PER 471- The Outsourcing Of College Ticket Sales Operations.14 Chapter 14 – CASE STUDY Directions: Using a word document, answer the Case Study questi

PER 471- The Outsourcing Of College Ticket Sales Operations.14 Chapter 14 – CASE STUDY

Directions: Using a word document, answer the Case Study questi

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Chapter 14 – CASE STUDY

Directions:  Using a word document, answer the Case Study questions with thorough and complete sentences with proper punctuation, grammar, and sentence structure. Ensure you FULLY answer each question. Organize neatly and nicely using 12pt Times New Roman Font with SINGLE SPACING.  Copy the questions in BOLD and answer the questions directly under the questions.

The Outsourcing of College Ticket Sales Operations

For decades, colleges and universities have relied upon the expertise of consulting companies to handle the development and management of their various marketing assets. For instance, industry-leading firms such as Collegiate Licensing Corporation (now a division within IMG College) and Licensing Resource Group have been representing the licensing interests of colleges and universities since the 1970s. The former Host Communications (also now a division of IMG College) was on the forefront of representing colleges and universities for their broad-casting rights. These and other industry players, including Learfield, CBS College Sports, ISP (now absorbed into IMG College), and Nelligan Sports Marketing, have also been retained by collegiate institutions to develop, manage, and sell their sponsorship programs, because so many of these partnerships are driven in large part by media/advertising sales. In most cases, one outside firm may handle all three areas of assets for the college or university.

These consulting arrangements typically provide the collegiate institution with a guar-anteed annual cash rights fee payment (and in some cases a percentage of revenues above a certain monetary threshold) in exchange for allowing the outside company with the rights to reap the potential monetary benefits from the sales of the collegiate institution’s broadcast advertising, sponsorship packages, and licensed products. It has historically been viewed as a win–win relationship for both parties. The focus of colleges and universities is typically on the educational mission; hence, many athletic departments lack the sales personnel and resources that one would typically find within a professional sport organization.

In the spring of 2009, Georgia Tech announced the hiring of The Aspire Group to handle ticket marketing and sales for football and men’s basketball (Lombardo & Smith, 2009). It was the first such arrangement in college sports involving the outsourcing of ticket sales, and the publicity attendant to the announcement suggested the ushering in of a new trend in the collegiate marketplace. The same factors that drove collegiate merchandising/licensing, and then later broadcast media and sponsorship rights, to outsourcing have also driven the outsourcing of ticket marketing and sales—lack of expertise within the athletic department staff. However, in the case of outsourced ticket marketing, sales, and service, a few additional factors appear to be driving this growth. Many universities during the recent economic downturn have not been able to fund the significant number of new full-time positions that labor-intensive proactive outbound phone sales demands. Further, the payment of commissions to sales staff and bonuses to managers is frequently prohibited by state law. Finally, existing athletic administrative staff invariably have their time spread so thinly across multiple ticketed sports that they cannot allocate the time necessary to recruit, train, develop, and closely manage the ticket sales staff. The arrangement called for The Aspire Group to handle full- and partial-season ticket sales and group ticket sales in exchange for expense reimbursement plus a percentage of any increase in ticket sales. Georgia Tech’s athletic department maintains control of ticket prices and season ticket plans as well as ticket sales of premium seating and suites. After signing the agreement with Georgia Tech, The Aspire Group set up a full-time sales staff of around 15 people who work on Georgia Tech’s Atlanta campus, which has subsequently grown to over 20 sales consultants, a director, and two managers. “It boils down to cost containment and efficiency,” said Mullin. “Traditionally, schools have a smaller number of year-round salesstaff, but we can put more staff and resources behind the sales efforts. The school is providing the infrastructure and we are providing the management, systems, and procedures” (Lombardo and Smith, 2009, p. 1). Added Georgia Tech’s Athletic Director Dan Radakovich, “We look at this as the next frontier for what we need to do to sell tickets” (Lombardo and Smith, 2009, p. 1).Although the outsourcing of college ticket sales is a relatively new concept, in just 4 years since Aspire started the trend there are now over 80 NCAA Division I programs that have outsourced and an additional 30 NCAA Division I Athletic programs that have developed their own outbound ticket sales capabilities in-house. Additionally, several schools have outsourced their ticket marketing functions, responsibility for season ticket renewals, plus athletic donation renewals, and new sales. At Rutgers, University of California-Riverside, and University of Louisiana-Monroe, they have even outsourced ticket office/box office management and all day-of-game gate sales responsibilities to The Aspire Group. To Outsource or Not to Outsource? That Is the Question From the 2005 to 2008 Georgia Tech football seasons, attendance at the 55,000-seat Bobby Dodd stadium declined from an average of 51,607 per game to an average of 47,489 (a nearly 8% decline in attendance). In the season in which Georgia Tech outsourced its ticket sales to The Aspire Group, attendance increased by over 12% to a per game average of 51,584 (Table14-2).

Additionally, during the first 4 months of 2010, The Aspire Group had sold more than 770 new season-ticket packages, representing over $240,000 in additional revenue (Roberson, 2010). In each year that the Aspire Group has been selling Georgia Tech’s tickets, the amount of new and incremental ticket revenues has grown each year, including a total of

Table 14-2 Georgia Tech Football

Year Average Attendance Percent of Capacity Change from Previous Season

2012 43,955 79.9% –8.8%

2011 48,232 87.7% +3.8%

2010 46,449 84.45% –9.9%

2009 51,584 93.78% +12.43%

2008 47,489 86.34% –5.55%

2007 50,280 91.42% –0.67%

2006 50,617 92.03% –1.92%

2005 51,607 93.83% +10.23%

Data from: National Collegiate Athletic Association. (n.d.). Retrieved from http://www.n

$2 million in the 2012–2013 season. But perhaps more important, when the “annuity value” or “lifetime asset value” (LAV) is factored in, the residual revenue streams to Georgia Tech of these new ticket purchasers repeating their purchases in future years is extremely large. Georgia Tech has identified that approximately 67% of these new buyers renew each year, and therefore the LAV is 300% of each year’s new ticket revenues, which over the 4-year period of outsourcing to The Aspire Group is estimated to be $15.3 million. Revenue generated from football and men’s basketball ticket sales is the lifeblood of collegiate athletic departments. Consider that during the 2006 fiscal year, ticket sales accounted for nearly 30% of the revenue generated by members of the NCAA’s Football Bowl Subdivision, the single largest source of revenue (Fulks, 2008). Research has indicated that a number of factors influence consumer demand for collegiate sport (Groza, 2010). Although a number of these factors are outside of the control of the sales department, the ticket sales department must nonetheless strive to promote and ultimately sell tickets by highlighting the value to the customer. For high-demand games (e.g., the home team is having a successful season and/or is playing a quality opponent), creating a value proposition for the customer is not difficult. However, selling tickets to low-demand games (e.g., the home team is having an unsuccessful season and/or is playing an undesirable opponent) represents a much more challenging task for the ticket sales department. The art of selling is becoming increasingly scientific and technology driven. Today, advanced analytics such as consumer demand modeling and CRM systems allow sales managers to intelligently predict demand and sales personnel to better understand the individual customer.

Although The Aspire Group originally hired and managed 15 salespeople who were physically located within the Georgia Tech athletic facility, an increasingly prevalent mode, especially with smaller and emerging athletic programs, is for outside firms to handle all ticket sales from their corporate headquarters. For instance, The Aspire Group has up to 22 salespeople working out of its National Sales Center in Atlanta, where, for example, it sells over $1 million in ticket inventory for the NCAA and six of its National Championships, including men’s and women’s basketball; women’s softball; women’s volleyball; FCS football; and men’s lacrosse

Questions for Discussion

1. The outsourcing of licensing, media, and sponsorship rights is a business-to-business (so-called B2B) operation. Outside firms such as IMG College, Learfield, CBS, and Nelligan endeavor to find local, regional, and national businesses to buy advertising and sponsorships. Selling tickets is, in contrast, primarily a business-to-consumer (so-called B2C) endeavor. Assume you are the athletic director for a midsized Division I university. What would you see as some fundamental differences in and challenges to these two sales approaches?

2. Assuming the same situation, what concerns might you have about an outside firm selling tickets for your university from a sales call center in another location, perhaps even another state?

3. Assume you are the athletic director for a major Division I football powerhouse. Would you recommend that your athletic department outsource its ticket operations? Why or why not? What factors would influence your decision?

Chapter 1

4

CASE STUDY

Directions

:

Using a

word documen

t, answer the Case Study questions with thorough

and complete sentences with proper punctuation, grammar, and sentence structure.

Ensure you

FULLY

answer each question. Organize neatly and nicely

using

12pt

Times New Roman Font with SINGLE SPACING

.

Copy the questions in

BOLD

and

answer the questions directly under the questions.

The Outsourcing of College Ticket Sales Operations

For decades, colleges and universities have relied upon the expertise

of consulting companies to handle

the development and management of their various marketing assets. For instance, industry

leading

firms such as Collegiate Licensing Corporation (now a division within IMG College) and Licensing

Resource Group have been re

presenting the licensing interests of colleges and universities since the

1970s. The former Host Communications (also now a division of IMG College) was on the forefront of

representing colleges and universities for their broad

casting rights. These and ot

her industry players,

including Learfield, CBS College Sports, ISP (now absorbed into IMG College), and Nelligan Sports

Marketing, have also been retained by collegiate institutions to develop, manage, and sell their

sponsorship programs, because so many o

f these partnerships are driven in large part by

media/advertising sales. In most cases, one outside firm may handle all three areas of assets for the

college or university.

These consulting arrangements typically provide the collegiate institution with a

guar

anteed annual

cash rights fee payment (and in some cases a percentage of revenues above a certain monetary

threshold) in exchange for allowing the outside company with the rights to reap the potential monetary

benefits from the sales of the collegiat

e institution’s broadcast advertising, sponsorship packages, and

licensed products. It has historically been viewed as a win

win relationship for both parties. The focus of

colleges and universities is typically on the educational mission; hence, many athl

etic departments lack

the sales personnel and resources that one would typically find within a professional sport organization.

In the spring of 2009, Georgia Tech announced the hiring of The Aspire Group to handle ticket marketing

and sales for football a

nd men’s basketball (Lombardo & Smith, 2009). It was the first such arrangement

in college sports involving the outsourcing of ticket sales, and the publicity attendant to the

announcement suggested the ushering in of a new trend in the collegiate marketpl

ace. The same factors

that drove collegiate merchandising/licensing, and then later broadcast media and sponsorship rights, to

outsourcing have also driven the outsourcing of ticket marketing and sales

lack of expertise within the

athletic department staff

. However, in the case of outsourced ticket marketing, sales, and service, a few

additional factors appear to be driving this growth. Many universities during the recent economic

downturn have not been able to fund the significant number of new full

time p

ositions that labor

intensive proactive outbound phone sales demands. Further, the payment of commissions to sales staff

and bonuses to managers is frequently prohibited by state law. Finally, existing athletic administrative

staff invariably have their ti

me spread so thinly across multiple ticketed sports that they cannot allocate

the time necessary to recruit, train, develop, and closely manage the ticket sales staff. The arrangement

called for The Aspire Group to handle full

and partial

season ticket sa

les and group ticket sales in

exchange for expense reimbursement plus a percentage of any increase in ticket sales. Georgia Tech’s

athletic department maintains control of ticket prices and season ticket plans as well as ticket sales of

Chapter 14 – CASE STUDY

Directions: Using a word document, answer the Case Study questions with thorough

and complete sentences with proper punctuation, grammar, and sentence structure.

Ensure you FULLY answer each question. Organize neatly and nicely using 12pt

Times New Roman Font with SINGLE SPACING. Copy the questions in BOLD and

answer the questions directly under the questions.

The Outsourcing of College Ticket Sales Operations

For decades, colleges and universities have relied upon the expertise of consulting companies to handle

the development and management of their various marketing assets. For instance, industry-leading

firms such as Collegiate Licensing Corporation (now a division within IMG College) and Licensing

Resource Group have been representing the licensing interests of colleges and universities since the

1970s. The former Host Communications (also now a division of IMG College) was on the forefront of

representing colleges and universities for their broad-casting rights. These and other industry players,

including Learfield, CBS College Sports, ISP (now absorbed into IMG College), and Nelligan Sports

Marketing, have also been retained by collegiate institutions to develop, manage, and sell their

sponsorship programs, because so many of these partnerships are driven in large part by

media/advertising sales. In most cases, one outside firm may handle all three areas of assets for the

college or university.

These consulting arrangements typically provide the collegiate institution with a guar-anteed annual

cash rights fee payment (and in some cases a percentage of revenues above a certain monetary

threshold) in exchange for allowing the outside company with the rights to reap the potential monetary

benefits from the sales of the collegiate institution’s broadcast advertising, sponsorship packages, and

licensed products. It has historically been viewed as a win–win relationship for both parties. The focus of

colleges and universities is typically on the educational mission; hence, many athletic departments lack

the sales personnel and resources that one would typically find within a professional sport organization.

In the spring of 2009, Georgia Tech announced the hiring of The Aspire Group to handle ticket marketing

and sales for football and men’s basketball (Lombardo & Smith, 2009). It was the first such arrangement

in college sports involving the outsourcing of ticket sales, and the publicity attendant to the

announcement suggested the ushering in of a new trend in the collegiate marketplace. The same factors

that drove collegiate merchandising/licensing, and then later broadcast media and sponsorship rights, to

outsourcing have also driven the outsourcing of ticket marketing and sales—lack of expertise within the

athletic department staff. However, in the case of outsourced ticket marketing, sales, and service, a few

additional factors appear to be driving this growth. Many universities during the recent economic

downturn have not been able to fund the significant number of new full-time positions that labor-

intensive proactive outbound phone sales demands. Further, the payment of commissions to sales staff

and bonuses to managers is frequently prohibited by state law. Finally, existing athletic administrative

staff invariably have their time spread so thinly across multiple ticketed sports that they cannot allocate

the time necessary to recruit, train, develop, and closely manage the ticket sales staff. The arrangement

called for The Aspire Group to handle full- and partial-season ticket sales and group ticket sales in

exchange for expense reimbursement plus a percentage of any increase in ticket sales. Georgia Tech’s

athletic department maintains control of ticket prices and season ticket plans as well as ticket sales of

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