Threshold Sports Case Solution

1. What are the issues facing David Chauner?

David Chauner is facing the following issues:

• The prime concern for Chauner pertains to the growth strategy of the firm. The threshold has the potential to expand rapidly. In this regard, the issue of which type of city should be selected demands the maximum attention.

• Chauner is also unsure about the choice of patching up with local event management companies or carrying the services themselves.

• Moreover, Chauner also faces the dilemma of attracting fewer, but larger sponsorship deals while maintaining the customization package so that the firms can feel free to choose between the levels of sponsorship.

• The decision regarding the selection of the television deal also pretenses some issues for Chauner.

• In the midst of all these issues, the biggest problem for Chauner is to make sure that in the coming years, Threshold envisages a considerable growth in revenues. By the end of 2007-08, the revenue should increase by more than 100%.

2. Given that the plan is for Threshold to reach revenues of $50 million in 2007-2009, what revenue commitments should Chauner make to Strauss Zelnick for 2003 and 2005? What a mix of sponsorship merchandise and tickets should Chauner commit to for 2003 and 2005?

It should be noted that in order for the revenue to reach the desired mark, Threshold has to increase its revenue to 111% in the course of 7-9 years. Initially, for the year 2003, the revenue commitment should not exceed $8 million. This is because the start of a growth strategy will require 1 to 2 years for proper implementation. However, in 2005, revenue commitment should increase to $20 million. The rapid expansion of this magnitude can only ascertain that a $50 million marks is attained till 2009. The following table depicts other pertaining details. Note that the revenue from ticket and merchandise sales is increasing at a rapid pace.