Southwestern University (SWU), a large state college in Stephenville, Texas, enr
ID: 359632 • Letter: S
Question
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 ranking. Since the legendary Phil Flamm was hired as its head coach in 2009 (in hopes of reaching the elusive number 1 ranking), attendance at the five Saturday home games each year increased. Prior to Flamm’s arrival, attendance generally averaged 25,000 to 29,000 per game. Season tickets also bumped up by 10,000 just with 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 following table indicates attendance at each game for the past 6 years.
One of Flamm’s demands upon joining SWU had been a stadium expansion, or possibly a new stadium. With attendance increasing, SWU administrators began to face the issue head-on. Flamm 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 “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 $50 in 2016 and a 5% increase each year in future prices.
2010
2011
2012
Game
Attendees
Opponent
Attendees
Opponent
Attendees
Opponent
1
34,200
Rice
36,100
Miami
35,900
USC
2a
39,800
Texas
40,200
Nebraska
46,500
Texas Tech
3
38,200
Duke
39,100
Ohio St.
43,100
Alaska
4b
26,900
Arkansas
25,300
Nevada
27,900
Arizona
5
35,100
TCU
36,200
Boise St.
39,200
Baylor
2013
2014
2015
Game
Attendees
Opponent
Attendees
Opponent
Attendees
Opponent
1
41,900
Arkansas
42,500
Indiana
46,900
LSU
2a
46,100
Missouri
48,200
N. Texas
50,100
Texas
3
43,900
Florida
44,200
Texas A&M
35,900
S. Florida
4b
30,100
C. Florida
33,900
Southern
36,300
Montana
5
40,500
LSU
47,800
Oklahoma
49,900
Arizona St.
Discussion Questions
Develop a forecasting model, justifying its selection over other techniques and project attendance through 2017.
What revenues are to be expected in 2016 and 2017.
Discuss the school’s options.
2010
2011
2012
Game
Attendees
Opponent
Attendees
Opponent
Attendees
Opponent
1
34,200
Rice
36,100
Miami
35,900
USC
2a
39,800
Texas
40,200
Nebraska
46,500
Texas Tech
3
38,200
Duke
39,100
Ohio St.
43,100
Alaska
4b
26,900
Arkansas
25,300
Nevada
27,900
Arizona
5
35,100
TCU
36,200
Boise St.
39,200
Baylor
2013
2014
2015
Game
Attendees
Opponent
Attendees
Opponent
Attendees
Opponent
1
41,900
Arkansas
42,500
Indiana
46,900
LSU
2a
46,100
Missouri
48,200
N. Texas
50,100
Texas
3
43,900
Florida
44,200
Texas A&M
35,900
S. Florida
4b
30,100
C. Florida
33,900
Southern
36,300
Montana
5
40,500
LSU
47,800
Oklahoma
49,900
Arizona St.
Explanation / Answer
Answer:
1) There could be various multiple forecasting models and could stretch out into unpredictability like anything. However since every such model would require sources of info and points of interest which would be significantly more than the ones gave underneath, we need to fulfill our self with some somewhat straightforward multiple forecasting technique with little yet practical suspicions.We assume that in 2017 the stadium would be 80% occupied since it would be new hence the craziness but the shows would be limited due to limited popularity and hence the 8% benchmark. On the other hand we assume a 10% increase in occupancy on account of increased popularity and better shows played over there. The strength is unknown from details provide below and for this forecasting needs we assume it to be 20,000 seating capacity.
2) Hence in 2016 it is expected to clock revenues of $ ((20,000 * .80)*50) = $800,000. Similarly in 2017 a revenue of $((20,000*.90)*(50*.05)) = $945,000 is expected to be clocked.
3) The scenario is not very clear as to in which regard the option is being asked for but we assume it is regarding the expansion. In light of the circumstance and likelihood presented we feel that the expansion could wait for a year to two before initialing the same and that too without loss of revenues for it. This is so because we see that the occupancy would be less in initial years and hence even with expanded capacity in all likelihood revenues could not be drawn from it.
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