SPTE 440 Final

Which of the following is the amount earned annually from the interest payment compared with the price of the bond reflected as a percentage return?

Current yield

Which of the following is sold by either a government agency or a non-profit corporation set up to build a facility?

Certificate of participation

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 __________.

Contractually obligated income

Which ratio is an indication of whether an organization can meet its current liabilities―those due within a year―with its current assets?

Current Ratio

What is a measure of risk or uncertainty of time?

Discount rate

T or F: Asset-backed securities are a public source of stadium financing.

False

T or F: 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.

False

T or F: The geographic moniker chosen by a team (e.g., Chicago Cubs, Colorado Rockies) affects the amount cities are willing to pay to publicly finance their stadiums.

False

T or F: Tourism tax revenues are the most common source of public financing for sport facilities.

False

Historically, which bond was the most common method used for facility financing?

General Obligation bonds

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.

Gift

Of the following, which is NOT a form of equity financing?

Government funding

In general, the chances of receiving back an investment in a large market Major League Baseball team is __________ that for a small market team.

Greater than

Which of the following is calculated by investigating changes in the Consumer Price Index (CPI)?

Inflation rate

Which ratio measures how often an organization sells and replaces its inventory over a specified period of time?

Inventory Turnover Ratio

Which of the following is the nominal or quoted risk-free rate of interest?

None of the above

The __________ of a bond is the face value, or amount of principal that the bond is worth when the principal amount is due.

Par value

Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments?

Return on equity

Which of the following is a single cash flow per year forever into the future?

Perpetuity

During which phase of facility construction were most sport facilities built with private dollars?

Phase 1

During which phase of facility construction were sport facilities primarily financed using general obligation bonds?

Phase 2

During which phase of construction were stadiums built with a mix of public and private dollars? The stadiums usually only housed one major tenant, not two

Phase 3

Which of the following was the first major professional sports team to declare bankruptcy in the middle of a long-term facility lease?

Phoenix Coyotes

One source of risk is current economic conditions. Of the following, which is impacted by changes in current economic conditions?

A, B, & C are all impacted (Capital finance, Operating budgets, League loan pools)

In order for investors to purchase stock in a company, they will require a return of at least a certain amount. The amount investors require depends on which of the following?

All of the above

Which of the following is a bond issued by a municipality in which the revenue stream backing the payment of the bond is an actual lease, not just revenues from a source?

Lease revenue bonds

What is determined by comparing the risk of one asset to another?

Level of risk

If it is expected that it will be hard to sell a security, which of the following will be added?

Liquidity premium

Which of the following is today's value of a future cash flow?

Present value

Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings?

Price-to-earnings ratio

What is the interest rate that banks charge their best customers?

Prime rate

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 funding?

Revenue bonds

Which of the following is the rate of return required over and above the risk-free-rate?

Risk Premium

Risk increases as the length of time funds are invested increases. What is this known as?

Risk of time

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 __________.

Winning championships, seeking celebrity status, protecting a community asset

What percentage of businesses have equity ownership?

100%

Of the following bond types, which is issued by a public entity?

All of the above (General obligation bonds, Auction-rate bonds, lease revenue bonds, revenue bonds)

The choices that individuals and organizations make regarding financial management are influenced by which of the following?

All three—a, b, and c—are correct (Demand, Scarcity, Price)

When the citizens of Hamilton County, Ohio, decided to raise their taxes to fund two new sports stadiums rather than to raise taxes for something like improving the educational system in the county, they missed a chance to improve the educational system. What is this known as?

An opportunity cost

A series of equal payments or receipts made at any interval of time is referred to as which of the following?

Annuity

Here, a sport team may package together guaranteed or expected revenue streams and sell bonds based on the assets.

Asset backed securities

Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time?

Balance Sheet

The major disadvantages of forming a business under a _____ structure is that there is double taxation of profits, and the cost of forming the business and operating the business is higher than other structures.

C corporations

When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used?

Debt

Which ratio measures how an organization finances its operation with debt and equity?

Debt Ratio

Which of the following is added to the risk-free rate to reflect the likelihood that the issuer will default?

Default risk premium

The __________ shows the organization's income over a specified period of time.

Income Statment

Other than __________, sport leagues in the United States are subject to the Sherman Act.

MLS

An estimation of an organization's worth according to the stock market is __________.

Market Value

When calculating the nominal interest rate, which of the following premiums is added to account for the risk of time and interest rate risk?

Maturity risk premium

In its policies regarding deferred salaries, which of the following leagues has stated that deferred payments must be placed by the team in a league fund for administration and future disbursement?

NFL

Which of the following is a profitability ratio that measures the percentage of an organization's total sales or revenues that was net profit or income?

Net profit margin

Which of the following refers to the purchasing power of a dollar?

Real value

When sport leagues do not expand into a market that can support a franchise, or when they create rules to limit the movement of existing franchises, which of the following economic concepts is being applied?

Scarcity

The vast majority of for-profit businesses in the United States operate as which of the following?

Sole proprietorships

The owners of which franchise agreed to a perpetuity when they negotiated to fold their team after the ABA and NBA merger.

St. Louis Spirits

Which financial statement tracks cash in and cash out of an organization over a specified period of time?

Statement of cash flows

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account, with depreciation occurring quickly after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, accelerating depreciation

Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the asset's use?

Sum-of-years digits, decelerating deprecation

Of the following, which is an indirect source of public financing?

Tax abatements

Which of the following is a source of governmental financing that, according to its proponents, is NOT paid for by the public?

Tax increment financing

T or F: A recent trend has seen cities opt to leave the stadium management business and either allow the team or a third party (e.g., AEG or SMG) to manage the facility in exchange for a fee.

True

T or F: An indirect source of public financing is infrastructure improvements.

True

T or F: Psychic impact is the emotional impact of having a local sports team.

True

T or F: The sale of naming rights has little to do with getting a new stadium financed and completed.

True

T or F: When cities and other political entities invest in a new stadium, the team using that stadium will receive most, if not all, of the additional revenue generated within the stadium while paying for only part of its cost.

True