Step 1: Fixed Cost

Fixed Expenses
Uniforms $8,000
League Dues $175,000
Staff Salaries $124,000
Office Expenses $110,000
Team Travel $455,000
Market Research & Milling Lists $4,879
Advertising, Sales, and Marketing $175,000
Total Fixed Expenses $1,051,879
less nonticket revenue:
Advertising and Sponsorship $25,000
City of Springfield & University Contributions $21,000
Balance needed from ticket and concession sales to
cover fixed costs $1,005,879

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 Nor'easters are affiliated

Step 2: Willingness to Purchase

To calculate the optimal ticket price for each type of ticket, we must first consider the data from Cas
Exhibit 5, which shows consumers’ willingness to purchase at seven different price points.

$ per ticket
Less than
Ticket Type $4 $4 $6 $8 $10
Single ticket 0% 2% 5% 13% 31%
5-game ticket 1% 2% 3% 19% 36%
20-game half-season 1% 7% 23% 28% 25%
38-game season 18% 26% 20% 14% 11%

Step 3: Cumulative Analysis

We have to consider the data we had in Step 2 in a cumulative manner to determine the total percent
consumers who are willing to purchase at each of the price points.
For example, 27% willing to pay $12 + 22% willing to pay $14 = 49% willing to pay at least $12
Cumulative Table of Consumer Willingness to Pay by Price and Tick
$ per ticket

Ticket Type
 Less than
Ticket Type $4 $4 $6 $8 $10
Single ticket 100% 100% 98% 93% 80%
5-game ticket 100% 99% 97% 94% 75%
20-game half-season 100% 99% 92% 69% 41%
38-game season 100% 82% 56% 36% 22%

Step 4: Potential Ticket Revenue

Next, we need to multiply the figures in Step 3 by the ticket price points to obtain potential ticket rev
per game for each ticket type/price pair.
$ per ticket
Less than
Ticket Type $4 $4 $6 $8 $10
Single ticket $--- $4.00 $5.88 $7.44 $8.00
5-game ticket $--- $3.96 $5.82 $7.52 $7.50
20-game half-season $--- $3.96 $5.52 $5.52 $4.10
38-game season $--- $3.28 $3.36 $2.88 $2.20

Step 5: Season Ticket Revenue

To determine the team’s ticket revenue for the season, we must determine the number of consumers
interested in each ticket type and multiply this by the percentage of consumers willing to purchase at
newly established prices.

% of
customer
s # of % willing
interested interested to buy at
Ticket in ticket consumer this ticket # ticket
Ticket Type Price type s price type sold
Single ticket $10 21% 11621 80% 9297
5-game ticket $8 11% 6087 94% 5,722
20-game half-season $7 5% 2767 81% 2241
38-game season $6 2% 1107 56% 620
Total
Step 6: Average Concession Revenue

There is an additional factor we must consider: concession revenues. Based on data in Case Exhibit 5
can calculate average concession revenue as follows:
Less than
0 $5 $6-10 $11-15
How much do you expect to spend on snacks,
souvenirs, and arcade games, per person, for each
game you attend? 8% 11% 45% 36%

Average concession revenue: $8.56

Revenue margin 39%
Revenue contribution $3.34

Step 7: Season Concession Revenue

For us to arrive at a concession contribution figure for the season, we first need to multiply the estim
attendance percentages by the number of likely seats sold to obtain the number of seats that are likel
purchase the concessions.
# seats
buying
Attendan concessio Concessio
Ticket Type # seats sold ce ns n revenue
Single ticket 9297 100% 9297 $79,582
5-game ticket 28610 97% 27,751 $237,414
20-game half-season 44824 95% 42583 $364,507
38-game season 23552 90% 21197 $181,443
Total 106282 $100,828 $862,946

Revenue
Contribut
ion $336,549

Step 8: Breakeven Analysis

Revenues:
Ticket sales (from Step 5) $776,926
Concession sales (from Step 7) $336,549
Total revenues: $1,113,475
Balance needed from ticket and concession sales to
cover fixed costs (from Step 1) $1,005,879
Net income $107,596
er the data from Case
ce points.

$12 $14
27% 22%
34% 5%
15% 1%
10% 1%

ine the total percentage of

pay at least $12

to Pay by Price and Ticket Type
 $12 $14
49% 22%
39% 5%
16% 1%
11% 1%

n potential ticket revenue

$12 $14
$5.88 $3.08
$4.68 $0.70
$1.92 $0.14
$1.32 $0.14

mber of consumers
illing to purchase at the

Total
# seats ticket
sold revenue
9297 $92,970
28,610 $228,878
44824 $313,766
23552 $141,311
106,282 $776,926

136800 30,518 803.0952947 0.211340867

ata in Case Exhibit 5, we

o multiply the estimated

f seats that are likely to