Finance Final 12-15
What is the most common degree of athletic directors?
sport administration/management and education
In the past 5 years (at the time the article was written), how many DI athletic directors have been hired?
167
At the time the article was written, how many states charged students a "pay to play" fee?
43
The pricing paradox related to public sector sport is a result of which of the following?
Affordable pricing for public programs combined with lower tax revenues Generating revenues to offset expenses not covered by a tax subsidy Providing a multitude of affordable programs Operating as self-sufficient entities
According to the author, how important are business skills for securing a job as a DI athletic director?
Along with solid education and experience, business skills are very important.
CH 12 High school/Interscholastic Sport: Most popular type of contributing groups for high school sport programs
Athletic Support Groups •. Single Sport or Multiple? •Most popular types? •. Parents, volunteers, students, businesses, service organization, booster clubs, alumni
A fee new owners must pay, a(an) ______________ fee new is enforced because when new owners join a league they dilute the payments current teams receive with revenue sharing.
expansion
Which of the following is the most common business background/experience of current DI athletic directors?
fundraising/development
CH 14 Collegiate Athletics: # of self-supporting athletic departments
•90% of Division I programs have expenses that exceed revenues •Only 20 Division I-FBS schools were self-supporting in fiscal year 2013 ●Median net revenue was $8.4 million ●For others, median loss was $14.9 million
Land, buildings constructed on land, and improvements made to land are known as which of the following?
real property
CH 15 Professional Sport: Purpose and structure of leagues
*Franchisee/franchisor: Commissioner (vendors, game officials, National things, work for owners), league owners(team things), "league think" and the NFL (MLB, NBA, NHL, NFL) * single-entity structure: a single group or individual owns the league and all teams (MLS, WNBA) • advantages: place clubs in preferred cities, assign players to teams, promote competitive balance via player assignments, constrain salary costs • provides a limited economic incentive to individual clubs • frequently found in new start up leagues
At the time when the current article was published, how many athletic directors also participated in collegiate athletics as student-athletes?
194
What percentage of current Division I athletic directors held a head coaching position at any point during their career?
20%
What is the current average age of DI athletic directors?
28-30
CH 12 Fundraising: How to approach individuals for solicitation/donations to athletic dept.
5 key elements: 1. Prospecting and targeting (prospects, donors) 2. Preparation (questions) (top dogs ask) (formal) 3. Presentation (features, benefits, advantages) 4. Closing (difficult part) (asking for money different levels) 5. Follow up (thank and make them feel appreciated) (polite persistence)
What did LA Unified School District do to save coaches' jobs and keep high school sports programs running? Correct!
A grant from Anita Defrantz provided over $200,000 in funding along with the help from other sponsors like the LA Dodgers, Nike, and Easton.
Leagues have created rules and policies to improve competitive balance. What do these rules and policies typically relate to?
ALL ARE CORRECT Player salary Free agency Player drafts
Of the following, which is a trend impacting financial management in public sector sport facilities?
ALLLLL of these answer choices are correct. None of these answer choices are correct Demand for services has increased The type and variety of services and facilities have increased
CH 12 EI: Methodology of conducting EI studies
Analysis of Direct Spending •Incremental visitor spending: •. What is the amount of spending that goes to local businesses? •Organizational spending: •. How much do the event host committee, event management company, corporate sponsors, and others spend? Direct spending: •. Secondary research •. Spectator surveys •. Corporate spending surveys •Indirect and induced spending: •. Multiplier effect Measuring Costs A complete economic impact study includes an analysis of event costs: •Security •Ticket sales •Printing •Advertising •Transportation •Communication
Ch 12 (week 9) EI: Define economic impact/economic impact studies (and know why EI studies are conducted)
Background •May be part of a feasibility study or a standalone source of information •One purpose: •Provide public with relevant information regarding return on investment in a development project (e.g., stadium, new team) Net economic change in a host community resulting from spending attributed to an event or facility •Note: Measures new economic benefits that accrue to the region that would not have otherwise occurred. Why: Sporting events •. Team •. Home games are a series of events •. Headquarters can impact a local area •Facility •. Construction •. Events held over time
CH 15 Professional Sport: Overview of Big 4 - key points
Big 4: • MLB, NBA, NFL (pooled debt NFL got loan from the bank to give to teams), NHL • have rules and policies new ownership, debt, expansion (when become owner pay huge expansion fee, revenue sharing), territorial rights (who and where) (can you keep a team profitable) others: • NASCAR (family own business, organize events and own racetracks), MLS, Lacrosse, golf, bowling, tennis
CH 14 Collegiate Athletics: ASG's
Booster club responsible for most annual giving programs ●Non-profit and tax exempt ●Separate legal entity from university •Example: Gamecock Club at University of South Carolina
CH 14 Collegiate Athletics: Arms Race
Building bigger and better facilities in order to land key recruits ●The Ohio State University ●University of South Carolina ●Gettysburg College •Changing NCAA divisions •Adapting to new NCAA legislation
CH 15 Professional Sport: Role of league commissioner
Commissioners are elected by the owners of the league's clubs or board of directors/governors, and function as Executive Directors of the various owners associations describing themselves as Leagues and handle matters such as discipline, arbitration of disputes between the clubs, etc in the interests of the owners.
One method used to achieve _____________, is implementing a ____________ which is basically a consequence for exceeding a salary cap or salary threshold charged to teams within leagues. The New York Yankees don't seem to mind this particular consequence.
Competitive Balance, Luxury Tax
CH 15 Professional Sport: What is competitive balance? Why important? How to achieve it?
Competitive balance: • concerns of most leagues: make sure that every team has a financial opportunity to field a competitive team AND attract media and fan attention • opinions vary in whether the competitive balance is needed or how to achieve it Rules: • player draft (order or picks), • salary slotting (money goes per round, how much each team gets), • free agency (how long player tied to team) • salary negotiations • luxury taxes (NBA and MLB) (consequence for exceeding a salary cap or salary threshold) HELPS WITH COMPETITIVE BALANCE (required of teams whose payroll exceed a set tax level) (repeater tax rate for trains that spend over the limit for the past three seasons), • revenue sharing (designed to narrow the gaps in the financial resources of the participant's ting teams) (mitigate inequality from non-league revenue sources) (different methods for different leagues) • areas of revenue sharing (sharing with teams): media, gate receipts, merchandise, sponsorship agreements Revenue sources: • luxury seating • seat license • ticket reselling • variable ticket pricing • fantasy sports and gambling • securitization
The author mentions that 35 current athletic directors were hired with business experience outside of college athletics. Where did Michigan's AD work prior to being hired at Michigan? (again at the time the article was written again)
Dominos Pizza
Which is the standard structure for "The Big Four" in the US?
Franchisee/Franchisor Structure
A type of sales tax that applies to particular products is called...
Excise tax
Private funding is not a good option for public sport financing.
FALSE
Public sector sport programs, like any other sport program/organization, are expected to make a profit.
FALSE
While it is challenging for women and minorities to secure a job as a DI athletic director, many have done so and represent 50% of all current DI athletic directors.
FALSE
CH 14 Collegiate Athletics: Financial difficulties associated with coll. Ath. (pg. 372) - dept generated revenues vs. allocated resources
Financial Profitability: Challenging to measure •Methods of recording venues and expenses differ from school to school •USA Today ●Database of revenue and expenses for 230 Division I schools •Department-generated revenues and allocated revenues
CH 12 EI: Positive externalities
For a community: •Jobs •. Earnings or income •. Tax revenues •Positive externalities (overflow benefits) •. Benefits that are produced by an event but not captured by the event owners or sport facility •. Restaurants, hotels, gas stations, and so forth
CH 14 Collegiate Athletics: trends in fundraising
Fundraising: •Operating expenses are increasing faster than revenues. •Programs are looking for ways to decrease reliance on allocated funds •Development office: Raise money from giving ●Offset expenses of running athletic department ●Fund new athletic facilities ●Reduce reliance on allocated revenues ●Capital campaigns and annual giving programs Capital campaigns: Intensive effort to raise funds in a given time frame for a specific purpose •Campaign case statement: Why and how to give to a campaign •Major gifts: Usually $25,000 or more ●Gifts table •Prospects: Development office needs to identify and cultivate them before asking for gift
CH 12 Fundraising: Definitions - sponsorship vs. fundraising
Fundraising: purposive process of soliciting and accepting monetary gifts, in-kind services, personnel, or materials to supplement a sport organizations existing resources (OBTAINING DONATIONS FROM INDIVIDUALS) sponsorship: a business relationship between a provider of funds, resources, or services and a sport event or organization, which offers in return specific rights that navy help used for commercial advantage • two way exchange between the business and the sport organization for increased visibility and marketing
In the article, what did the athletic director do to save his high school sports program from complete shutdown?
He mobilized the booster club and the students. He cut costs. He raised more than $6,000 in sponsorships competing in triathlon.
What does Paul Caccamo want all of the major US sports properties (NFL and MLB for example) to do in order to have a bigger impact on youth sports?
He thinks the major organizations providing assistance to youth sport programs need to plan around a coordinated set of goals
CH 12 EI: Displaced spending
In a conservative estimate, most local spending is not counted as part of the economic impact. •Money would have been spent elsewhere locally if the event hadn't occurred. Steps: 1.Define relevant market/geographic area of impact 2.Determine incremental visitors 3.Analyze direct spending 4.Determine indirect and induced spending 5.Calculate fiscal impact 6.Measure costs
CH 14 Collegiate Athletics: Criteria for NCAA $ distribution to member schools
In response to O'Bannon v. NCAA (2014): •New legislation that will benefit athletes •Four-year scholarships and NIL cap •Changes in dining and food allowances New Legislation •National governing body most responsible for shaping/controlling intercollegiate athletics in the United States •1119 member schools ●125 Division I-FBS (Football Bowl Subdivision) ●125 Division I-FCS (Football Championship Subdivision) ●95 Division I-Other ●324 Division II ●450 Division III Net worth of $708 million •Revenues: $989 million ●Television ●Marketing rights fees •Expenses: $909 million ●Distribution of revenues to member institutions ●Association-wide programs ●Costs associated with conducting championships
CH 12 High school/Interscholastic Sport: Justification for funding of high school sport programs
Inflation - cost more today •Increased cost of liability insurance - litigous society •Increased cost of qualified staff •More opportunity for more people = more participants & teams •Insufficient gate receipts •high school have difficulty in gaining a customer base and charging them increased amounts •Decreased funding from institution & state
CH 12 EI: Types of visitors
It is very important to be able to determine who is a visitor and who is a local resident. •Types: •. Casual (Randon loves to fish and plans a trip Pensacola to do just that. While he is there he decides to attend a Blue Wahoo's Baseball game. Randon would be considered a... Randon is a CASUAL VISITOR. He visited Pensacola for the awesome fishing! •Blue Wahoo's did not "draw" him to Pensacola •His spending/attendance should not be counted in an EI study) •. Time-switcher ( Austin is planning to visit his family who lives in Louisville, Kentucky. He decides to visit in May when the Kentucky Derby will be held, rather than going home for Easter. Austin would be considered a....Austin is a TIME SWITCHER! He planned his trip around the Kentucky Derby date in May! •His spending would NOT be counted in an economic impact study •He would have visited Louisville anyway, regardless of whether or not the Derby was held there) •. Incremental
Which league once operated under a single-entity model?
MLS
According to the article, which state has been the most careful in tracking pay to play effects?
Michigan
With so many school districts charging athletes a fee to participate, what are two reasons why high school administrators believe participation numbers have NOT decreased?
Most schools and districts that charge participation fees offers waivers for students based on need and parents are accustomed to paying the fees.
In the late 1950s, which league failed to recognize that it should expand to emerging markets, which allowed an upstart league to establish a presence in those markets?
NFL
CH 12 Fundraising: Why do people give to sport org?
Private giving: • voluntary one way transfer of income or goods • altruistic motives (because they want to and don't want anything in return, no recognition) • emotional attachment • self-interest • psychic rewards ** (feel good) • tangible rewards ** (preferred sitting, first dibs of playoff tickets, ext) • tax considerations: • when major gifts are given to a university one of the primary concerns of the donor are tax write offs • often time sit is the major impetus
CH 12 High school/Interscholastic Sport: Marketing and promotional examples/programs; examples of special fundraising projects
Promotional Activities: We learn from prior successes as well as failures Three Sources of Support: 1. General athletic operation, money saved is money that can be used later 2. Sponsoring organization =institution, organization etc.. 3. Outside sources = raise sufficient funds to support the program Promotional Activities •Determination of Needs •There must be justification for fund raising activities •Philanthropic Activities •Cont. inc. in US; focus is on businesses that want to get the positive association with a nonprofit •Realization of Goals & Objectives •Increased revenues or positive image of the program Special Fund Raising Projects •Sales: Almost anything can be sold for revenue generation •Gambling Projects / Raffles •Specific Fund Raising Projects - Athletic contests, Coaches clinics, Sport camps, Fun night, Car washes, Rummage sales, shows/exhibitions •Game Day and Halftime Activities •Contests of skills, Competing persons, Special announcements •Banquets
Demand for new and better public sport facilities has arisen because...
Residents (tax payers) have become more aware of health and wellness
CH 13 Parks and Recreation: Sales tax, excise tax, Bonds, fundraising & grants (terms you are already familiar with from previous chapters)
Sales tax: 2nd most common; a tax on certain goods and services (only 26% of all rec. sport construction or operational funding involved ales taxes) (varies by state) Excise tax: imposed on goods and services WITHIN a city, county, or state (these may benefit park and rec. departments) Pay-as-you-go financing: RARE Bonds: MOST public capital projects are financed through bonds • term bond: paid in single payment at the end of the loan period • serial bond: requires regular payments on principle abs interest over the life of the bond • revenue bond: secured by future revenues generated by the project being funded • general obligation bonds: secured by tax revenues and the issuing entity's ability to impose new taxes (backed by a tax source) • WHICH TO PICK: will the project generate enough revenue to cover the department, operate the facility and maintain the facility? If YES revenue if no G.O. (Sales tax or property tax increase) Private funding: viable option as well secured through grant or other non government source (fundraising, advertising, sponsorship (used to fill gaps in funding) FUNDRAISING AND GRANTS: • less than 8% of $ comes from non-government sources • decade long fundraising campaign • endowments (uwf uses interest money only from the bank) Collaborative financing: • joint use agreements: formal agreements documents outline how the facility will shared between public school districts and municipal parks and rec departments • public private partnerships: collaborations between public and private sectors (AAU/ASA) (city could receive percentage of merchandise sold at events
Advantages of the ____________ include the ability to place clubs in preferred cities, assign players to teams, promote competitive balance via player assignments, and constrain salary costs
Single Entity Structure
According to the author, which graduate programs provide individuals with specialized knowledge and training to become managers in the sports industry?
Sport Management/Sport Administration
What exactly is pay-to-play?
Students are forced to pay a fee to participate in athletics
In addition to "traditional" luxury suites and club seats, some facilities offer luxury suites that do not have a direct view of the field of play.
TRUE
Joint use agreements and public/private partnerships are collaborations between the public and private sectors.
TRUE
Public sector sport is offered for its profit potential.
TRUE
The NBA recently used a pooled-debt instrument to assist financially struggling franchises.
TRUE
When assessing how much property tax is due, which of the following is true?
The assessed value of the property is multiplied by a millage rate for a given area
Up2Us created a position paper, which was co-signed by Nike, and listed four main goals to help youth sports financially. Discuss two of these goals and why you do or not agree with the goal (provide a solid rationale for your answer).
There were four goals that the Up2Us created one was, to document the decline of opportunities which in turn I believe goes hand in hand with their third goal of contrasting the benefits of youth sports with the risk of their reduction. This simple meant when kids could no longer play sports it would be noted. When the kids stop playing sports their opportunities for their future can be affected. Being able to identify these opportunities and explain them to the youth might increase kids chances of staying in sports for the long run. Some of these opportunities sports can bring them in the future are; scholarship opportunities for college, healthy lifestyle, and maybe even a career in that sport. Another one of the other goals that the position paper listed was finding ways to forward youth sports on the national agenda. I love this goal. Pushing youth sports nationally is a great way to get other places youth into sport. This will be beneficial for so many reasons a few being; encouraging health and active lifestyle early on, creating the level of sport more competitive in the future, encouraging the youth to engage in teamwork and sportsmanship, and it can even be a common ground for everyone to agree with. Sports can teach our youth valuable lessons and tasks. The position paper does very well with pushing for continuing the playing and development of youth sports.
Often associated with player strikes, ______________ is the process that occurs when workers in a company or industry agree to negotiate as one unit with management.
collective bargaining
CH 12 Fundraising: Endowment
•
CH 12 Fundraising: Two top sources of revenues for collegiate athletic programs
• Boosters and alumni (athletic support groups) (the more they win the more people are willing to give) #2 • ticket sales #1
CH 12 High school/Interscholastic Sport: Problems and controversies linked to high school sports (which play a key role in the financing of these programs)
• Cheating is Rampant •Not consistent with academic goals of sport •Autocratic Coaches •Control all aspects of players lives •"Win at all costs" Attitude •Sport is treated as work, not play •Teaches the cheating is acceptable •Promotes Specialization by athletes •Corporate sports (Friday Night Lights) •Lots of $ spent on sports (stadiums, equipment, travel) •Exposure and commercialization •Channeling athletes into pros (early recruiting) •Coaches paid much more than teachers • Demanding Schedules: take time away from school work. •Begin too early: serve as a feeding ground/minor league for H.S. sports. •Reinforcing Gender Roles: 900% increase in female participation from 1971 • Budget problems •schools charge for right to play •sponsorship is accepted
CH 13 Parks and Recreation: Sources of funds (definitions)
• construction and operations by tax $ • tax subsidies: use of tax receipts to fund a program or business = offer @ free or reduced cost • public sector (not make profit) : offered to serve societal need vs. profit potential... success not measured by $ return • tax receipts: tax revenues from all sources received by a municipality • property tax: most commonly used; government levy based on value of property.. generated 32% of all state and local revenue in 2004 73% of property tax revue used for rec. facility construction and operation • real property (TAX) (land and structure, house, office building, stadium, basketball ect) vs. personal property (cars, boats, planes, things you can move ect) • rate of tax = mileage (mileage rate: total of levies by the city, county, school district, and any special districts in which a resident lives) • property tax: asses value of property: fair market value (x) assessment ratio (percentage of the property subject to taxation (better) Ex: FMV: $250,000. AV: $250,000 x .04 = $10,000. (X) millage rate (.08360)(sales tax)
CH 13 Parks and Recreation: Overview of parks and rec. trends
• demand has increased over past 30 years • GOALS to break even NOT break profit • parks now include: interactive playgrounds, sporting courts, game fields, advanced trial systems • community centers: large multipurpose facilities: aquatics, climbing walls, open gym space, fitness centers, child care areas, • community sport and recreation department ms are expected to do two things (provide many AFFORDABLE sport and rec programs) (provide programs and facilities self sufficient or generate revenue to offset expense) • difficulties in financing sport and Rex departments • competition form non profits such as YMCA • growth of similar facilities and services in private sector (golds gym, planet fitness ect) • less $ available for parks and rec departments to offer programs and services (government $ elsewhere for variety of other programs and services) (first to cut for budget cuts)
CH 12 Fundraising: One of the main jobs of an AD?
• fundraising • institutional control (In charge of booster clubs and make sure they follow rules, send out communications , education on what they can and can't do)
CH 12 Fundraising: Rules of thirds
• if you work in fundraising and development you need to follow: • 1/3: top 10 donors (of how much money you want to get) • 2/3: following 100 donors • 3/3: everyone else ($25 broad view memberships) • major gifts programs: 25K • a substantial one time contribution • targeted toward a very elite group of individuals (deep pockets
CH 15 Professional Sport: Rules of professional team ownership
• owners need to consider the impact of financial decisions on other owners (competitors) • profit maximization(secondary) vs win maximization (most goals are wins) • competitive balance: too much emphasis on money more winning, have to keep in mind what FANS want
CH 12 Fundraising: Planned/deferred gifts
• people will in their will put the university to give their money or whatever to the school
CH 13 Parks and Recreation: Public sector (tax) (what does this mean)
• sport is provided by tax dollars, provided by all = power to levy taxes(city government have power to enforce and raise taxes) to fund both operations and construction • accountable to tax payers (in 2004 state and local gif spent $30.5 billion)
CH 14 Collegiate Athletics: Primary source of revenue for DI athletic programs
•Boosters •Distributions from conferences is a small proportion of overall departmental revenues •Largest portion of revenue comes from football ●See, for example, University of Michigan •Even large athletic departments can face financial difficulties ●Example: University of South Carolina
CH 12 High school/Interscholastic Sport: What is included in the typical high school budget
•Officials •Uniforms •Travel •Balls, equipment •Coaches' Supplies •Clinics Costs •Awards