interested buy at this type # seats Total Ticket
Ticket Type Price ticket type consumersa ticket price sold sold revenue
Single ticket $10 21% 11,621 80% 9,297 9,297 $ 92,968
5-game ticket $8 11% 6,087 94% 5,722 28,610 $ 228,878
20-game half-season $7 5% 2,767 81% 2,227 44,547 $ 311,830
38-game season $6 2% 1,107 56% 620 23,552 $ 141,311
Total 106,006 $ 774,987
a From Springfield total of 55,338
What is the total capacity of

the stadium?
65
Revenue from
Concessions?
66
Concession Revenue Per Seat (1/3) nothing
more 10% more 25% more 50% more
12. What would you be willing to pay, per game, for a grandstand 24% 48% 19% 9%
Less than
Nothing $5 $6-$10 $11-15

18 or under 19-25 26-35 36-45 46-55 56-65+

14. What is your age? 1% 7.00% 30% 21% 19% 19%
$0.00*8% + $2.50*11% + $8*45% + $13*36% Female Male
15. Are you: 56% 44%
= $8.56
67
Revenue From Concessions (2/3)
Case, p.6 $8.56/seat
Concessions revenue
# seats buying Concession

Ticket type seats sold Attendance concessions revenue
Single ticket 9,297 100% 9,297 $79,580

5-game ticket 28,610 97% 27,751 $237,552
20-game half-season 44,547 95% 42,320 $362,257
38-game season 23,552 90% 21,197 $181,443
Total 106,006 100,565 $860,832

68
Net Income Per Seat (3/3)
Case, p.4
39% contribution margin

Net Income Per Seat
= $8.56 * 39%
= $3.34
69
Breakeven?
70
Breakeven Analysis
Breakeven analysis
Revenues:
Ticket sales $774,987
Concession sales (net) $335,725
Total revenues: $1,110,712
Balance needed from ticket and concession sales to cover

fixed costs $1,005,879
Net income $104,833

71

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The Springfield Noreasters:

Maximizing revenue at Minor

Game dates have already been determined, but

A survey has been run with the expectation of

Ancillary issues of concession sales also need

The Springfield Noreasters: Maximizing Revenue in Minor League

Entertainment Industry: Sports

The Springfield Noreasters: Maximizing Revenue in Minor League

Harvard Business School Case

Harvard Business School Case

The Springfield Noreasters: Maximizing Revenue in Minor League

Understand the relationship between

Harvard Business School Case

optimal pricing policy?

The Springfield Noreasters: Maximizing Revenue in Minor League

Baseball Football Basketball Hockey

The Springfield Noreasters: Maximizing Revenue in Minor League

Harvard Business School Case

Baseball Football Basketball Hockey

College graduate 18% 21% 20% 18%

Source: League Sports Association.

The Springfield Noreasters: Maximizing Revenue in Minor League

These insights were 3 years old,

The Springfield Noreasters: Maximizing Revenue in Minor League

The Springfield Noreasters: Maximizing Revenue in Minor League

Season ticket versus Individual ticket

Concession Sales are crucial

The Springfield Noreasters: Maximizing Revenue in Minor League

The Springfield Noreasters: Maximizing Revenue in Minor League

Clarity in questions asked

Ease of data analysis

Harvard Business School Case

How was the survey

Fill Online / Telephone Survey

Chance to Win $500 restaurant gift

Harvard Business School Case

Harvard Business School Case

Springfield residents, census tract 5,000 $90 250 5.2%

College football individual and

Parents of little league baseball players, 441 $130 20 17.3%

Total 10,000 420

Harvard Business School Case

o Pretested 3 times on friends, relatives,

Harvard Business School Case

The Springfield Noreasters: Maximizing Revenue in Minor League

Not attend at all 61%

Harvard Business School Case

Less than $4 $4 $6 $8 $10 $12 $14

Less than $4 $4 $6 $8 $10 $12 $14

The Springfield Noreasters: Maximizing Revenue in Minor League

13. How much do you expect to spend on snacks, souvenirs and

18 or under 19-25 26-35 36-45 46-55 56-65+

Harvard Business School Case

Nothing $5 $6-$10 $11-15

13. How much do you expect to spend on snacks, souvenirs and

18 or under 19-25 26-35 36-45 46-55 56-65+

Harvard Business School Case

Some high High Some

Up to $22,500- $45,000- $75,000 and

categories represents your household's annual income? 18% 36% 40% 6%

The Springfield Noreasters: Maximizing Revenue in Minor League

optimal pricing policy?

The Springfield Noreasters: Maximizing Revenue in Minor League