The Springfield Nor Easters

Situation Analysis
The population of Springfield, MA has a high percentage of lower income families and college
students resulting in price sensitive consumers. Therefore, it is important that the offerings of the
Springfield Noreasters will be in alignment with the needs of the local market. By entering this
industry we face high bargaining power of buyers, high threat of substitutes, and moderate
rivalry (Exhibit 2). In order to breakeven in our opening season, appropriate pricing for both
tickets and concessions will be our key to success (Exhibit 3). In addition, we must advertise and
promote in a way that will appeal to our target customers which are primarily families with
young children.
The Springfield Nor Easters must decide on the optimum pricing points on single tickets, ticket
packages, and concessions to encourage attendance at home games while being able to break
even in the first year of operations and if discontinuing operations may be the best decision.
Buckingham,marketingdirectorfortheNorEasters,conductedasurveyofroughly10,000
peopletogagewhatpeoplewerewillingtopay.Althoughthesurveyonlyobtained625
responses(6.25%)itgaveBuckinghamusefulinformationaboutpeopleswillingnesstopay.
QuantitativeandBreakevenAnalysis
Since revenue can be maximized by increasing attendance to the games, it is necessary to
calculate prices for each ticket type that cause most people to purchase and attend the game.

Based on background information and survey results, the following prices would be advertised
for flat-rate ticket sales:
Single Game: $10 per ticket per game
Five-Game: $8 per ticket
Half-Season (20 games): $7 per ticket
Full-Season (38 games): $6 per ticket

With the above prices set, the total numbers of tickets are expected 106,007 to be sold, which
brings the total ticket revenue of $774,990 per year.

This estimate is much less than total fixed cost of $1,961,379, given the fact that players salaries
and equipment are paid for by Noreasters major league affiliate, fixed cost to the team itself is
estimated only at $1,051,879.
However, ticket sale is not the only revenue Nor Easters can generate. Concession sale is
another main source of revenue for the team. According to the data in Exhibit 5 from the survey
81% would spend between $6 - $15 on snacks, souvenirs and arcade games per person for each
game they attended. Since 19% said they would spend less than $5, I took the average for all
responses and set potential concessions income at $8 per ticket holder regardless of ticket type
average($0, $5, $6, $10, $11, $15) = $8. A big factor in concession income is the occupancy
rate for games based on the no-show averages per ticket package. The following occupancy
rates were used in the calculations:
Single Game 100%
5-game package 97% (3% no show)
20-game package 95% (5% no show)
38-game package 90% (10% no show)

Total concession revenue is estimated at $313,763.27 based on the sum of: # of tickets per
package sold x # of games x $8 per ticket holder x occupancy rate; Total sales were then
multiplied by the 39% profit margin.

In addition to the revenue from tickets and concession, the team can obtain $21,000 in pledge
from the city and local colleges and another $25,000 from local businesses for sponsorship and
advertising (Page 3).
From these 3 main factors of revenue generation, Springfield Nor Easters can expect to pass the
breakeven point and make $127,874 in profit in the first year.

Furthermore, the stadium still has available seats of 810 per game. The number is arrived from
subtracting number of total seats sold from the total capacity and then divided by the number of
total game per year. Nor Easters can take advantage of this for additional revenue by offering
discount group sales for events like birthday party and graduation party.

Conclusion
The Springfield Nor Easters should definitely run the operations since its revenues from ticket
sales, concession sales, and sponsorship and advertising not only covers its total fixed cost but
also provides the team with $127,874 in profit.