Carolyn Bivens: Change Agent at the Ladies Professional Golf Association

In 2005 when Carolyn Bivens became commissioner of the Ladies Professional Golf Association (LPGA), she was surprised to learn that 70 percent of tournaments were losing money. Many of these events hardly compensated the tour for its support. She also inherited unsigned contracts and different financial practices for different tournaments. She was also shocked to see the differences between the PGA and LPGA. At many events, women passed on the smaller women’s locker rooms and instead used the more spacious men’s locker rooms, where pots of geraniums sometimes disguised urinals. The difference between winning a PGA event and an LPGA event often approached $1 million.

Having a deficit was not an option that Bivens could live with. She moved quickly and unilaterally, bluntly telling tournament owners that they needed to pay for services rendered. In some cases, fees were raised from $15,000 to $100,000. Tournament sponsors balked at the increase and some left, including Corning Glass, which had been a sponsor of the Corning Glass tournament for more than 31 years, and McDonald’s. Corning Classic’s sponsorship dollars had declined more than 20 percent and Corning’s board chairman, Jack Benjamin, said, “We want to be part of the LPGA, but I want to make sure that everybody understands this—if the revenue side of the ledger does not match with the expense side—we cannot support the LPGA.” Even long-time partner Anheuser-Busch, sponsor of the Michelob Ultra Classic, started rethinking its sponsorship.

Bivens was described as the proverbial bull in a china shop, causing controversy since she replaced Charlie Mechem, whom players called affectively “Uncle Charlie.” Bivens maintained a vision that she could make the LPGA a model for 21st-century sports organizations. To keep the LPGA on solid financial footing, after looking at each event’s profit and losses and severing ties with long-time sponsors, she found new sponsors that were willing to pay bigger purses. For example, she secured Ginn as a sponsor for two new LPGA events and touted the real estate developer as a new partner who could offer the bigger purses that her players deserved. She even moved some long-standing tournament dates around to satisfy Ginn, causing certain long-time sponsors to question her judgment. Unfortunately, when the real estate market crashed in 2008 and 2009, Ginn foreclosed on its tournament commitments. Bivens also battled the media over control of image rights, and imposed an English-proficiency policy for the tour’s international players. She took the latter action to make the tour and its players more marketable. This action caused such an uproar that she had to rescind the policy.

She landed a 10-year deal with the Golf Channel that was worth between $3 and $4 million a year depending on the tour’s ability to get TV sponsors. Historically, the LPGA had jumped among channels, on network and cable, making it difficult to develop a fan following. She worked on improving the meager LPGA pension plan. At that time, the LPGA had no medical benefits for its members. Bivens aimed to leverage the LPGA brand by going international. She signed a 5-year broadcasting-rights tour exclusive contract with J. Golf, a South Korean TV company, for more than $4 million dollars a year. This was a major feat during the recession of 2009 when most companies dramatically cut sports marketing programs. In 2009, she traveled to India, Abu Dhabi, and Dubai to determine interest in those countries. She stated that players would have to adjust to a globetrotting schedule if that’s what it took to make the tour financially viable.

For the most part, at that time, the LPGA did not own its events. Rather, it extended contracts to third parties to host them. But in 2010, the LPGA finally established ownership of a major championship, the LPGA Championship. Unfortunately, McDonald’s then ended its sponsorship of that event and many began questioning the LPGA’s ability to raise more than $3 million to stage it. The loss of local sponsors and rising operating costs was taking a toll on LPGA tour events as well. The title sponsorship of a regular PGA tour event, such as the HP Byron Nelson or Shell Houston Open, costs $6 to $8 million annually (including a TV commitment of $3 million). Sixty-eight percent of the LPGA’s future tour events did not have sponsors, which meant that the tour’s schedule was cloaked with uncertainty. In fact, Bivens acknowledged that it was “high risk and high reward” time for the LPGA.

Adding to the LPGA’s challenge was a backlash against golf sponsorships in general at that time due to the economy. Bivens knew that companies still wanted the business opportunities that tournaments created, but with less fanfare and spectacle to avoid public backlash. At the 2009 Michelob Ultra Open at Kingsmill, Virginia, for example, Anheuser-Busch cancelled its annual champions’ dinner, which mingled past champions with Anheuser-Busch executives, because InBev, the Belgian brewer that now owns Anheuser-Busch, thought that such an expense was not needed. Even so, Bivens believed that the LPGA’s hospitality benefits would save the LPGA. The networking that occurred in the Wednesday pro-amateur rounds could not be duplicated anywhere else. “The fact that a sponsor can spend five hours with its biggest three or four customers away from the office is something that money can’t buy,” she says. The LPGA pro-ams are played in a scramble format, ensuring participants the opportunity to share their experience with their LPGA hosts. Because of these issues, in July 2009 Bivens resigned her position as commissioner of the LPGA.

Questions

• Q1: Which forces did Bivens face that supported change and which resisted change? support change:(Technology, globalization, generational differences, social networks)
• Q2: Did she use an economic or an organizational development approach to create change? Was it effective?

You received a high-yield savings account that contains $1,000,000. The account has a 7% annual interest rate and you want to take out a constant amount every year for 40 years.

1. How much would you be able to withdraw every year? Hint: the annual interest rate should be used as the discount rate in the finite time annuity formula.

2. Using Microsoft Excel, decompose your annual withdrawals into interest revenue and revenue earned from principal deduction (for example, at t=1, you get 7% x $1,000,000 in interest, and take the remaining amount from the principal – these together should equal the amount you determined in (1)). Graph interest revenue and principal revenue together, with time on the xaxis. Report the graph based on all 40 years, and only report the interest revenue and principal revenue numbers for the first 10 years.

3. Suppose you want to take out $100,000 per year. For how many years would you be able to make this exact withdrawal?

4. After your last exact withdrawal from (3), you decide to withdraw everything in your account one year later. How much money would you get from your final withdrawal?

Concert Nation] Concert Nation, INC. is a nationwide promoter of rock concerts. The president of
the company wants to develop a model to estimate the revenue of a major concert event at large venues
(such as Ford Field, Madison Square Gardens) for planning marketing strategies. The company has
collected revenue data of 32 recent large concert events. For each concert, they have also recorded the
attendance, the number of concession stands in the venue, and the Billboard chart of the artist in the
week of each event. This data is available in “Tickets”. They have two potential models that could
explain the revenue. The two competing models are:

Model A: ??????? = ?? + ???????????? + ???????????? + ??????????? + ?0123?

Model B: ??????? = ?? + ???????????? + ??????????? + ?012?

Run regression on both models. Use only the regression outputs of the two models and the original data
to answer questions 1 to 7 below.
1. [1 pt] Let’s consider the model A first. What does the result of F-test indicate?
(a) The p-value of F-test is 100.83. Thus, the model does not significantly explain the revenue.
(b) The p-value of F-test is close to zero. Thus, all independent variables in the regression model are
statistically significant.
(c) The p-value of F-test is close to zero. This indicates that at least some independent variables in the
regression model significantly explain the revenue.
(d) This indicates weak evidence of a linear relationship, because the p-value is very low.
2
2. [1 pt] If we use model A for prediction, what is the point estimate for the revenue of a concert that has
attendance of 50,000 people, 5 concession stands, and the song ranked in no. 15 in the Billboard ranking?
(a) $3.145 M
(b) $2.851 M
(c) $3.252 M
(d) $340K
3. [1 pt] What is an approximate 95% prediction interval for the concert listed in the previous question?
(a) [$2.757M, $3.533M]
(b) [$2.463M, $3.239M]
(c) [$2.368M, $3.922M]
(d) [$2.074M, $3.628M]
4. [1 pt] Which of the following statement is correct?
(a) The estimated slope for the attendance is only $59.2. This means that, when keeping everything
else the same, the revenue does not depend much on the attendance.
(b) The t-statistic associated with the slope for the attendance variable is 16.9. This means that there is
too much noise to determine if the slope is definitely positive.
(c) The p-value for the concession variable is 0.933. This means that the number of concession stands
is not a statistically significant variable to determine the revenue.
(d) The p-value for the concession variable is 0.933. This means that the number of concession stands
is a statistically significant variable to determine the revenue.
5. [1 pt] Is it appropriate to use model A as a final model to estimate the revenue of a concert?
(a) Yes. All independent variables are statistically significant.
(b) Yes, because the analysis indicates a linear relationship between revenue and attendance.
(c) No, because not all independent variables are statistically important. Thus, revision is necessary.
(d) No, because some of the slopes were negative. Thus, revision is necessary.
3
6. [1 pt] Now, consider model B. According to model B, what is a point estimate for a concert that has
attendance of 50000 people, 5 concession stands, and the song ranked in no. 15 in the Billboard ranking?
(a) $3.147M
(b) $2.839M
(c) $7.139M
(d) $13.637M
7. [1 pt] Based on the regression outputs, which model would you consider more suitable for predicting the
revenue between the two models– Model A and Model B?
(a) Model A is more suitable, because it has a higher ?2, lower standard error of the estimates
(??), and lower F-test p-value.
(b) Model A is more suitable because the fraction of SST accounted for by the residuals is higher than
for model B.
(c) Model B is more suitable, because, while both models have similar ?2 and F-test p-value, model B
has lower standard error of the estimates (??) and all independent variables are statistically
significant.
(d) Model B is more suitable, because the slope coefficient is larger in magnitude.

Your company, VZ, is evaluating the proposal of replacing one of its old cell phone towers with one with built-in new technology and GPS supporting system. The old tower has a book value of $600,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old tower in 5 years, but it can be sold today to another wireless provider today for $265,000. The old system is being depreciated toward a zero salvage value by $120,000 using straight line method. The new system has a purchase price of $1,175,000, an estimated useful life and MACRS class life of five years, and an estimated market value of $145,000 at the end of five years. The new towers is expected to allow VZ obtain additional customers to increase its revenue by $230,000 per year and also reduce cost due to maintenance, compensating customers for dropped calls which save an additional $25,000 annually. Verizon’s marginal tax rate is 36%.

1. What is the investment outlay of the system for capital budgeting purposes?

2. Calculate the annual depreciation allowances for both machines, and compute the change in the annual depreciation expense if the replacement is made.

3. What are the incremental operating cash flows in Year 1 through 5?

4. What is the terminal cash flow in Year 5?

5. If the project’s required rate of return is 12%, should the project be pursued? What if the required rate of return is 18%? What if the required rate of return is 8%?

6. In general, how would each of the following factors affect the investment decision and how should each be treated?

   1. The expected life of the existing machine decreases?

   2. The required rate of return is not constant but is increasing as VZ adds more projects into its capital budget?

On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances:

The following information is available on January 31, 2018.

Unpaid utilities for the month of January are $7,000.

Supplies at the end of January total $5,900.

Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a service life of three years and a residual value of $10,800.

Accrued income taxes at the end of January are $2,800.

I need help preparing the closing statements for revenue, closing statement for expenses and closing statement for dividends

Bridgeport Corp. uses a periodic inventory system reports the following for the month of June.

A sale of 388 units occurred on June 15 for a selling price of $8 and a sale of 50 units on June 27 for $9.

Calculate the average cost per unit, using a perpetual inventory system. (Round answers to 3 decimal places, e.g. 5.125.)

Calculate cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 388 units occurred on June 15 for a selling price of $8 and a sale of 50 units on June 27 for $9. (Round answers to 0 decimal places, e.g. 125.)

A researcher is looking at the relationships between age and the number of instances of shoplifting. Use the data below to establish hypotheses and calculate the correlation for the relationship between age and shoplifting. State and explain your decision with regard to whether the H₀ is ultimately rejected or accepted.

1.

Based on the following payoff table, answer the following:

The maximin strategy is:

Group of answer choices

A) Buy.

B) Rent.

C) Lease.

D) High.

E) Low.

2.

A manufacturing firm has three plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:

How many demand nodes are present in this problem?

Group of answer choices

A) 1

B) 2

C) 3

D) 4

E) 5

3.

A manufacturing firm has three plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:

How many arcs will the network have?

Group of answer choices

A) 3

B) 4

C) 7

D) 12

E) 15

4.

A manufacturing firm has three plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:

Note: This question requires Solver.

Formulate the problem in Solver and find the optimal solution. What is the optimal quantity to ship from Factory A to Customer 2?

Group of answer choices

A) 25 units

B) 50 units

C) 75 units

D) 100 units

E) 125 units

5.

A manufacturing firm has three plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:

Which type of network optimization problem is used to solve this problem?

Group of answer choices

A) Maximum-Cost Flow problem

B) Minimum-Cost Flow problem

C) Maximum Flow Problem

D) Minimum Flow Problem

E) Shortest Path Problem

308 Chapter 11 CASE STUDYCase stUDYCollege and professional sports are economy boosters for their host cities. The stream of revenue to the local economy generated by excited fans comes from the sale of tickets, hotel room rentals, car rentals, restaurant meals served, gasoline sales, park-ing fees, and vendor sales. The sales become even greater when a team is winning.Cities such as Lincoln, Nebraska; Columbus, Ohio; Tallahassee, Florida; and Baton Rouge, Louisiana count on the revenue generated by sell-out crowds during the college football season. Stadiums that hold from 82,000 to 102,000 fans provide an eco-nomic windfall for the college com-munities where they are located.Some fans of professional sports teams, such as the Chicago Cubs and Green Bay Packers, are loyal no mat-ter how well their team is performing. These faithful fans provide a steady flow of revenue to the sports program and surrounding communities.College World Series Wars?Cities that host major sporting events understand the financial benefits. Omaha, Nebraska, appreciates the millions of dollars poured into the city during the annual College World Series. Zesto’s, a popular fast-food restaurant, has truckloads of food rolling in each day to meet the demands of customers from all over the United States.The event has been voted the Best Annual Local Event and ranks as the third-most important state tourist attraction, according to a survey conducted by Omaha Magazine. The revenue from this two-week event has attracted the attention of other cities, such as Oklahoma City, that would like the opportunity to host the event in the future. Economic experts estimate that the College World Series generates more than $40 million for the Omaha economy. It is no wonder that other cities would like to host thisevent.Omaha tore down Rosenblatt Stadium, the former home of the College World Series, to build the new $131-million TD Ameritrade Park Omaha that has 24,505 seats. Omaha must continue to demonstrate top-notch hospitality so that the College World Series event planners continue to choose Omaha as its host city.Think Critically

1. Why is it important for Omaha to continue hosting the College World Series? Consider both financial and nonfinancial benefits.

2. What are some of the greatest sources of revenue for cities that are home to popular college and professional sports teams?

3. How can hosting a major event like the College World Series help a city develop a national image? Explain your answer.

4. List ten good food items for ven-dors to sell at the College World Series

REGRESSION. The length of a species of fish is to be represented as a function of the age (measured in days) and water temperature (degrees Celsius). The fish are kept in tanks at 25, 27, 29 and 31 degrees Celsius. After birth, a test specimen is chosen at random every 14 days and its length measured. The dataset is presented below. What is the estimated regression equation?

Part 2

1.       REGRESSION. Which variable is the response variable?

Part 3

1.       REGRESSION. Is there evidence of collinearity between the independent variables?

Part 4

1.       REGRESSION. What proportion of the variation in the response variable is explained by the regression?

Part 5

1.       REGRESSION. The F statistic indicates that:

Part 6

1.       REGRESSION. The t-test of significance indicates that:

Part 7

1.       REGRESSION. The t-test of significance indicates that (same question but choose the correct answer):

Part 8

1.       REGRESSION. Assuming you ran the regression correctly, plot the residuals (against Y-hat). The plot shows that:

Part 9

1.       REGRESSION. Which of the following types of transformation may be appropriate given the shape of the residual plot?

Part 10

1.       REGRESSION. This type of dataset is best described as a ____ and a residual problem common with this type of data is ___