Use of Decision Tree Model in Sport Management
\nCase
\nAuthor: Cevda Mumcu & Kimberly Mahoney
\nOnline Pub Date: January 15, 2020 | Original Pub. Date: 2018
\nSubject: Decision Analysis, Events Management
\nLevel: | Type: Indirect case | Length: 1718
\nCopyright: \u00a9 2018 Human Kinetics, Inc.
\nOrganization: | Organization size: Small
\nRegion: Northern America | State:
\nIndustry: Advertising and market research| Sports activities and amusement and recreation activities
\nOriginally Published in:
\nMumcu, C. , & Mahoney, K. ( 2018). Use of decision tree model in sport management. Case Studies in
\nSport Management, 7 (1), 1\u2013 3.
\nPublisher: Human Kinetics, Inc.
\nDOI: http:\/\/dx.doi.org\/10.1123\/cssm.2017-0036 | Online ISBN: 9781529706819
\n\u00a9 2018 Human Kinetics, Inc.
\nThis case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion
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\nhttp:\/\/dx.doi.org\/10.1123\/cssm.2017-0036
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\nPage 2 of 6 Use of Decision Tree Model in Sport Management
\nAbstract
\nWhen individuals need to make a decision, they often face alternatives and some uncertainty.
\nIdentifying alternatives and anticipating outcomes in a systematic way provides value in better
\ndecision-making. Decision trees help to clarify the choices, risks, monetary gains, and other
\ninformation involved in the decision. As a result, managers can make an informed decision when
\nchoosing the alternative that provides the best net gain and whether the net gain is worthwhile to
\npursue. As such, this case presents a scenario in which the sport marketing manager of the local
\nsports commission is working with the convention center to bring a sporting event to the city in
\norder to enhance the city\u2019s image and generate positive economic impact. The manager is faced
\nwith evaluating three alternatives (Event A, Event B, or neither) and making a recommendation
\nto the sports commission and convention center executives regarding which event to pursue, if
\nany. This case provides an opportunity for students to practice using this strategic management
\ntool to Help in systematic decision-making while investigating the event bidding process.
\nCase
\nKeywords : decision trees, event management, strategic management, systematic decision making
\nAs the sport marketing manager of the local sports commission (an arm of the local convention and visitors
\nbureau) in Jeffersonville, U.S., you have been asked to work with the convention center to bring a sporting
\nevent to the area in order to enhance the city\u2019s image and generate additional revenue in the community. This
\nMidwestern city has a diverse metro population of just over 2 million people with a median household income
\nof $43,850. Jeffersonville is centrally located within the state and within the region. The city offers over 4,500
\nhotel rooms in the downtown area and an amazing food scene. There is both vibrant nightlife and numerous
\nfamily activities in the area. The city is home to a minor league baseball team and an NBA team, as well as
\na number of colleges and universities in the area. The city has a history of hosting successful events, both
\nlarge and small, and city officials are working to enhance Jeffersonville\u2019s reputation as an event and tourism
\ndestination.
\nA convention and visitors bureau (CVB) is considered a destination marketing organization (DMO) working
\nto attract events and visitors to a community. DMOs, including CVBs, represent a specific destination and
\nhelp long-term development of communities through a travel and tourism strategy (Destinations International,
\n2017). CVBs are generally not-for-profit organizations funded by local government (often through hotel\/bed
\ntaxes). CVBs work to attract events to their city and in doing so will Help meeting and event professionals
\nwith the planning and coordination of their events. In addition, CVBs also encourage business travelers and
\nvisitors to visit local historic, cultural, and recreational sites (Destinations International, 2017).
\nIt is common for rights holders organizations (RHOs; those that own the rights to one or more events) to utilize
\na request for proposals (RFP) process to solicit proposals from potential host cities and venues (Greenwell,
\nDanzey-Bussell, & Shonk, 2014). Examples of RHOs include national sport governing bodies, the National
\nCollegiate Athletic Association (NCAA), and the National Football League (NFL), as well as smaller grassroots
\nprograms, regional organizations, or any other organization that owns events that are bid out and\/or awarded
\n(National Association of Sports Commissions, 2017). CVBs typically take the lead in preparing a proposal
\nin response to an RFP as part of their efforts to attract events to the city. Those proposals often require
\ncoordination with a number of stakeholders, including the CVB, local hotels, and facilities.
\nMany cities with a heightened focus on attracting sporting events, such as Jeffersonville, also utilize a sports
\ncommission or sports council. The sports commission may be an arm of the CVB or may be a stand-alone
\norganization, but, regardless of the structure, their function\/purpose is the same: to attract events to the
\ncity that bring visitors and positive economic impact, though the sports commission is generally focused
\non sporting events. As such, the mission statement for Jeffersonville\u2019s CVB and sports commission is to
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\nstrengthen the awareness of the city as a convention and visitor destination, attracting individuals, families,
\nand businesses from around the world to increase revenue and stimulate economic development and growth
\nfor the community.
\nAs the sport marketing manager with the local sports commission, you search for alternative events to bring to
\nthe city and you come across Event A and Event B, both of which will accept proposals\/bids for hosting rights
\nin the near future. Jeffersonville has the facilities and support structure to support pursuit of either event.
\nEvent A: Girls Volleyball Junior National Championships
\nThis annual event includes over 1,200 teams competing across 5 divisions and multiple age groups. The
\nevent draws approximately 18,000 participants and up to 30,000 spectators from across the nation. The event
\nrequires 4 move-in days, 10 days of competition, and 1 move-out day. Historically, the event has been held
\nin late-June to early-July and the average stay per team is 4.5 nights. Based on data shared by previous
\nhost organizations, the economic impact on the host city is in excess of $50 million. It is important to note
\nthat this high-profile event has garnered great interest from cities across the country and has been hosted by
\nmuch larger cities in recent years, both of which may decrease the likelihood of a successful bid for the city
\nof Jeffersonville. Jeffersonville meets or exceeds all requirements of the RFP, though larger cities often have
\ngreater resources and amenities to offer potential RHOs and their respective events. Therefore, submitting a
\nproposal to host Event A would require a particular emphasis on the unique advantages of Jeffersonville as a
\nhost for the event.
\nEvent B: State High School Coaches Association Convention
\nThe flagship event of the coaches\u2019 association takes place annually during the summer. Nearly 2,000 high
\nschool coaches from a variety of sports, athletic directors, and administrators attend this two-day event, along
\nwith approximately 80 exhibitors and sponsors. The convention kicks off with a golf scramble the day prior
\nheld at a local golf course with approximately 250 participants. Securing a central location within the state
\nfor their convention is an important consideration for the coaches\u2019 association. Jeffersonville has hosted this
\nevent successfully several times and has become a trusted host city for the State High School Coaches
\nAssociation Convention.
\nDue to current budget constraints, you must identify the best event to pursue, if any. Your initial reaction
\nmay be to pursue the more prestigious event, but a prestigious event does not automatically translate into
\nincreased profits for all stakeholders. On the other hand, your initial reaction may be to pursue the smaller
\nevent where you perceive the greatest likelihood of being awarded the event even though it may not provide
\nthe recognition to help attract larger events in the future. There are a number of factors at play and there is
\nno simple solution. The sport marketing manager is best served to utilize a strategic approach to examine the
\navailable data and make a recommendation regarding which event to pursue.
\nIn order to compare the possible outcomes of bidding and hosting alternative sporting events and not bidding
\nfor an event at all, you decided to use a decision tree model as a tool. Prior to constructing the decision tree,
\nyou identified the cost of bidding for Event A and Event B, the probability of being awarded Event A and Event
\nB, the cost of hosting Event A and Event B, the probability of an excellent event execution for Event A and
\nEvent B, and the estimated financial benefit resulting from an excellent event and a mediocre event for Event
\nA and Event B. All the necessary information is provided in the payoff table (see Table 1).
\nTable 1: Payoff Table for Bidding and Hosting Sporting Events
\nEvent A Event B
\nCost of bidding $200,000 $10,000
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\nProbability of being awarded .1 .9
\nCost of hosting $1,000,000 $60,000
\nProbability of hosting successfully .7 .9
\nFinancial benefit expected by an excellent event (including revenue for the
\nconvention center and economic impact for the city) $50,000,000 $3,750,000
\nFinancial benefit expected by a mediocre event (including revenue for the
\nconvention center and economic impact for the city) $38,000,000 $1,600,000
\nThe probabilities are subjective and are established based on industry knowledge and experience, as well
\nas case-specific industry research. In this instance, Event A is a large, national event with strong anticipated
\neconomic impact for the host community. Therefore, it historically attracts a number of proposals from across
\nthe country each year. Due to the competition and other factors presented previously, the probability of being
\nawarded Event A is .1. On the other hand, Event B is a smaller, state-based event which limits the number
\nof possible host cities. In addition to the reduced competition, Jeffersonville has successfully hosted Event B
\nseveral times previously, has an established relationship with the coaches association, and the city is centrally
\nlocated in the state, which is important to the event organizers. Therefore, the probability of being awarded
\nEvent B is .9.
\nAdditional issues may be taken into consideration when establishing the probabilities for hosting each event
\nsuccessfully. For Event A, Jeffersonville meets all the requirements as outlined in the RFP, meaning the city
\nhas the infrastructure and resources needed to host the event. However, as this would be a new event for
\nJeffersonville there may be unanticipated challenges and expenses that impact the probability of success. For
\nEvent B, Jeffersonville not only offers the infrastructure and resources needed to host the event, but, most
\nimportantly, has a proven track record of successfully hosting Event B. Therefore, the probabilities for hosting
\neach event successfully have been established at .7 for Event A and .9 for Event B.
\nIn order to help the executives from the sports commission and convention center make a decision on which
\nsporting event to pursue, if any, please perform the following by using the information provided in the pay-off
\ntable for the bidding and hosting sporting events:
\n\u2022 1.
\nConstruct a decision tree as the sport marketing manager of the local sports commission and
\nconvention and visitors bureau (CVB) for Jeffersonville.
\n\u2022 2.
\nCompare the three alternatives (Event A, Event B, or not bidding for any event) for their expected
\nvalues and net gains.
\n\u2022 3.
\nPrepare your recommendation to the executives from the sports commission and convention center
\nand be prepared to explain your decision tree model and the preferred choice.
\nDiscussion Activities\/Questions
\n\u2022 1.
\nCalculate the expected value and the net gain for Event A with the new probability of .3 for being
\nawarded the event, and compare the new outcome for Event A with the outcome of Event B from
\nprevious assignment.
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\n\u2022 2.
\nWhat would your recommendation to the executives be now?
\n\u2022 3.
\nWhat are three main take-aways from this exercise?
\nReferences
\nDestinations International. (2017). Frequently asked questions. Retrieved from
\nhttps:\/\/destinationsinternational.org\/general-information\/frequently-asked-questions
\nGreenwell, T.C. , Danzey-Bussell, L.A. , & Shonk, D.J. (2014). Managing sport events. Champaign, IL: Human
\nKinetics.
\nNational Association of Sports Commissions. (2017). Sports commissions 101. Retrieved from
\nhttps:\/\/www.sportscommissions.org\/Portals\/sportscommissions\/Documents\/About\/
\nSports%20Commissions%20101.pdf
\nhttp:\/\/dx.doi.org\/10.1123\/cssm.2017-0036
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\nSAGE Business Cases
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