Westlake Eagles is a NBDL (National Basketball Development League) team in Westlake, Ohio (a city with...

Westlake Eagles is a NBDL (National Basketball Development League) team in Westlake, Ohio (a city with population of 107,000). It is one of sixteen teams with close affiliation to NBA. With about 400 season ticket holders currently, the team is considering expansion to the Lakefront market (pop. 200,000), which is next door to the city of Westlake. The objective of such a move is to acquire more season ticket holders from Lakefront, which is traditionally considered a market of Cavaliers in Cleveland, an NBA team. With location convenience and much lower prices, as well as a more intimate court experience, Westlake Eagles believe that they are not competing with Cavaliers and have a lot to offer to the Lakefront market.

A team of marketing researchers has collected some information for this decision:

Average population of Westlake, Erie, Portland (Maine), Des Moines, and other home cities of NBDL is around 80,000
Average number of season ticket holder of the sixteen teams is 250.
They estimated that to capture a market like the size of Lakefront, the fixed cost is likely to be $100,000 (salary+ marketing budget).
The average game attendance of a NBDL game is roughly 5,600.
Of the 400 season ticket holders, the most popular price levels are Basic ($125) and VIP ($300). The ratio of the two is around 6 to 1.

The variable cost per season ticket holder is $50 for Basic level and $100 for VIP level.

Question 1:

a. What is the market penetration rate per 1000 of population for Westlake season ticket holders? (number of season ticket holders/population in 1000).

b.What is the weighted average price for season ticket at Westlake Eagles?

c. What is the weighted variable cost of season tickets with Westlake Eagles?

d. How many season ticket holders does Westlake Eagles have to acquire from Lakefront in order to break even?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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