ECO 330 exam 1
In the NFL, gate receipts are approximately what percentage of total revenue? 22% 28.5% 37% 15.0%
15.0%
In the NBA, gate receipts are approximately what percentage of total revenue? 22.3% 37% 28.5% 15.5%
22.3%
In MLB, gate receipts are approximate what percentage of total revenue? 22% 37% 29% 15.5%
29%
In the context of antitrust laws, why does the structure of the league matter? A collection of independent teams increases market power A league ruled as a single entity is exempt from antitrust laws. A collection of independent teams is exempt from antitrust laws. A league ruled as a single entity is subject to antitrust laws.
A league ruled as a single entity is exempt from antitrust laws.
What is a regional sports network (RSN)? A network that broadcasts sports events on a global scale. A network that focuses solely on niche sports with a limited following. A network that exclusively covers sports in a specific geographic area or region. A network that broadcasts only international sports events.
A network that exclusively covers sports in a specific geographic area or region.
Strategic ticket pricing includes? Variable ticket pricing All of the above Dynamic ticket pricing Bundling tickets Price discrimination
All of the above
What are the assumptions used in the production possibilities curve? Fixed # of teams Fixed games Fixed roster size All of the above Fixed salary cap/luxury tax
All of the above
Sports pricing is typically elastic, however, teams price in the inelastic range of demand. Which of the following best explains this? All of the above are reasons. Teams trying to build a loyal fan base. Complement goods and services offset the lower price of tickets. Teams reducing prices in exchange for political considerations.
All of the above are reasons.
Regional sports networks: Often includes an ownership stake in the RSN Can give large market teams a significant advantage over small market teams All of the answer choices are true about RSN's Exclusive deals between a local network and a team
All of the answer choices are true about RSN's
Which of the following is NOT true about NBA revenue sharing? National broadcast contracts are shared equally NBA shares 50% of all local revenue, minus certain expenses Licensing revenue is shared equally All teams must share 48% of their local revenue
All teams must share 48% of their local revenue
Which of the following is NOT true about dynamic ticket pricing? The elasticity of demand is irrelevant Allows for higher ticket prices if the relative quality of the game is higher than expected. Allows team to change ticket prices if there is bad weather All the answer choices are true
All the answer choices are true
Which of the following is true about the structure of NHL revenue sharing: Licensing is shared equally All the answer choices provided are true of the revenue-sharing pool is funded by the top 10 revenue teams. NHL shares approximately .061% of projected hockey-related revenue National TV contracts are shared equally
All the answer choices provided are true
Would an NFL team move from a larger market to a smaller market? Gate revenue in the NFL is about the same regardless of market size A new stadium may have more premium seating, which generates more revenue for the team All the answer choices provided are true Broadcast revenue is equally shared so market size
All the answer choices provided are true
Which of the following are the consequences of the leagues having market power? Higher ticket prices. All the answers provided are consequences of leagues having market power. Pressure on local governments to help finance new stadiums. Reduced competition.
All the answers provided are consequences of leagues having market power.
The 1961 Sports Broadcasting Act Allowed teams to individually negotiate TV contracts. Allowed the league to collectively negotiate TV contracts. Reinstated the court's 1954 ruling against the NFL Prevented broadcasting blackouts for all games.
Allowed the league to collectively negotiate TV contracts.
Which of the following best defines diminishing marginal returns? As you add players to a roster, the number of wins they generate will start to decline None of the above. An increase in roster will reduce marginal returns As you add players to a roster, the amount of marginal revenue will start to decline
As you add players to a roster, the number of wins they generate will start to decline
According to the Federal League, how did the AL and NL monopolize the pool of talent? Blacklisting players By requiring the players to join a player's union. By requiring players to sign a reserve clause. By forcing players to only play in MLB.
By requiring players to sign a reserve clause.
The US Supreme Court has ruled the NFL is a? An oligopoly A single-entity Collection of independent firms A monopoly
Collection of independent firms
If an increase in the price of product X causes the demand for product Z to decrease, then product Z is: Substitute good Complementary good Normal good Inferior good
Complementary good
What antitrust issue arose during the merger negotiations between the WHA (World Hockey Association) and the NHL (National Hockey League)? Disputes over broadcasting rights. Accusations of game-fixing and corruption. Concerns about NHL monopolizing the pool of talent Allegations of player salary disputes.
Concerns about NHL monopolizing the pool of talent
Which of the following is a consequence of centralized licensing agreements? Decreases the team's market power Less profitable teams will receive more of the revenue Small market teams will receive more of the revenue Creates an even financial playing field among the teams
Creates an even financial playing field among the teams
Network demand for sports is a derived demand. What is it derived from? Demand from the players Demand from corporations Demand from advertisers Demand from the fans
Demand from advertisers
In a dynamic ticket pricing model, a popular NBA team is playing a crucial playoff game against their arch-rivals. As the game day approaches, the ticket prices start to rise due to high demand. This is an example of: Variable ticket pricing. First-degree price discrimination. Third-degree price discrimination. Dynamic ticket pricing.
Dynamic ticket pricing.
What impact does the NFL's revenue sharing have on competitive balance within the league? It has increased competitive balance as a result of teams joining regional sports networks. It has decreased competitive balance as a result of teams joining regional sports networks. Equal revenue sharing removes the impact a large TV market has over a small TV market. Unequal revenue sharing removes the impact a large TV market has over a small TV market.
Equal revenue sharing removes the impact a large TV market has over a small TV market.
If event A has high positive correlation with even B, which of the following is NOT true? Event A causes event B to increase The correlation coefficient is approximately .8 or higher If event A increases, event B will also increase All of the above are true
Event A causes event B to increase
The uncertainty of outcome hypothesis is best defined: Fans will be drawn to a game when they know their team will win. None of the above. Fans prefer a game when their team has just over a 60% chance of winning. Fans will only view a game if they know the outcome.
Fans prefer a game when their team has just over a 60% chance of winning.
Which of the following is not a limitation of spending money to increase win percent? Fixed costs These are all considered limitations of spending money to increase win percent. Profit mentality of the owner Revenue structure
Fixed costs
Venue revenue includes all of the following except: Concessions Parking Gate receipts Luxury boxes Stadium naming rights
Gate receipts
Public Law 89-800 included all of the following provisions, except: Gate revenue is to be shared No Friday or Saturday games Stadiums under 50,000 would need to be renovated or replaced No existing team would relocate
Gate revenue is to be shared
What are the six main sources of revenue for a sports franchise? Gate revenue, venue revenue, broadcast revenue, seat licensing revenue, licensing revenue, and NFL revenue. Gate revenue, licensing revenue, broadcast revenue, advanced media, venue revenue, and transfer revenue. Gate revenue, broadcast revenue, licensing revenue, parking revenue, venue revenue and tax revenue Gate revenue, broadcast revenue, ticket sales, licensing revenue, venue revenue, and shared revenue.
Gate revenue, licensing revenue, broadcast revenue, advanced media, venue revenue, and transfer revenue.
Barriers to entry include all the following, except: Higher ticket prices Management of the leagues as cartels League negotiated broadcast contracts Exclusive geographic territories
Higher ticket prices
Which of the following is a determinant of elasticity? How easily the product can be substituted. Number of buyers. Consumer expectations. Consumer income.
How easily the product can be substituted.
What primary advantage do regional sports networks give MLB teams? More Fan Engagement Priority Seating for Season Ticket Holders Increased Revenue from Broadcasting Rights Additional exposure within the local market
Increased Revenue from Broadcasting Rights
Section 1 of the Sherman Antitrust Act prohibits all the following except? Formation of cartels Collusion Restraint of trade Individual actions to monopolize a market
Individual actions to monopolize a market
What does the "per se" rule of the Sherman Act refer to? It applies only to monopolistic practices and attempts to monopolize. It applies when an activity is considered inherently anticompetitive and illegal without needing to prove actual harm to competition. It pertains to deceptive advertising practices in the marketplace. It allows for certain agreements that may restrain trade as long as they can demonstrate a pro-competitive justification.
It applies when an activity is considered inherently anticompetitive and illegal without needing to prove actual harm to competition.
Which of the following is true about broadcast revenue? It will lead to higher ticket sales None of the answers provided are true All leagues earn this revenue through regional sports networks It is the primary source of revenue for the leagues
It is the primary source of revenue for the leagues
What is the primary characteristic of the "rule of reason" approach in Sherman Act cases? It requires a detailed analysis of the specific circumstances and potential effects on competition. It is applied only in cases involving price fixing. It automatically presumes all actions to be anticompetitive. It focuses exclusively on the intent of the parties involved.
It requires a detailed analysis of the specific circumstances and potential effects on competition.
Which of the following statements best describes Section 2 of the Sherman Act? It specifically targets monopolization and attempts to monopolize. It primarily addresses deceptive advertising practices in the marketplace. It prohibits agreements among competitors that restrain trade. It focuses on preventing mergers that may substantially lessen competition.
It specifically targets monopolization and attempts to monopolize.
Why did the courts believe the NFL would fail if they were not allowed to collectively negotiate TV contracts? Large market teams would dominate The level of absolute quality would decline There would be an uneven number of teams in the league Large market teams would win all the games
Large market teams would dominate
Which of the following is not one of the four components of competitive balance? Drafting Limits on roster size Luxury tax rules Salary caps Revenue sharing policies
Limits on roster size
Which baseball team has the highest Regional Sports Network (RSN) revenue? Chicago Cubs Boston Red Sox New York Yankees Los Angeles Dodgers
Los Angeles Dodgers
Which of the following is NOT true about MLB revenue sharing? The top 12 teams are disqualified from the revenue-sharing pool The top 12 teams will still contribute 48% of their revenue if they are paying the luxury tax MLB shares 52% gate revenue revenue MLB shares 48% of local revenue
MLB shares 52% gate revenue revenue
Which league generates the most licensing revenue? MLB PGA NFL NHL NBA
NFL
Which of the following is true about NFL revenue sharing? NFL does not share licensing revenue NFL shares 60% of gate receipts NFL shares 40% of gate receipts NFL does not share luxury box revenue
NFL shares 40% of gate receipts
Although leagues need to collude to provide 'uncertainty' to the consumer, what type of collusion would be considered 'illegal' by antitrust courts? Enforcing a common set of game rules. Allowing teams to enter any market they choose. Establishing a common game schedule. None of these answer choices would be considered illegal
None of these answer choices would be considered illegal
Which of the following is NOT a determinate of demand? Opportunity cost of attending a game. Number of home games Uncertainty of outcome. Team loyalty or the bandwagon effect. Changing in consumer income.
Number of home games
What were the four main market structures discussed in class? Free Market, Socialism, Communism, Monopoly. Oligopoly, Pure competition, Monopolistic Competition, Monopoly Free Market, Communism, Monopolistic Competition, Monopoly None of the above.
Oligopoly, Pure competition, Monopolistic Competition, Monopoly
Public choice hypothesis states: Owners keep prices low in exchange for political considerations Owners keep prices lower because of the marginal revenue of concession Owners keep prices low to reduce the "fair-weather fan" phenonmenon. Owners keep prices lower because they receive utility from owning a sports team
Owners keep prices low in exchange for political considerations
The primary reason owners price tickets in the inelastic range of demand: Owners keep prices lower because of the public choice hypothesis Owners keep prices lower because of the sportsman hypothesis Owners keep prices lower because of the marginal revenue of concession Owners keep prices lower because of the habitual consumption model
Owners keep prices lower because of the marginal revenue of concession
What are some methods to achieve perfect price discrimination (check all that apply)? Market study Dynamic ticket pricing Variable ticket pricing Perform a willingness to pay assessment on your fans
Perform a willingness to pay assessment on your fans
In the short run, which of the following is true? Coach's contracts can change Marginal costs are increase Stadium capacity can increase or decrease Player's contracts are fixed
Player's contracts are fixed
Which of the following are the consequences of the leagues having market power? Higher owner profits Lower ticket prices. Pressure on local governments to help finance new stadiums. Increased competition.
Pressure on local governments to help finance new stadiums.
In the realm of professional sports, antitrust laws primarily focus on: Ensuring equal playing time for all athletes Regulating ticket prices for sporting events Preventing anticompetitive behavior among sports organizations Promoting the use of performance-enhancing drugs
Preventing anticompetitive behavior among sports organizations
How did the NFL violate antitrust laws regarding broadcasting? Allowing teams to negotiate their TV contracts. Prohibiting teams from individually negotiating broadcasting contracts. Equally sharing all TV revenue. Only broadcasting on certain TV networks
Prohibiting teams from individually negotiating broadcasting contracts.
Although leagues need to collude to provide 'uncertainty' to the consumer, what type of collusion would be considered 'illegal' by antitrust courts? Enforcing a common set of game rules. Establishing a common game schedule. Allowing teams to enter any market they choose. Prohibiting teams from negotiating their TV contracts.
Prohibiting teams from negotiating their TV contracts.
The determents of elasticity include: Weather Consumers income Proportion of income Opportunity cost of travel
Proportion of income
Which of the following is NOT a reason RSNs give large market teams a competitive advantage? Only a small portion of the RSN revenue is shared with other teams. RSN gives the team the ability to pay more for players RSN gives the team higher revenues The additional revenue can boost market power
RSN gives the team higher revenues
Which of the following is NOT one of the four fronts that leagues typically violate antitrust laws? Mergers or Expansions Broadcasting Labor Revenue
Revenue
Why don't most firms price in the inelastic range of the demand curve? Market share is decreasing Revenue is decreasing Quantity sold is declining Costs are increasing
Revenue is decreasing
All the following are the key components of the NHL revenue-sharing policies, except? The NHL shares approximately .061% of projected hockey-related revenue Licensing revenue is shared equally There are three funding sources for the revenue-sharing pool National broadcast contracts are shared equally Revenue sharing is distributed to teams based on market size
Revenue sharing is distributed to teams based on market size
Which of the following are reasons MLB has a low correlation between a team's win percent and spending on team payroll? MLB players face high rate of injury All the above are reasons. Salary arbitration in MLB. MLB salary cap that limits spending.
Salary arbitration in MLB.
Four components of competitive balance include: Profit sharing Limited expansion teams Salary caps Roster size
Salary caps
A licensed jersey would be included in: Soft lines Multimedia lines Licensing revenue Hard lines
Soft lines
The largest licensing category is? Soft lines Hard lines Multimedia lines Network lines
Soft lines
In the world of sports, what does "rent-seeking" behavior typically refer to? Athletes seeking higher salaries and better contracts. Sport organizations trying to secure special privileges, subsidies, or concessions without creating new value. Fans seeking to attend games for free. Sports teams attempting to maximize their revenue.
Sport organizations trying to secure special privileges, subsidies, or concessions without creating new value.
Which of the following is NOT one of the drivers for dynamic ticket pricing in NHL? Franchise Value Time of the game Playoff division Stadium size
Stadium size
The determents of elasticity include: Consumers income Weather Substitutability Opportunity cost of travel
Substitutability
The all-or-nothing demand curve results in: Antitrust lawsuits Advantages for large market teams Regional sports networks Taxpayer-funded stadiums
Taxpayer-funded stadiums
The consequences of accepting the all-or-nothing demand curve include: More competitive team. Lower marginal costs. Less revenue sharing with other teams in the league. Teams receive better facility lease arrangements
Teams receive better facility lease arrangements
Why do NFL games have the smallest variation in gate revenue compared to other leagues? The NFL plays fewer games, thus typically at stadium capacity The NFL has more teams than other leagues NFL games are longer than games in other leagues The NFL is prone to player injuries
The NFL plays fewer games, thus typically at stadium capacity
Which of the following is NOT a reason RSNs give large market teams a competitive advantage? RSN gives the team the ability to pay more for players The additional revenue can boost market power Only a small portion of the RSN revenue is shared with other teams. RSN gives the team higher revenues
The additional revenue can boost market power
What did the U.S. Supreme Court rule that MLB was exempt from antitrust law? The court believed MLB should be considered inter-state commerce, thus exempt from antitrust law MLB would collapse without the exemption Without the exemption, large market teams would dominate the league The court believed MLB was a public exhibition, thus exempt from antitrust law
The court believed MLB was a public exhibition, thus exempt from antitrust law
What impact can a large market team have on the salary cap? The high revenues of a large market team can increase league revenue, thus increasing the salary cap Large market teams often exceed the salary cap Large market teams have no real impact on the salary cap Large market teams are more popular, thus able to attract better players
The high revenues of a large market team can increase league revenue, thus increasing the salary cap
Why would a network sponsor a sport even when the network loses money by doing so? The high ratings The league could lend credibility to the network The market power of the league The number of games in a season
The league could lend credibility to the network
What are the two different licensors that are involved in sports licensing? Players license their names and images and the owners license their players and uniforms. Players license their names and images and each team licenses their name and logo. The league licenses logos, team names, etc., and teams license their stadiums. The league licensing logos, team names, etc., and players licensing their names and images
The league licensing logos, team names, etc., and players licensing their names and images
In the 1954 antitrust lawsuit against the NFL, how did the court rule in favor of the NFL? The league was prohibited from blacking out games broadcast in another team's home territory. The league was allowed to restrict other teams from broadcasting in another team's home territory even if it was an away game. The league was not able to collectively negotiate TV contracts The league was allowed to blackout out games in a team's home market only when the team had a home game.
The league was allowed to blackout out games in a team's home market only when the team had a home game.
If the league was ruled a collection of independent firms, which of the following would be true? The league would be guilty of collusion The league would be an oligopoly The league would be exempt from antitrust laws The league would be subject to antitrust laws
The league would be subject to antitrust laws
The limitations of the production function include all of the following except? The length of season Determining the output in sports The impact of coaching quality Knowing what inputs to use
The length of season
Congressional approval of Public Law 89-800 allowed? Blackout home games in the NFL AL and NL to merge into MLB The merger of AFL and NFL NFL to collectively bargain TV rights
The merger of AFL and NFL
What impact does revenue sharing have on market power? Revenue sharing does not impact a team's market power The more equal the revenue sharing, the more market power a team has The lower the revenue sharing, the more market power a team has Higher revenue sharing results in a more profitable team
The more equal the revenue sharing, the more market power a team has
Derived demand would be? Watching the even on TV instead of attending the game Viewing the event live or on TV Going to a move instead of attending a game The sporting event is an input into the production of another good or service
The sporting event is an input into the production of another good or service
Under what conditions could an MLB team receive a refund from their revenue sharing? The team is located in a smaller market The team finished last the previous season The team's payroll is under the luxury tax threshold Team payroll is over luxury tax but does not exceed surcharge tiers
The team's payroll is under the luxury tax threshold
Which of the following is NOT a reason an NFL team has market power in their host city? They have competing leagues such as the NBA, NHL, and MLB. All of the above are reasons the NFL has market power in their host city. Extensive revenue sharing that minimizes the impact of market size. NFL has league-negotiated national TV contracts.
They have competing leagues such as the NBA, NHL, and MLB.
Fixed costs include all the following, except? Ticket prices Coach contracts Current facilities Player contracts
Ticket prices
What was the primary purpose of the MLB Reserve Clause? To prevent players from being drafted by the military during times of war. To regulate the distribution of tickets for postseason games. To establish a salary cap for all players in Major League Baseball. To give teams the exclusive rights to negotiate with their players after their contracts expire.
To give teams the exclusive rights to negotiate with their players after their contracts expire.
What is the main purpose of the Curt Flood Act of 1998? To provide financial support for retired MLB players. To regulate the sale of MLB merchandise. To establish salary caps for MLB players. To restore antitrust laws to broadcasting negotiations To restore certain antitrust laws to labor negotiations
To restore certain antitrust laws to labor negotiations
Which of the following is NOT the reason an NFL team has market power in their host city? NFL has league-negotiated national TV contracts. Most teams have exclusive geographic territories Variable and dynamic ticket pricing Extensive revenue sharing that minimizes the impact of market size.
Variable and dynamic ticket pricing
Distinguish between variable ticket pricing and dynamic ticket pricing. None of the above. Variable ticket pricing is based on location within the stadium, and dynamic ticket pricing is based on premium seating. Variable ticket pricing is based on factors during the season, and dynamic ticket pricing is based on factors before the season starts. Variable ticket pricing is based on factors before the season starts, and dynamic ticket pricing is based on factors during the season. Variable ticket pricing is based on premium seating and dynamic ticket pricing is based on regular seat pricing.
Variable ticket pricing is based on factors before the season starts, and dynamic ticket pricing is based on factors during the season.
Variable ticket pricing would be best used for Variable ticket pricing should be used for all of these Weekend games Rivalry games Prime time network games
Variable ticket pricing should be used for all of these
A direct substitute would be? Attending a hockey game Going to a movie instead of attending the game. Watching the event on TV instead of attending the game. All of the above are direct substitutes.
Watching the event on TV instead of attending the game.
What drives market power in sports? Revenue sharing policies Barriers to entry No competing leagues all the answers provided drive market power
all the answers provided drive market power
