Katie Wilson 1

Executive Summary
The Noreasters are a new minor league baseball team whose first season will begin in about
a year and a half. Larry Buckingham has been tasked with creating a pricing strategy for tickets, as
well as taking care of the other marketing needs of the team. He has many factors he needs to
consider as he creates his pricing strategy, including the following:

Springfield has a minor league hockey team that is threatening to leave because they
cannot sale enough season tickets.

Springfield residents have a median income of $31,046, which means they do not
necessarily have a lot of extra money to spend. However, Springfield is starting to
experience some growth with many entrepreneurs, financial organizations, and health
organizations moving to the area.

From his research, Larry knows more than half of the teams revenue may have to
come from ads and concession sales. However, to have strong concession sales, he
must have solid ticket sales.

His manager, Jimmy Mercante, wants to break even in the teams first year.

This analysis will cover the issues Larry faces as he creates his pricing strategy; the important
results he needs to consider from the survey he sent; what pricing strategy he should implement for
the Noreasters and why; and what he can do to break even in the first year. This analysis will also
recommend that Larry implement a fair pricing strategy that is not too high it turns people away
from events, but is not too low that the Noreasters cant make a profit. It will recommend that
Larry markets to families because this is the market that is most likely to come to games and buy
items at the concession stands. Finally, it will recommend that Larry gets businesses around the area
to purchase several ads because currently there is a small chance that he will have the strong ticket
sales he needs to break even in the first year.

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Analysis of the Noreasters and Their Pricing Strategy

Larry Buckingham has many challenges facing him as he tries to create a pricing strategy for
the Springfield Noreasters. To better figure out his pricing strategy, he utilized secondary research
from the League Sports Association; however, this research applied to both major and minor league
teams, so he decided to do his own primary research to better understand the city where the
Noreasters will play. Larry knew he had to collect the right data because a minor league hockey
team was also threatening to leave Springfield if they did not sale more tickets. Larry knew he
needed this primary survey information to better analyze who would be willing to come to the
games and how much they would be willing to pay. To develop the survey, he talked to his
equivalents at other minor league teams. He focused on how these teams generated revenue so he
would better know what to ask on his survey. Once he had developed the survey, he sent it through
a pretest to see how he could better ask the questions to improve responses.
He bought mailing lists from the Springfield census and from four sports-related
organizations in Springfield. He got a random sample of the names in the database for each. He sent
out 10,000 surveys and received 625 responses. Overall, Larry felt the respondent characteristics
were fairly representative of the Springfield market (page 318 1 ). The most significant findings from
the survey were as follows:

Of the people who will attend a game, 21% (the highest percentage) are willing to
attend one game, and 11% (the next highest percentage) would consider a 5-game
package.

When it comes to paying for one game, 31% are willing to pay $10, 27% are willing
to pay $12, and 22% are willing to pay $14. This is important because the highest

All page references come from The Springfield Noreasters: Maximizing Revenues in the Minor Leagues case study
in Duke, McGraw-Hill Customized Text with cases.

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percentage of respondents is willing to pay $10 or more, which means that the
Noreasters could comfortably charge more for one game.

Those who would purchase a 5-game ticket package are willing to pay between $10
and $12.

48% are willing to pay 10% more for grandstand seats over bleacher seats.

Finally, the majority of respondents (66%) have children living with them.

When establishing a pricing policy, there are several important factors to consider. The first
is that there is currently another minor league team that is considering leaving Springfield because
they are not selling enough season tickets; in fact, they need to sell 300 or more season tickets for
the team to remain viable in Springfield. This could impact the Noreasters as well, especially since in
the survey, respondents were more willing to buy single or 5-game tickets over full-season tickets.
While they want to be aggressive with their pricing to make a profit, the Noreasters also need to
keep in mind that currently Springfield does not have the richest population and many have to be
cautious of the money they spend. However, 60% of the population has families and many of these
families are active in little leagues; this group of people will be more likely to attend a game.
Springfield is also showing signs of growth with several small businesses, entrepreneurs, and health
care and financial industries moving into the area, which could be a good sign for the Noreasters
advertising sales.
When creating the pricing strategy, there are two quotes to keep in mind:
Most of the marketing directors emphasized the need to price seats on par with the
competitionmovies, bowling, other sporting events. (page 316)
Our prices should be high enough so that anyone who can and will pay a lot to
attend will do so. At the same time, anyone who really wants to come shouldnt be
put off by what they perceive as too-high prices. (page 318)

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Based off the above information, Larry should implement the following ticket price options. Larry
should offer both bleacher and grandstand seating options for single and 5-game tickets. He should
do this because 48% of respondents said they were willing to pay 10% more for grandstand over
bleacher seating. For 5-game tickets, the higher percentage of people were willing to pay between
$10-$12; since the Noreasters still need to make a profit, Larry can make 5-game tickets $12 for
grandstand and $10 for bleachers. Larry should offer 5-game tickets for bleacher seats because they
arent as comfortable as grandstand; however, they could offer an option for those who want to save
money but want to attend more than one game. He can make 20-game tickets $10 for grandstand
since the majority was willing to pay between $8-$10. He can make the full-season tickets $6 per
game for grandstand seats. He should charge $6 per game for season tickets because most people
were willing to pay between $4-$8. Based on the lower level of interest in season tickets, it is better
to go significantly lower than the 20-game tickets to draw more people to these tickets, but not go
too low that they cant be profitable. Finally, for single game tickets, he should charge $14 for
grandstand and $12 for bleacher seats. Most respondents were willing to pay at or above $10, but
since Larry wants to encourage season or multi-game ticket sales, he should charge the maximum
people are willing to pay for a single game ticket. (See the Appendix for the Pricing Chart.)
Larry also received good advice from his counterparts who suggested catering to families
and little leagues. When looking at prices for other minor league teams, it appeared that offering
group rates (that discounted by $2 or more) was an important strategy for minor league teams. To
account for these groups, he should create a birthday group, a little league group, and a regular
group set of tickets. He should charge $18 per person for birthday and little league groups because
food will be provided so parents wont have to leave to get food for a bunch of kids (though they
can still buy other concession items). These groups could use either the Birthday Party Zone or the
Family Section. For the regular group tickets, he should offer a $2 discount from the $14 tickets.

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This is on par with the 5-game tickets and encourages people to bring 10 or more people to the
game. They would also have access to grandstand seats.
Based on the expenses and revenues calculations provided in the Appendix, Larry can
assume there is a slim possibility that the Noreasters will break even in the first year. If they sold
only the highest priced tickets and sold out every game, they could break even from ticket sales
alone; however, based on the troubles the minor league hockey team is having, it is very unlikely
they will be able to sellout every game. If they sold 75% of seats at full price every game, they would
still break even; however, if they sell less than 75% of seats every game, they will have to rely heavily
on ad sales and concession sales to break even their first year. To break even, the Noreasters will
have to use clever and aggressive marketing to get people to the games. This includes pushing
family-friendly events and their group rates. They need to make it the place for families and groups
to go any night of the week. Larry should focus on families because they will probably be the
majority of who comes to the games and the Noreasters need to utilize this market.
Larry could also enhance the teams relationships with the local businesses coming into
town. The case mentions that several entrepreneurs, healthcare businesses, and financial businesses
have started coming to the area. If he can get them to buy more ads for an aggressive cost, this
could substantially help the revenues they bring in. He could also consider getting these businesses
to purchase group tickets for their companies. From the case, it didnt sound like these were
necessarily big businesses, so group ticket rates could be very viable for these businesses.
Considering the troubles of the city, Larry should focus on enhancing ad and concession
sales as much as possible since tickets sales may not be very strong. He should also create events
that get families to the games since they have the best potential for attending games and buying
concession items while theyre there. If he can get this market and get them to buy concession items
while theyre there, he can increase the teams chances of breaking even.

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Appendix: Pricing Chart

Grandstand (all prices represent costs per game)
Cost per Ticket
Type of
Ticket
Single
Ticket
5-game
20-game
half-season
38-game
season

$6

$8

$10

$12

$14
X

X
X
X

Bleachers (all prices represent costs per game)

Cost per Ticket
Type of Ticket

$10

Single Ticket
5-game

$12
X

Extra Promotions
Promotions
Birthday
Party Zone

Cost
$18/person

Little
League
Teams

$18/person

Group
Tickets

$12/person

Notes
Includes food, drinks, and a
special visit from the team
mascot and two players
Includes food, autographed
souvenirs from the team, a
visit from the mascot, and an
introduction of the team on
the field
Valid for groups of 10 or
more

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Appendix: Expenses and Potential Revenues

Expenses
Fixed Expenses (excludes costs
covered by the major league)
Mailings
Cost of lists (estimated)
Total

$1,051,879
$3,800
$680
$1,056,359

Revenues if the Nor'easters sold out

every game
Sold out bleachers at
$24,000
full price (per game)
Sold out grandstand
at full price (per
game)
Total (per game)
Total for the full
season

$22,400

$46,400
$1,763,200

To break even

If Nor'easters sold 75% of seats

Sold 1,500 bleacher
seats per game (full
price)

$18,000

Sold 1,200
grandstand seats per
game (full price)

$21,000

Total per game

Total for season
To break even

$39,000
$1,482,000
0

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If Nor'easters sold 50% of seats
Sold 1,000 bleacher
seats per game (full
price)

$12,000

Sold 800 grandstand

seats per game (full
price)

$11,200

Total per game

Total for the season

$23,200
$881,600

To break even
(would need the
following from
concessions and
ads)

$174,759

If they sold 21% of seats (based on

survey data)
Sold 420 bleacher
seats per game (full
price)
Sold 336 grandstand
seats per game (full
price)
Total per game

$5,040
$4,704

$9,744

Total for full season

$370,272

To break even
(would need the
following from
concessions and
ads)

$686,087