Outdoor Ice-skating heads firmly down the product life cycle

Its rare that you come across an article with as many key business studies terms and concepts as this one…

This fantastic article in the Times is well worth printing off (before Rupert Murdoch puts his paywall in place in early 2010). It describes the issues that have led Wembley Stadium to cancel its proposed ice-skating attraction, which was scheduled to operate over the next month or so.

The story is packed full with business studies material, including:

- Product life cycle: this seems to be a product that has completed its growth phase

- Break even - the fixed costs of operating the ice-rink are estimated at £250,000; how many visitors would be needed to breakeven?

- Market saturation - despite (or perhaps because of) the popularity of Dancing on Ice, consumers have a much wider variety of skating locations to choose from

- Seasonal demand - outdoor skating is very much a Christmas holiday period activity

- Impact of substitute products - e.g. the German Christmas markets, which are proving incredibly popular and profitable (a much better investment for local councils, given the UK’s obsession with shopping)

- Raising finance - Wembley reported a £31.1 million loss last year and we are told that its directors are under pressure to maximise the number of events to help offset annual interest repayments of nearly £23 million accrued on bank debts totaling £326 million,

The comments from one contributor to the article also make some useful points about why the viability of outdoor skating venues in under threat:

D Spock wrote:
It’s not difficult to figure out why.
1. Expensive, plus booking fee plus ticket post/email
2. You have to book well in advance
3. When you get there you then have to pay extra for them to hold your shoes/bag whilst you’re wearing skates
4. You’re given a very limited amount of time
5. That time is spent going round in circles
6 It’s overcrowded

People have done it once, and not returned. Bubble has burst.”

A lesson classic - enjoy