Calculate the expected value and the net gain for event A with new probability of 0.3 for being awarded the event and compare the new outcome for Event A with outcome of Event B. What would your recommendation to the executive be now?

Question - calculate the expected value and net gain for Event A with new probability of 0.3 for being awarded the event and compare the new outcome for Event A with the outcome of Event B from previous assignment? what would your recommendation to the executive now?

Moments PAGE CTE 2 $10,000 .9 awarded 3 $60,000 Eventa o cost of bidding $200.000 Probability, of being Cost of hosting $1,000,000 Peobability of hosting success financial benefit expected $50,000,000 @ financial benefit expected $38,000,000 .7 .9 $ 3,750,000 by an excellent Event $1,600,000 by an mediocie Event 2018 Human Kinetics, Inc grow strengthen the awareness of the city as a convention and visitor destination, attracting individuals, families and businesses from around the world to increase revenue and stimulate economic development and for the community As the sport marketing manager with the local sports commission, you search for alternative events to bring to the city and you come across Event A and Event B, both of which will accept proposals/bids for hosting rights in the near future. Jeffersonville has the facilities and support structure to support pursuit of either event. Event A: Girls Volleyball Junior National Championships This annual event includes over 1,200 teams competing across 5 divisions and multiple age groups. The event draws approximately 18,000 participants and up to 30,000 spectators from across the nation. The event requires 4 move-in days, 10 days of competition, and 1 move-out day. Historically, the event has been held in late-June to early-July and the average stay per team is 4.5 nights. Based on data shared by previous host organizations, the economic impact on the host city is in excess of $50 million. It is important to note that this high-profile event has garnered great interest from cities across the country and has been hosted by much larger cities in recent years, both of which may decrease the likelihood of a successful bid for the city of Jeffersonville. Jeffersonville meets or exceeds all requirements of the RFP, though larger cities often have greater resources and amenities to offer potential RHOs and their respective events. Therefore, submitting a proposal to host Event A would require a particular emphasis on the unique advantages of Jeffersonville as a host for the event. Event B: State High School Coaches Association Convention The flagship event of the coaches' association takes place annually during the summer. Nearly 2,000 high school coaches from a variety of sports, athletic directors, and administrators attend this two-day event, along with approximately 80 exhibitors and sponsors. The convention kicks off with a golf scramble the day prior held at a local golf course with approximately 250 participants. Securing a central location within the state for their convention is an important consideration for the coaches' association. Jeffersonville has hosted this event successfully several times and has become a trusted host city for the State High School Coaches Association Convention. Due to current budget constraints, you must identify the best event to pursue, if any. Your initial reaction may be to pursue the more prestigious event, but a prestigious event does not automatically translate into increased profits for all stakeholders. On the other hand, your initial reaction may be to pursue the smaller event where you perceive the greatest likelihood of being awarded the event even though it may not provide the recognition to help attract larger events in the future. There are a number of factors at play and there is no simple solution. The sport marketing manager is best served to utilize a strategic approach to examine the available data and make a recommendation regarding which event to pursue. In order to compare the possible outcomes of bidding and hosting alternative sporting events and not bidding for an event at all, you decided to use a decision tree model as a tool. Prior to constructing the decision tree, you identified the cost of bidding for Event A and Event B, the probability of being awarded Event A and Event B, the cost of hosting Event A and Event B, the probability of an excellent event execution for Event A and Event B, and the estimated financial benefit resulting from an excellent event and a mediocre event for Event A and Event B. All the necessary information is provided in the payoff table (see Table 1). Table 1: Payoff Table for Bidding and Hosting Sporting Events Event A Event B $200,000 $10,000 Cost of bidding Page 4 of 6 Use of Decision Tree Model in Sport Management SAGE businesscases Probability of being awarded .1 .9 Cost of hosting $1,000,000 $60,000 Probability of hosting successfully .7 .9 Financial benefit expected by an excellent event (including revenue for the convention center and economic impact for the city) $50,000,000 $3,750,000 Financial benefit expected by a mediocre event (including revenue for the $38,000,000 $1,600,000 convention center and economic impact for the city) The probabilities are subjective and are established based on industry knowledge and experience, as well as case-specific industry research. In this instance, Event A is a large, national event with strong anticipated economic impact for the host community. Therefore, it historically attracts a number of proposals from across the country each year. Due to the competition and other factors presented previously, the probability of being awarded Event A is 1. On the other hand, Event B is a smaller, state-based event which limits the number of possible host cities. In addition to the reduced competition, Jeffersonville has successfully hosted Event B several times previously, has an established relationship with the coaches association, and the city is centrally located in the state, which is important to the event organizers. Therefore, the probability of being awarded Event B is.9. Additional issues may be taken into consideration when establishing the probabilities for hosting each event successfully. For Event A, Jeffersonville meets all the requirements as outlined in the RFP, meaning the city has the infrastructure and resources needed to host the event. However, as this would be a new event for Jeffersonville there may be unanticipated challenges and expenses that impact the probability of success. For Event B, Jeffersonville not only offers the infrastructure and resources needed to host the event, but, most importantly, has a proven track record of successfully hosting Event B. Therefore, the probabilities for hosting each event successfully have been established at.7 for Event A and .9 for Event B. In order to help the executives from the sports commission and convention center make a decision on which Sporting event to pursue, if any, please perform the following by using the information provided in the pay-off table for the bidding and hosting sporting events: 1. 2. Construct a decision tree as the sport marketing manager of the local sports commission and convention and visitors bureau (CVB) for Jeffersonville. Compare the three alternatives (Event A, Event B, or not bidding for any event) for their expected values and net gains. 3. . Prepare your recommendation to the executives from the sports commission and convention center and be prepared to explain your decision tree model and the preferred choice. Discussion Activities/Questions 1 Calculate the expected value and the net gain for Event A with the new probability of .3 for being awarded the event, and compare the new outcome for Event A with the outcome of Event B from previous assignment. Page 5 of 6 Use of Decision Tree Model in Sport Management SAGE businesscases