Tennessee Titans Value Chain Analysis
Business Finance
The Tennessee Titans are a Class AA baseball team and farm club for the Atlanta Braves. The Titans’ league consists of eight teams that are all located within a 150-mile radius of Nashville. The Titans ranked sixth of eight last year but have high hopes for the coming season in part because of the acquisition at the end of the last season of a great new pitcher, Don Johnson. Don had the second-best ERA last season.
Johnson is also a popular player, seen frequently in the community, using his humor and occasionally outrageous behavior to develop a local fan club called the “DJs.” None of the other players come close to Don in popularity. Head Coach Bill Belcher, a 15-year veteran of the Titans, is optimistic for the coming season, noting the team’s luck has “got to change.” The Titans have had only two winning seasons in the last 10 years.
The Nashville baseball park is somewhat typical of AA parks, though somewhat older and a bit smaller. It serves a variety of soda, beer, and nachos to its fans on game days. Also, in a 150-mile radius of Nashville are three NASCAR venues, two outdoor concert venues, 12 colleges with competitive sports teams, one major league football team, and one major league basketball team. There is no major league baseball team.
Martin Barns, the consultant for the Tennessee Titans, has been asked to complete a value-chain analysis of the franchise with a particular focus on a comparison with a nearby competing team, the Memphis Bulls. Martin has been able to collect selected cost data as follows for each of the six steps in the value chain. Single-ticket prices range from $4.50 to $8.00, and average paying attendance is approximately 2,200 for Nashville and 3,400 for Memphis.
|
Tennessee Titans |
Activities in the Value Chain |
Memphis Bulls |
|---|---|---|
|
$0.45 |
Advertising and general promotion expenses |
$0.50 |
|
0.28 |
Ticket sales: At local sporting goods stores and the ballpark |
0.25 |
|
0.65 |
Ballpark operations |
0.80 |
|
0.23 |
Management compensation |
0.18 |
|
0.95 |
Players’ salaries |
1.05 |
|
0.20 |
Game-day operations: security, special entertainment, and game-day promotions |
0.65 |
|
$2.76 |
Total cost |
$3.43 |
- Provide a brief (2-3 paragraphs) background and history of baseball farm clubs, from a business perspective, and their relationship to the major leagues.
- Analyze the value chain to help Martin better understand the nature of the competition between the Titans and the Bulls and to identify and recommend opportunities for adding value and/or reducing cost at each activity.
- Referring to the information provided, regarding the Tennessee Titans, prepare a SWOT analysis for the Titans.
- Referring to the information provided, regarding the Tennessee Titans, prepare a balanced scorecard for the Titans
