Sport Finance Final

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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


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