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  • Lady Gaga Income Statement - Case Study

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    nickbell271
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    The document compares four touring options for Lady Gaga: a solo arena tour, a smaller tour with fewer venues and lower ticket prices, canceling all tours, or continuing her current Fame Kills tour. A solo arena tour with 25 venues seating an average of 16,000 could generate $40 million in revenue but would require selling 87% of tickets to cover costs. A smaller tour would generate less revenue at $14 million but only require a 62% sell-through rate to break even. Canceling all tours would cost $4 million but result in a $4 million loss.

    Original Description:

    Calculated income statement from Harvard Business Case Study using numbers from narrative of case.

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    The document compares four touring options for Lady Gaga: a solo arena tour, a smaller tour with fewer venues and lower ticket prices, canceling all tours, or continuing her current Fame Kills tour. A solo arena tour with 25 venues seating an average of 16,000 could generate $40 million in revenue but would require selling 87% of tickets to cover costs. A smaller tour would generate less revenue at $14 million but only require a 62% sell-through rate to break even. Canceling all tours would cost $4 million but result in a $4 million loss.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    60 views1 page

    Lady Gaga Income Statement - Case Study

    Uploaded by

    nickbell271
    The document compares four touring options for Lady Gaga: a solo arena tour, a smaller tour with fewer venues and lower ticket prices, canceling all tours, or continuing her current Fame Kills tour. A solo arena tour with 25 venues seating an average of 16,000 could generate $40 million in revenue but would require selling 87% of tickets to cover costs. A smaller tour would generate less revenue at $14 million but only require a 62% sell-through rate to break even. Canceling all tours would cost $4 million but result in a $4 million loss.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 1

    Lady Gaga Touring Options

    Option 1
    Option 1
    Option 1
    Solo Arena Tour Solo Arena Tour Solo Arena Tour
    Worst Case
    Average
    Best Case
    Number of Venues:
    Number of Seats (average):
    Ticket Price per Seat (average):
    Tour Revenue

    Option 2

    Option 3

    Small Tour

    Cancel Tours

    $
    $

    25
    16,000
    100 $
    40,000,000 $

    25
    18,000
    125 $
    56,250,000 $

    25
    20,000
    150 $
    75,000,000 $

    25
    7,000
    80 $
    14,000,000 $

    Expenses:
    Currently Spent on Fame Kills tour
    Rework Plans
    Start-up costs
    Concert Costs
    Total Expenses

    $
    $
    $
    $
    $

    4,000,000
    12,000,000
    18,750,000
    34,750,000

    4,000,000
    12,000,000
    18,750,000
    34,750,000

    4,000,000
    12,000,000
    18,750,000
    34,750,000

    4,000,000
    2,000,000
    6,000,000
    10,000,000
    22,000,000

    Profit (Loss) from each option

    $
    $
    $
    $
    $

    $
    $
    $
    $
    $

    $
    $
    $
    $
    $

    5,250,000 $

    21,500,000 $

    40,250,000 $

    Calculations of Required Ticket Sell-Through Rate to cover expenses:


    Total Costs:
    $ 34,750,000 $
    Divided by ticket price
    $
    347,500 $
    Divided by number of arenas
    13,900
    Ticket sell out rate required
    87%

    34,750,000 $
    278,000 $
    11,120
    62%

    34,750,000
    231,667
    9,267
    46%

    $
    $
    $
    $
    $

    (8,000,000) $

    4,000,000
    4,000,000
    (4,000,000)

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