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An Inevitable Clash

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Himanshugupta
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Supply Network Guru
Re: Inevitable clash
Himanshugupta   10/27/2011 11:01:50 AM
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Ken, i liked your post and the commentary on Barbara's post. I was thinking about the high salaries of stars in both corporate and sport world. Its not just simple supply-demand. It seems to go in opposite direction from my experience, the more the star players in the game the higher the price or stake. In India, cricket is widely popular (just as NFL) and with the increasing number of games player per years and hence more star players emerging; the money that cricketers get is only increasing. The same goes in the corporate world. Companies always need more and more star players to increase the stake of the game. 

Ken Bradley
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Re: Inevitable clash
Ken Bradley   10/15/2011 5:26:12 PM
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Barbara,

Thanks for the complement on my last blog and your take on professional sports. I have a different view on the NFL which I will share as it relates to materials costs in the supply chain.

I think players’ salaries impact profits but not ticket prices. As long as the NFL can fill stadiums, the prices will be high. What’s good about the NFL is that they can fill their seats and attract television viewers better than any other sport. They can do this because they create value for their customers. They constantly study the game and change the rules of play so that the offence and defence remains in balance thereby maintaining customer interest and game excitement. Their actions are all real world driven with the customer first. Changing the rules is regulation for the good.

Players’ salaries are high, probably at a level that is undeserved, but the NFL pays these salaries in cash. Their cash is a product of real world value creation unlike CEO stock compensation of the corporate expectations world. The NFL players are not incented to cheat or manipulate outcomes as their motivation and behaviour is aligned with the customer; they are motivated to win the game not effect the points spread.

I too believe professional athletes are overpaid and would like to see lower ticket prices so that average families with kids could go to more games; but I do not equate ticket price with cost. You are right when you say price is determined by the market and, at Freebenchmarking.com, we see a wide range in market prices as different companies buy the exact same electronic components at widely varying prices sometimes different by many times. The cost of making the components purchased by customers isn’t different but the price sure is. Some companies manage the market price while others live with it.

This being said, I don’t know how to bring down the cost of professional sports tickets! Wish I did.

stochastic excursion
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Stock Keeper
Re: An Inevitable Clash
stochastic excursion   10/14/2011 1:45:43 PM
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There is a notion that seems to be shared by progressives and staunch capitalists alike that I have a problem with.  It's said from time to time that corporations are mandated to return value to the shareholder regardless of what may or may not be legal (this is one of the main points in the documentary, "The Corporation" that came out some years ago). 

Virtually all states where articles of incorporation are drawn up require the officers incorporating the business to state its purpose.  Invariably, the purpose is stated as "To comply with the laws of such and such a jurisdiction."

This practice is standard and seems curious to me.  However I just attribute it as being just one more layer in the legal boilerplate.  In any case it seems to refute the ideas that the law ends at the receptionists desk.

Barbara Jorgensen
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Blogger
Inevitable clash
Barbara Jorgensen   10/14/2011 10:14:05 AM
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Ken--great blog! I tried to discuss sports and business in a previous blog (How many do-overs...) with minimal success. The point about the NFL is perfect--professional sports in general clearly does not care about customers, otherwise ticket prices would not be so high. They are high because players demand insane salaries, because the "market will bear it..." I hope professional sports sees the equivalent of Occupy Wall Street, where fans just refuse to pay ticket prices and force a sea change.

I can't say I'm optimistic, though, season tickets for Boston sports continue to be something you get only if a ticket-holder passes on

JADEN
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Stock Keeper
Re: An Inevitable Clash
JADEN   10/14/2011 8:08:52 AM
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A great insight in this post is about delighting the customers; customers come first and shareholders last.

Jacob
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Supply Network Guru
Re: great article
Jacob   10/14/2011 7:19:03 AM
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Ken, when majority of the wealth or money is getting concentrating to some particular category of peoples, others can get frustrated.  We know most of the corporate are handling majority of the wealth, where somebody’s profit or asset is more than nation’s wealth or per year income. In such cases instead of doing something for the public, such companies are trying to get more benefit from the government to increase their profit. This can be surly a frustrating reason for common peoples and those who are below poverty line.

FLYINGSCOT
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Supply Network Guru
great article
FLYINGSCOT   10/13/2011 5:28:42 PM
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Thank you for this entertaining post.  I am a firm believer in the real world and wish that companies would spend more of their time attending to it rather that pursuing the quarter by quarter folly of maximizing shareholder value.  



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