Case Write-up:

The Springfield Noreasters Maximizing

Revenues in the Minor Leagues

Hsiu-Wei Wan (0028366443)

I-Hsuan Chen (0028472538)
Wei-Hsin Liu (0028363835)

1. Decision Problem:

Noreasters is a new Class A minor league baseball team in Springfield. Even though
Springfield is the third largest city in Massachusetts, it faces struggling economy with 25% of

residents living below the poverty level. Additionally, it lacks of customers base of
professional sports games and higher-wage-earning residents. Buckingham, the marketing
director for the Noreasters, needs to set the price of the tickets for the games and tries to
increase the number of loyal customers in the city. Also, how to enhance the attendance rate
will be an important issue for Buckingham. Since the research mentions that most of the
family in Springfield has children under 18 years old, the marketing strategies of the baseball
team should be more specify to this kind of target market. However, Buckingham has a deep
marketing background but little sports industry experience. According to other experts,
concession earnings will be the main source of the teams revenue. Plus, Buckingham has to
satisfy the owner Jimmy Mercante who expected to at least break even in the first year.
Therefore, how to attract customers, maximize the profit and break even in one year will be
Buckinghams primary issues.

2. Analysis of Options:

According to the marketing research result, each ticket package has different attendance rate,
21% customer base for attending just one game, 11% customer base for 5-game package, 5%
customer base for 20-game package and 2% customer base for 38-game package. As a result,
the maximized expected coming customers are 11,621 for single ticket, 6,087 for 5-game
package, 2,767 for 20-game tickets and 1,107 for 38-game tickets (See Exhibit 1).

We utilized the accumulative number of people who are willing to pay to calculate the
accumulative total revenue to ticket, and found that when single ticket is priced at $10, Nor
easters would get the highest revenue from tickets (See Exhibit 2). Since the total revenue to
Nor easters was still needed to consider the revenue from the concessions, we made the

concessions matrix for each ticket package (See Exhibit 3) to figure out the best combination
of the price between ticket package and concession. Ultimately, we sum the revenue of tickets
and concessions as our total revenue matrix (See Exhibit 4).

Since the local colleges charged between $5 and $6 per adult and $3 per child for general
admission tickets, we should price higher than them but lower than the price of major league
games. We decided to set the price at $10 for single ticket, $8 for 5-game package, $6 for 20game package and $4 for 38-game package. According to the exhibit 4, even though we
found that we would have the maximize profit when we sell the single tickets at $8, we
decided to set it at $10. The reason is if we set both single tickets and 5-game package at the
same price, we will lose customers who are willing to pay $8 per ticket to attend 5 games and
that will directly affect our concession revenue. In addition, according to the question 8 in the
survey results (Exhibit 5 in case), only 13% people are willing to pay $8 for a single ticket.
However, 31% (the highest percentage) people are willing to pay $10. That is, people actually
value a single ticket more than $8 dollars.

Finally, we got our total cost at $1,005,879 (See Exhibit 5) and summed the total revenue of
single ticket, 5-game package, 20-game package, and 38-game package, and got it at
$2,332,697. Subtracting total cost from total revenue, we got net profit at $1,326,818 (See
Exhibit 6). That is, we can break even in the first year but only if people attend games as the
rate from survey result. However, this marketing research was sampled from 10,000
participants and the data was from 625 responses from the sample. We believed it could be
trusted.
Furthermore, in order to maximize the revenue, we set the price of bleacher seat and
grandstand seat at different levels. From Survey Questionnaire, we found the majority of

respondents are willing to pay 10% more for a grandstand seat over and above the cost of a
bleacher seat so the price of bleacher seat and grandstand seat in different packages is
outlined in Exhibit 7. Then, we utilized accumulative probability to calculate the number of
people who purchase ticket of bleacher seat or grandstand seat. That is, 24% of people are
willing to pay nothing more for a grandstand seat over and above the cost of a bleacher seat,
and 76% of them are willing to pay 10% more. Based on the result, charging different prices
for bleacher seat and grandstand seat can generate more ticket revenue.

3. Recommendation:
In order to break even in the first year, we would recommend Noreasters to set the price at
$10 for single ticket, $8 for 5-game package, $6 for 20-game package, and $4 for 38-game
package now. Few years later, when this baseball team becomes more and more popular and
the customer base becomes stable, Noreasters can further consider the different pricing
between the bleachers and grandstand seats.

For the purpose of building loyal fan base, we would recommend Noreasters to utilize some
marketing events and social media strategies to interact with fans more actively. They could
create every kind of fan pages to increase brand awareness and communicate with fans more
frequently. Besides, they can enhance the entertainment during the game such as playing
some famous songs and playing the games with audiences. Attendance rate is another
important issue for Nor easters. We would recommend them to randomly give free team Tshirt and souvenirs during the games. We believed it helpful for running a whole new A class
team.