BSOP330 Week 2 southwestern case study

Forecasting Problem

Discussion Questions

1. Develop
a forecasting model, justifying its selection over other techniques, and
project attendance through 2007.
2. What revenues are to be expected in 2006 and
2007?
3. Discuss
the school’s options.

Case Study (Southwestern
University)

Southwestern University (SWU), a large state college in Stephenville, Texas,
enrolls close to 20,000 students. The school is a dominant force in the small
city, with more students during fall and spring than permanent residents. Always
a football powerhouse, SWU is usually in the top 20 in college football
rankings.

Since the legendary Bo Pitterno was hired as its
head coach in 1999 (in hopes of reaching the elusive number 1 ranking), attendance
at the five Saturday home games each year has increased. Prior to Pitterno’s
arrival, attendance generally averaged 25,000 to 29,000 per game. Season ticket
sales bumped up by 10,000 with just the announcement of the new coach’s
arrival. Stephenville and SWU were ready to move to “the big time!”

The immediate issue facing SWU, however, was
not NCAA ranking. It was capacity. The existing SWU stadium, built in 1953, has
seating for 54,000 fans. The table below indicates attendance at each game for
the past six years.

One of Pitterno’s demands upon joining SWU
had been a stadium expansion, or possibly even a new stadium. With attendance increasing,
SWU administrators began to face the issue head-on.

Pitterno had wanted dormitories solely for
his athletes in the stadium as an additional feature of any expansion.

SWU’s president, Dr. Joel Wisner, decided it
was time for his vice president of development to forecast when the existing
stadium would “max out.” The expansion was, in his mind, a given. But
Wisner needed to know how long he could wait. He also sought a revenue
projection, assuming an average ticket price of $30 in 2006 and a 10% increase
each year in future prices.

Southwestern University Football Game Attendance, 2000-2005

2000
GAME

ATTENDEES OPPONENT

1 37,100
Baylor
2a 41,600 Texas
3 39,400
LSU
4b 25,200
Arkansas
5 37,100
USC

2001
GAME

ATTENDEES OPPONENT

1 36,200 Oklahoma
2a 41,300
Nebraska
3 38,500
UCLA
4b 24,300 Nevada
5 37,200
Ohio
State

2002
GAME

ATTENDEES OPPONENT

1 34,700
TCU
2a 47,800
Texas
Tech
3 42,100
Alaska
4b 26,400
Arizona
5 38,500
Rice

2003
GAME

ATTENDEES OPPONENT

1 42,700 Arkansas
2a 48,100
Missouri
3 44,600
Florida
4b 29,200
Miami
5 41,300
Duke

2004
GAME

ATTENDEES OPPONENT

1 43,600
Indiana

2a 49,100
North
Texas
3 45,300
Texas
A&M
4b 32,700
Southern
5 48,600
Oklahoma

2005
GAME

ATTENDEES OPPONENT

1 47,400
LSU
2a 51,200
Texas
3 46,500
Prairie
View A&M
4b 35,200
Montana
5 48,700
Arizona
State

(a) Refer to Homecoming games.
(b) During the fourth week of each season,
Stephenville hosted a hugely popular Southwestern crafts festival. This event brought
tens of thousands of tourists to the town, especially on weekends, and had an
obvious negative impact on game attendance.