Sports Revenue Exam 1

As a result of an Act passed by Congress in 2004, owners who purchase professional sports teams can now claim the following depreciation allowance: A. 50% of the purchase price over 6 years B. 100% of the player roster value over 5 years C. 100% of the purchase price over 15 years D. 50% of the purchase price over 5 years

D. 50% of the purchase price over 5 years

Of the "Big 3" revenue sources, which of the following generally produces the greatest amount of annual income? A. Sponsorship sales B. Naming rights C. Concessions D. Premium seating (suites/clubs) E. Parking

D. Premium seating (suites/clubs)

One of the most serious concerns about the use of dynamic pricing is: A. Season-ticket holders might revolt if they find they are paying much more for their tickets than those purchasing similar tickets on game day. B. Fans simply won't understand the complexities of this new approach to pricing C. It will drive more fans to buy tickets in the secondary market D. Team revenues will drop. E. Both A & B

E. Both A & B

What group sales platform did we discuss in class? a. Fevo b. Zipwhip c. Qque d. None of the Above

a. Fevo

What sport did Professor Troupe get his first job in? a. Hockey b. Football c. Baseball d. Basketball

a. Hockey

What group hospitality area does Professor Troupe credit as being the best and one that others have followed? a. Service King Lounge b. Rockies Rooftop c. Yankees Judge Seats d. None of the above

b. Rockies Rooftop

26. What does Professor Troupe believe to be the biggest key to selling tickets? a. Upsell them when ever possible b. Sell them what they want to buy c. Never focus on renewals d. Don't worry about customer service after they buy

b. Sell them what they want to buy

What NBA team two years put in a bar located directly behind the basket? a. Golden State Worriers b. LA Lakers c. Atlanta Hawks d. NY Knicks

c. Atlanta Hawks

What Dynamic Pricing platform did we discuss in class? a. Fevo b. Zipwhip c. Qque d. None of the Above

c. Qque

What did the Houston Astros VP of Marketing in 1993 do with Professor Troupe study on marketing to kids? a. Love in and offered Prof KT a job b. Adopted it c. Threw it in the trash d. Ask for more research

c. Threw it in the trash

What new league will begin playing next year in Arlington? a. MLL b. MLS c. XFL d. AAF

c. XFL

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

Which is not one of the 3 methods to generate sales? a. Direct mail b. Telemarketing c. Personal sale d. Entertainment

d. Entertainment

Where did Professor Troupe receive his Masters? a. Texas A&M b. UCLA c. Ohio State d. Ohio University

d. Ohio University

Ticket operations is a twofold process, what is the two-fold process? a. Making money b. Being successful c. Servicing fans d. Granting access to event e. Both C&D

e. Both C&D

T or F: A personal seat license is typically valid for the life of the facility.

False

T or F: Antitrust law applies to single-entity sport leagues.

False

T or F: Department-generated revenues are revenues that the school transfers to the athletic department.

False

T or F: NFL teams share the highest percentage of gate receipts with visiting teams.

True

What was the #1 ticket trend to watch in Sports & Entertainment in 2019 highlighted in Forbes article discussed in class? a. Online Tickets will surpass offline b. Everyone has a phone, but no one will answer c. Revenue needs to increase d. Prices will go down

a. Online Tickets will surpass offline

According to which gift table rule does the top 10 gifts to a capital campaign account for 33% of the campaign's total goal and the next 100 gifts account for an additional 33%? a. Rule of thirds b. 80/20 rule c. 90/10 rule d. Traditional rule e. None of the above

a. Rule of thirds

Through 2015, the highest expansion fee paid by a new team entering a North American professional league was in which league? a. MLB b. NBA c. NFL d. NHL e. MLS

c. NFL

T or F: NCAA revenue distributions to member schools go directly from the NCAA to the school.

False

T or F: The NHL has the most strict ownership requirements of all the North American professional sport leagues, including a steep cash down-payment requirement.

False

T or F: The revenues that member schools receive from conference distributions are the largest percentage of overall departmental revenues.

False

T or F: The single entity structure is used by MLB, the NBA, the NHL, and the NFL.

False

T or F: The sport industry is classified as an industry by the U.S. Census Bureau.

False

T or F: Yankee Stadium was financed by the team using a form of equity financing.

False

When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used? a. Debt b. Equity c. Retained earnings d. Government e. Gift

a. Debt

What is NOT one of the 4 ticket sales departments listed in our book? a. Digital Sales b. Season Tickets c. Groups d. Inside Sales

a. Digital Sales

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

T or F: Gift financing is a minor source of operating income for major collegiate sports programs.

False

What is considered the oldest organized "team" sport in America? a. Golf b. Bowling c. Baseball d. Hockey

c. Baseball

For Division I-FBS Group of 5 conferences, increased revenue depends on which of the following? a. Performance in the NCAA men's basketball tournament b. A conference football championship c. Having 12 football playing teams in a conference d. All of the above e. None of the above

d. All of the above

What is ATP? a. Average Total Price b. Attended Tickets Premium c. Average Total Premium d. Average Ticket Price

d. Average Ticket Price

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 a and b

e. Both a and b

Identify/list the three (3) tests or prongs used by the Office of Civil Rights to determine whether intercollegiate athletic departments are in compliance with Title IX.

1) Substantial proportionality test 2) Continued improvement test 3) Accommodation of interest test

According the Team Marketing Report, the complete cost for a family of four to attend a single major league game on average was around: A. $200 B. $500 C. $300 D. $400

A. $200

Which of the following values would come closest to representing the percentage of a Division I-A level athletic department's total annual revenues generated from ticket sales? A. 22% B. 15% C. 42% D. 5%

A. 22%

Which of the following is generally the most expensive premium seating option: A. Suites B. Loge boxes C. Club seats D. Theater boxes

A. Suites

Why does Major League Baseball sell the lowest percentage of its available seating inventory than any other major professional sports league? A. Prices are too high compared to other leagues B. Has 3 to 5 times more seats to sell than any other league C. Long seasons mean more teams are out of contention for an extended period D. Baseball is no longer "America's Pastime"

B. Has 3 to 5 times more seats to sell than any other league

Selling FSE ticket packages are considered to be the most challenging of all the ticket options offered sports fans. Which of the following factors is often the most difficult to overcome in selling FSEs? A. FSEs are the most expensive tickets offered B. The considerable non-monetary "costs" (time and travel obligations) C. They offer fewer preferred seating locations. D. If the team performs poorly, FSE purchasers are stuck

B. The considerable non-monetary "costs" (time and travel obligations)

Which of the following is NOT typically a benefit feature of a seat license program: A. "Lifetime" guarantee to the best seats in the house B. The right to transfer /sell the PSL to another party C. The chance to invest in the team's future D. The typically deeply discounted price associated with PSL purchase

B. The right to transfer /sell the PSL to another party

The so-called "Sanders Provision" provides a loophole in the NFL salary cap by: A. allowing players already on a team's roster to extend their contracts with out regard for the salary cap limit. B. prorating large signing bonuses over the length of the players' contract rather than accounting for the entire amount in the year paid. C. exempting designated "franchise players" from the salary cap limit. D. allowing performance bonuses (e.g., number of touchdowns scored) to be exempted from cap limits.

B. prorating large signing bonuses over the length of the players' contract rather than accounting for the entire amount in the year paid.

Which of the following is NOT a requirement for admission to the highest level of NCAA membership, the Football Bowl Subdivision (FBS): A. must meet a minimum football attendance requirement of 15,000 paid home attendance per game. B. allowed to award a maximum of 85 football scholarships C. must offer a minimum of six varsity sports for women student athletes D. must award no fewer than 90% of the allowable number of football scholarships in any given season.

C. must offer a minimum of six varsity sports for women student athletes

Under the current NBA collective bargaining agreement (CBA), if players' salaries exceed approximately 50% of BRI, the CBA stipulates that an "Escrow Tax" goes into effect. This tax: A. requires that teams pay $1 for every dollar they are over the salary cap. B. may cost the Los Angeles Lakers an estimated $30 million. C. requires that players "give back" 10% of their salaries D. a and b

C. requires that players "give back" 10% of their salaries

Chapter 3 cites a number of reasons for why minor league baseball has continued to thrive over the past two decades. Which of the following is the single most important factor in sustaining the growth of minor league baseball?A. the unique "parent-team" arrangement in which major league teams underwrite the cost of all the operational expenses of their minor league affiliates. B. the development of many new and modern minor league baseball stadiums. C. the emphasis of providing family-affordable entertainment. D. minor league baseball benefits from the its long tradition as "America's pastime.

C. the emphasis of providing family-affordable entertainment.

According to data provided by the NCAA, very few intercollegiate athletic departments achieve financial self-sufficiency. In fact, the average FBS division program relies on $_______ in "institutional support" to breakeven. A. $13.1 million B. $9.5 million C. $3.2 million D. $15.6 million

D. $15.6 million?

Which of the following major sports leagues is most dependent on ticket sales? A. NBA B. NFL C. MLB D. NASCAR E. NHL

E. NHL

T or F: In a traditional gifts table, the lead gift (largest single campaign gift) should be set at 5% of the campaign total.

False

T or F: Most development departments define a major gift as a donation worth $1,000,000 or more.

False

T or F: Most of the recent bankruptcies in the "Big 4" professional sport leagues have involved baseball franchises.

False

T or F: 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

T or F: Another name for a university's athletic support group is booster club.

True

T or F: Distributed club ownership model leagues are sometimes structured as non-profit organizations.

True

T or F: Each of the professional sport leagues has established rules regarding who may become an owner and join their "club."

True

T or F: 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

T or F: More than 90% of Division I athletic programs have expenses that exceed revenues on an annual basis.

True

T or F: One can create a major gifts table for a capital campaign in three major mathematical ways.

True

T or F: Schools are permitted to count "emerging sports" toward meeting the minimum NCAA eligibility requirement for Division I and II status

True

T or F: The Gross Domestic Sports Product (GDSP) is the market value of a nation's output of sport-related goods and services in a given year.

True

T or F: The NBA recently used a pooled-debt instrument to assist financially struggling franchises.

True

T or F: The four major North American sport leagues all share revenues from licensed merchandise sales equally among their teams.

True

T or F: The largest grouping of sport businesses is within NAICS 71, the Arts, Entertainment, and Recreation segment.

True

T or F: The single entity structure is used by Major League Soccer.

True

T or F: The sport industry relies on the discretionary income of spectators and participants.

True

T or F: To reach a capital campaign goal, development departments need to receive major gifts from program supporters.

True

True or False ______: Regardless of whether the "P" in PSL stands for permanent or personal, these seating programs are generally alike in that they are used to collect money upfront from their fans, often to help underwrite the construction costs for a new venue.

True

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

a. Arms race

Three interrelated sectors exist within finance. Which of the following includes securities markets, investment banking, insurance, and mutual fund management? a. Money and capital markets b. Investments c. Financial management d. Derivative trading e. None of the above

a. Money and capital markets

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. NFL b. NBA c. MLB d. NHL e. WHA

a. NFL

What are the primary sources of NCAA revenues? a. Television and marketing rights fees b. Championship tournaments c. Investment income d. Sales and services e. Contributions

a. Television and marketing rights fees

What is the equation used to figure out your FSE number? a. Total Games in plan/ total # of games in Full Season b. Total Seats * Cost of parking/total games c. Total Games in a season/average ticket price d. None of the above

a. Total Games in plan/ total # of games in Full Season

What is the class Twitter Hashtag established to share articles with the class? a. #APSMSMUCLASS b. #SMUAPSM4371 c. #SMUSports d. #SMUHashtag e. None of the above

b. #SMUAPSM4371

What is the NCAA's main expense? a. Salaries b. Distribution to Division I members c. Distribution to Division II and III members d. General and administrative e. None of the above

b. Distribution to Division I members

For schools in Division I-FBS conferences, where does the largest portion of the athletic program's revenues come from? a. NCAA revenue distributions b. Football c. Men's basketball d. Baseball e. None of the above

b. Football

Why does Major League Baseball sell the lowest percentage of its available seating inventory than any other major professional sports league? a. Prices are too high compared to other leagues b. Has 3 to 5 times more seats to sell than any other league c. Long seasons mean more teams are out of contention for an extended period d. Baseball is no longer "America's Pastime"

b. Has 3 to 5 times more seats to sell than any other league

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

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

What does PSL stand for? a. People State License b. Personal Seat License c. Public Seat Lease d. Profit Seating Lean e. None of the above

b. Personal Seat License

What is professor Troupe's main strategy discussed in class to work with ticket brokers? a. Don't work with b. Treat them like partners c. Sell them every seat you can d. Work with SeatGeek

b. Treat them like partners

What statement best explains the Primary Ticket Market? a. 2nd buyer of the ticket b. Ticket brokers use this channel the most to sell their inventory c. 1st seller of ticket or rights holder of ticket d. Tickets given from employer

c. 1st seller of ticket or rights holder of ticket

What was not discussed in class as a significant source of sports revenue? a. Sponsorship sales b. Merchandise sales c. Autograph sales d. Naming right deals e. Licensing

c. Autograph sales

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

NCAA v. Board of Regents affected television revenue generated from which sport? a. Men's basketball b. Women's basketball c. Football d. All of the above e. None of the above

c. Football

What is the internet's greatest contribution to the ticket distribution process? a. Marketing b. Facebook c. Its ability to facilitate the resale or exchange of pre-purchased tickets d. Its ability to hit the right fan at the right time with a ticket offer?

c. Its ability to facilitate the resale or exchange of pre-purchased tickets

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 league once operated under a single-entity model? a. MLB b. NBA c. MLS d. NHL e. NFL

c. MLS

Other than __________, sport leagues in the United States are subject to the Sherman Act. a. The National Football League b. The National Basketball League c. Major League Baseball d. The National Hockey League e. Major League Soccer

c. Major League Baseball

In the 1980's & 90's, what was the primary type of ticket used by fans? a. Email b. Will Call c. Pre-Printed Tickets d. Electronic

c. Pre-Printed Tickets

College athletic department-allocated revenues include which of the following? a. Ticket sales b. NCAA and conference distributions c. Student fees d. Alumni donations e. All of the above

c. Student fees

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

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

Which of the following is not typically a benefit feature of a seat license program? a. a "lifetime" guarantee to the best seats in the house b. the right to transfer /sell the PSL to another party c. the chance to invest in the team's future d. the typically deeply discounted price associated with PSL purchase

d. the typically deeply discounted price associated with PSL purchase

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

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

One of the most serious concerns about the use of dynamic pricing is: a. Season-ticket holders might revolt if they find they are paying much more for their tickets than those purchasing similar tickets on game day. b. Fans simply won't understand the complexities of this new approach to pricing c. It will drive more fans to buy tickets in the secondary market d. Team revenues will drop. e. Both A & B

e. Both A & B

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

What are the two main functions of a ticket operations department? a. Budget and sell tickets b. Granting access to fans and providing tickets c. Training ushers and food & beverage staffers d. Staff premium spaces and parking lots e. Granting access to fans and servicing fans

e. Granting access to fans and servicing fans

What is not a common objective of a sports executive when making pricing decisions? a. Maximize the Expected Revenue Yield b. Attract a Large Spectator Base to a Game/Event c. Having a Great Game Day Atmosphere d. Attracting Targeted Groups (e.g., millennials, women 35-39) To the Venue Via Ticket Allocations At Low Ticket Prices (Or Even Complementary Tickets) e. Making sure players have access to seats

e. Making sure players have access to seats

In which league was Pete Rozelle commissioner and developer of the idea of "league think"? a. MLB b. NBA c. MLS d. NHL e. NFL

e. NFL

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

e. None of the above

Of the following statements regarding the Arts, Entertainment, and Recreation segment (NAICS 71) of our economy, which of the following is true? a. The industry employs a large number of full-time workers and relatively few seasonal and part-time workers. b. Those working in the industry tend to be older than those working in other industries. c. Wages for those working in the industry tend to be higher than wages paid to those working in other industries. d. Almost all leisure time activities, including watching movies, are a part of this sector. e. Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.

e. Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.

Which is not a "physical activity" included in the definition of sport? a. Physical sport b. Mind sport c. Coordinated sport d. E-sport e. Sports reporting

e. Sports reporting