Sport Finance Final
What is determined by comparing the risk of one asset to another? A. Risk of time B. Level of risk C. Risk premium D. Liquidity premium E. None of the above
B. Level of risk
This type of financing includes charitable donations, either cash or in-kind, made to an organization and is the primary source or operating and investing income for major collegiate sports programs. A. Debt B. Equity C. Retained earnings D. Government E. Gift
E. Gift
Which of the followings forms of budgeting is preferred in sport as it begins with a floor of expenses while also using cost behavior and cost identification techniques? A. Incremental budgeting B. Program planning budgeting system C. Modified program planning budgeting system D. Zero based budgeting E. Modified zero based budgeting
E. Modified zero based budgeting
Without the benefit of having a feasibility study, the public in which city was asked to vote to spend $143 million of public money to build the Sprint Center without a major tenant? A. Topeka B. Kansas City C. St. Louis D. Des Moines E. Milwaukee
B. Kansas City
Which league once operated under a single-entity model? A. NFL B. MLS C. MLB D. NBA E. NHL
B. MLS
Under this sport franchise ownership model, __________ is the most common model of team ownership. A. Single Owner/ Private Investor Model B. Multiple Owners/ Private Investment Syndicate Model C. Multiple Owners/ Publicly Traded Corporation Model D. Single Entity Model E. Distributed Club Ownership Model
B. Multiple Owners/ Private Investment Syndicate Model
In which league have franchises typically been owned by corporations? A. Japanese Professional Baseball League B. Nippon Professional Baseball C. Major League Baseball D. Minor League Baseball E. None of the above
B. Nippon Professional Baseball
During which case of facility construction were sport facilities primarily financed using general obligation bonds A. Phase 1 B. Phase 2 C. Phase 3 D. Phase 4 E. None of the above
B. Phase 2
This budgeting system is associated with output budgeting in which specific goals and objectives form the framework for a strategic, goal oriented budgeting process. A. Incremental budgeting B. Program planning budgeting system C. Modified program planning budgeting system D. Zero based budgeting E. Modified zero based budgeting
B. Program planning budgeting system
Which of the following is a source of governmental financing that, according to its proponents, is not paid for by the public? A. Certificate of participation B. Tax increment financing C. Contractually obligated income D. Asset backed securities E. None of the above
B. Tax increment financing
snapshot of what the company owns and owes
Balance Sheet
The process of creating a financial plan
Budgeting
money borrowed from creditors
debt ratio
Which factor is driving up the operating costs of a college or university athletic department? A. Arms race B. Moving up a division C. Free market for college coaches D. Increasing tuition on college campuses E. All of the above
E. All of the above
Which of the following is the responsibility of the commissioner's office under the franchisee/franchisor league structure? A. Negotiate national television contracts B. Establish relationships with vendors for league-wide licensed merchandise sales C. Hire and supervise game officials D. Negotiate a collective bargaining agreement with the players' union E. All of the above
E. All of the above
The pricing paradox related to public sector sport is a result of which of the following? A. Affordable pricing for public programs combined with lower tax revenues B. Providing a multitude of affordable programs C. Operating as self sufficient entities D. Generating revenues to offset expenses E. All of the above combine to create the paradox
E. All of the above combine to create the paradox
Residual amount that represents one's interest in the business (revenues)
Equity
A personal seat license is typically valid for the life of the facility. True False
False
Comparables analysis is a type of primary research. True False
False
During Phase 2 of the construction of sport facilities, there was a significant decrease in the amount the public was willing to pay for construction costs. True False
False
Facility revenues are typically kept by the facility owner. True False
False
Feasibility studies are often broken into three phases. True False
False
For community based programs, grants are more important for construction, and fundraising is more important for operations. True False
False
Most of the recent bankruptcies in the "Big 4" professional sport leagues have involved baseball franchises. True False
False
NCAA revenue distributions to member schools go directly from the NCAA to the school. True False
False
Primary research typically involves the analysis of data that have already been generated for other purposes but might provide information for the question at hand. True False
False
The NHL has the most strict ownership requirements of all the North American professional sport leagues, including a steep cash down-payment requirement. True False
False
Though securitization is popular, facilities cannot be financed through securitization. True False
False
inflow and outflow by the company in order to create profitability
Income Statement
financing operation with debt vs. equity
Leverage
amount owed to someone (banks, suppliers)
Liabilities
The price index of goods used to identify and calculate inflation
CPI
The amount a player subtracts from the salary cap in the current year
Cap hit
Unused amount from the previous year added to the cap number of a team.
Cap roll over
Money obtained to make more money
Capital
This team's stadium is built utilizing public funding from sales taxes
Colorado Rockies
Of the following, which is a trend impacting financial management in public sector sport facilities? A. Demand for services has increased B. The type and variety of services and facilities have increased C. Programs are now designed to appeal to a broad demographic D. All of the above E. None of the above
D. All of the above
This budgeting system requires starting the budgeting process with a zero base. A. Incremental budgeting B. Program planning budgeting system C. Modified program planning budgeting system D. Zero based budgeting E. Modified zero based budgeting
D. Zero based budgeting
Money subtracted from the cap of a player no longer on the team.
Dead money
Borrowing money that must be repaid over time, usually with interest.
Debt financing
The fundraising area of an athletics department or university
Development
Market index that follows the top 30 "Blue Chip" stocks of the US
Dow Jones
The revenues that member schools receive from conference distributions are the largest percentage of overall departmental revenues. True False
False
The single entity structure is used by MLB, the NBA, the NHL, and the NFL. True False
False
The science of fund management
Finance
Charitable donations, either in cash or in-kind
Gifts financing
Funding provided by state, federal, or municipal sources.
Government financing
The Titans' stadium was built due to Tennessee incorporating contributions directly into the state budget.
State appropriations
The organization whose mission is to make sure collegiate athletics stays true to its educational mission
The Knight Commission
The Colts' stadium was financed from a public financing source which diverts revenues from non-resident users.
Tourism Tax
An analysis of NCAA revenues and expenses shows that operating expenses are growing on par with or increasing faster than operating revenues depending on division affiliation. True False
True
Feasibility studies in sport can be used to determine whether a city should bid to host a major sporting event. True False
True
Feasibility studies require the application of many finance tools. True False
True
In the NBA, more than 50% of season ticket holders are corporations. True False
True
The findings of one section of a feasibility study will affect or be affected by the findings of the other sections. True False
True
The second most common tax source to fund the construction or operation of public sector sport facilities is the sales tax. True False
True
The analytical impact of a player on winning versus another player at that same position or lineup
W.A.R.
The age of the population is another factor to consider when analyzing ticket demand in comparable markets. True False
true
Which of the following is sold by either a governmental agency or a non-profit corporation set up to build a facility? A. Certificate of participation B. Tax increment financing C. Contractually obligated income D. Asset backed securities E. None of the above
A. Certificate of participation
Which of the following is the number of years required to recover the initial capital investment of an organization? A. Payback period B. Discounted payback period C. Net present value D. Internal rate of return E. Modified internal rate of return
A. Payback period
During which phase of facility construction were most sport facilities built with private dollars? A. Phase 1 B. Phase 2 C. Phase 3 D. Phase 4 E. None of the above
A. Phase 1
The Billie Jean King National Tennis Center is an example of which type of public-private partnership model? A. Private sector takeover B. Public sector leasing C. Private sector pump-priming D. Multiparty arrangement
A. Private sector takeover
Which of the following is the most common tax source used to fund the construction and operation of public sector sport facilities? A. Property tax B. Sales tax C. Excise tax D. Use tax E. Income tax
A. Property tax
Risk increases as the length of time funds are invested increases. What is this known as? A. Risk of time B. Level of risk C. Risk premium D. Liquidity premium E. None of the above
A. Risk of time
The source used by the NFL to determine the laegue's salary cap for the upcoming season.
AR
Plugging statistics into a mathematical model to predict the outcome
Analytics
A payment that has an end date
Annuity
The term used to identify the NCAA's decision for Power 5 conferences to set their own rules on some aspects.
Autonomy
This team's stadium was built utilizing public funding from lottery and gaming
Baltimore Orioles
A tool for financial planning
Budget
One source of risk is current economic conditions. Of the following, which is impacted by changes in current economic conditions? A. Capital finance B. Operating budgets C. League loan pools D. Both a and b E. a, b, and c are all impacted
E. a, b, and c are all impacted
Money spent before, during, and after a game/event
Economic activity
Positive economic activity in an area that is not offset by a loss in another area
Economic development
Total spending that takes place at a sport facility and by the team
Economic impact
Exchanging a portion of ownership of the organization/business for money.
Equity financing
The increase in prices that results in the lessening of the purchase power of the US dollar
Inflation
Market index that tracks all common stocks in the US.
NYSE
Market index that tracks non-financial domestic and international securities
Nasdaq
The worth of the dollar; stays the same
Nominal value
A payment that goes on without end
Perpetuity
The purchasing power of the dollar; decreases due to inflation
Real Value
The dollar decreases in value the further out into the future it is expected to be received
Regression Theory
Reinvesting prior earnings
Retained earnings
Of the following statements regarding the Arts, Entertainment, and Recreation segment (NAICS 71) of our economy, which of the following is true?Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.
Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.
Unfavorable event
Risk
Market index that follow stocks representative of industries within the US economy
S&P 500
Maximum amount of money a given team can use on player contracts
Salary cap
Which of the following is the final step in the capital budgeting process? A. Conduct a post-audit analysis B. Select the capital budgeting method C. Determine the incremental cash flow of a project D. Determine the initial cost of the project E. None of the above
A. Conduct a post-audit analysis
NCAA v. Board of Regents affected television revenue generated from which sport? A. Football B. Women's basketball C. Men's basketball D. All of the above E. None of the
A. Football
Last year's budget is increased or decreased by a percentage using this method of budgeting (a form of line-item budgeting). A. Incremental budgeting B. Program planning budgeting system C. Modified program planning budgeting system D. Zero based budgeting E. Modified zero based budgeting
A. Incremental budgeting
Which iconic franchise nearly experienced financial disaster in 2011? A. Los Angeles Dodgers B. Chicago Cubs C. Dallas Cowboys D. Washington Redskins E. None of the above
A. Los Angeles Dodgers
In which league was Pete Rozelle commissioner and developer of the idea of "league think"? A. NFL B. MLS C. MLB D. NBA E. NHL
A. NFL
Through 2015, the highest expansion fee paid by a new team entering a North American professional league was in which league? A. NFL B. MLB C. NHL D. MLS E. NBA
A. NFL
This league began in a single-entity structure and switched to a franchisee/franchisor model? A. WNBA B. MLS C. MLB D. NFL E. Both WNBA and MLS
A. WNBA
What you own of value (bank account, inventory, equipment)
Assets
As part of a feasibility study, a __________ directly investigates actual facilities that might compete with a subject facility in order to host events. A. A comparables analysis B. A competitive analysis C. A financing analysis D. Primary research
B. A competitive analysis
Factors examined in which part of the feasibility study include population, age, income, and competing sports franchises? A. Corporate demand B. Individual ticket demand C. Event activity D. Facility specifications and operating estimates
B. Individual ticket demand
Three interrelated sectors exist within finance. Which of the following sectors focuses on security choices made by individual and institutional investors as portfolios are being built? A. Money and capital markets B. Investments C. Financial Management D. Derivative trading E. None of the above
B. Investments
If facilities are successful in various similar cities, then a facility will be successful in the subject city. Where does this notion comes from? A. Primary research B. A financing analysis C. A comparables analysis D. A competitive analysis
C. A comparables analysis
When a team has signed multiyear contracts to receive money, these revenue sources can be used as collateral to get loans. This is referred to as __________. A. Certificate of participation B. Tax increment financing C. Contractually obligated income D. Asset backed securities E. None of the above
C. Contractually obligated income
What is the NCAA's main expense? A. Salaries B. Distribution to Division II and III members C. Distribution to Division I members D. General and administrative
C. Distribution to Division I members
Three interrelated sectors exist within finance. The goal or outcome of those working in which of the following sectors is to acquire and secure funds to maximize shareholder wealth? A. Money and capital markets B. Investments C. Financial Management D. Derivative trading E. None of the above
C. Financial Management
Which league's salary slotting system encouraged the Houston team to make their on-field product particularly terrible from 2009-2013? A. NFL B. NBA C. MLB D. NHL E. All of the above
C. MLB
Which section of the feasibility study drives much of the rest of the study? A. Location, construction costs, and engineering B. Economic and fiscal impact C. Market demand D. Financing
C. Market demand
Which of the following is the rate of return required over and above the risk-free-rate? A. Risk of time B. Level of risk C. Risk premium D. Liquidity premium E. None of the above
C. Risk premium
Leagues have created rules and policies to improve competitive balance. What do these rules and policies typically relate to? A. Player drafts B. Free agency C. Player salary D. All of the above E. None of the above
D. All of the above
The NCAA distributes revenue to member institutions based on a specific formula. Of the following, which is a criteria for establishing the amount of revenue a member receives? A. Historical performance in NCAA Division I Men's Basketball Championship B. The number of sports sponsored C. The number of scholarships offered D. All of the above E. None of the above
D. All of the above
Typically, owners in a specific industry compete for wealth maximization. Owners in sport might not be interested in this goal. Rather, they may be interested in __________. A. Winning championships B. Seeking celebrity status C. Protecting a community asset D. All of the above E. None of the above
D. All of the above
When selecting the type of bond to use when building a recreation facility, a municipality must do which of the following? A. Determine whether the facility will generate enough revenue to retire the debt B. Determine whether the facility will generate enough revenue to operate the facility C. Determine whether the facility will generate enough revenue to maintain the facility D. All of the above E. None of the above
D. All of the above
Which of the following budgets allows management to forecast future requirements related to property, facilities, and major equipment? A. Revenue budget B. Expense budget C. Cash budget D. Capital expenditure budget E. Fixed asset budget
D. Capital expenditure budget
Which section of the feasibility study determines the luxury seating capacity of a market? A. Event activity B. Individual ticket demand C. Facility specifications D. Corporate demand
D. Corporate demand
The required rate of return to justify an investment in a capital project is the __________. A. Interest rate B. Financing rate C. Coupon rate D. Discount rate E. None of the above
D. Discount rate
In which section of the feasibility study are the needs of attendees and event property owners calculated? A. Individual ticket demand B. Facility specifications and operating estimates C. Corporate demand D. Event activity
D. Event activity
In which section of the feasibility study does one determine if there is sufficient revenue to pay for facility financing costs? A. Corporate demand B. Individual ticket demand C. Event activity D. Facility specifications and operating estimates
D. Facility specifications and operating estimates
For all sport and entertainment organizations, __________ financing may include land use, tax abatements, direct facility financing, and infrastructure improvements. A. Debt B. Equity C. Retained earnings D. Government E. Gift
D. Government
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? A. MLB B. NHL C. WHA D. NFL E. NBA
D. NFL
For a recreation facility such as a water park, which of the following factors is not likely to be part of the feasibility analysis? A. Price of admission B. Income of local population C. Size of local population D. Number of corporations of a certain size in the area E. Age of local population
D. Number of corporations of a certain size in the area
Which type of bond is a form of public finance paid off solely from specific, well-defined sources such as hotel taxes, ticket taxes, or other sources of public sourcing? A. General Obligation Bonds B. Auction-rate bonds C. Lease revenue bonds D. Revenue bonds E. All of the above
D. Revenue bonds
Of the following bond types, which is issued by a public entity? A. General Obligation Bonds B. Auction-rate bonds C. Lease revenue bonds D. Revenue bonds E. All of the above
E. All of the above
Of the following, which is a main part of a feasibility study? A. Market demand B. Economic and fiscal impact C. Financing D. Location, construction costs, and engineering E. All of the above
E. All of the above
Of the following, which is a trait of a major donor? A. They often desire to provide opportunities that they did not have while growing up, to help the less fortunate, to improve quality of life, and to help solve problems in society. B. They tend to be very religious, have a strong belief in free enterprise, and are basically conservative. C. They know someone in the athletic department or know something about the department, and they believe in someone working for the department or believe in something that the academic institution or athletic department represents. D. They have the resources to make a major gift. E. All of the above
E. All of the above
When determining market demand for a facility, one must examine which of the following? A. Facility specifications and operating estimated B. Individual ticket demand C. Corporate demand D. Event activity E. All of the above
E. All of the above
Side of increase
Normal balance
where a company's cash comes from and how it's used to pay for operations and investments
Statement of Cash Flows
A form of financial aid/support with the goal of promoting economic development
Subsidy
Each of the professional sport leagues has established rules regarding who may become an owner and join their "club." True False
True
NFL teams share the highest percentage of gate receipts with visiting teams. True False
True
Naming rights are the largest single sponsorship revenue source for a sport facility. True False
True
Sport facilities compete against one another for corporate dollars. True False
True
The NBA recently used a pooled-debt instrument to assist financially struggling franchises. True False
True
The New York Islanders of the NHL violated league rules regarding league control of official league websites. True False
True
The four major North American sport leagues all share revenues from licensed merchandise sales equally among their teams. True False
True
Converts assets into cash and the ability to cover liabilities
liquidity
rate of return
profitability ratio
return on investment
return on equity ratio