Financial Management in Sport Final
expense budget
a list of a business unit's primary activities, with a dollar amount allocated to each
equity
a measure of ownership
marketability
a measure of the readiness with which an asset may be sold or liquidated
risk
a measure of the uncertainty of returns or uncertainty about future conditions that may affect that value of money
Sum of years digits depreciation
a method of depreciation that takes the non-linear loss of value into account
event activity
a planned occasion or activity (such as a social gathering) : any one of the contests in a sports program.
Retained earnings
a portion of earnings that a firm saves in order to finance operations or acquire assets
statement of cash flow
a report that tracks cash in and cash out of an organization and provides data as to whether a company has sufficient cash on hand to meet its debts and obligations
Financial management
a sector within firms that is concerned with the acquisition and use of funds to meet the goals of wealth maximization
budget
a set of financial statements based on projections resulting from a particular scenario, generally the most likely or hoped-for-scenario
Income statement
a statement of a company's income over a specified period of time, typically issued on an annual or quarterly basis. Also called a statement of earnings or profit or loss statement.
double-declining
a variation of straight-line depreciation in which a much higher amount of depreciation is allocated to the early years of depreciation schedule
Of the following, which is a trend impacting financial management in public sector sport facilities?
all of the above
Debt
something, typically money, that is owed or due.
direct economic impact
expenditures on a project or event that contribute to economic impact
Fixed cost
expenses that do not vary with volume of sales
fixed cost
expenses that do not vary with volume of sales
Although securitization is popular, facilities cannot be financed through securitization.
false
For community based programs, grants are more important for construction, and fundraising is more important for operations.
false
In a traditional gifts table, the lead gift (largest single campaign gift) should be set at 5% of the campaign total.
false
Most development departments define a major gift as a donation worth $1,000,000 or more
false
The NHL has the most strict ownership requirements of all the North American professional sport leagues, including a steep cash down-payment requirement.
false
The geographic area of impact should be determined late in an economic impact study.
false
location, construction costs, and engineering
feasibility study
fixed asset budget (volume in sales)
An expense that is added to the cost basis of a fixed asset on a company's balance sheet. Capitalized costs are incurred when building or financing fixed assets. Capitalized costs are not expensed in the period they were incurred, but recognized over a period of time via depreciation or amortization
Investments
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?
tourism taxes
include taxes on hotel stays and rental cars and may also include food and beverage taxes (visitors to arena help finance stadium)
efficiency principle
the notion that a tax should be easy understand, simple for government to collect, low in compliance costs, and difficult to evade
financing
the science of fund management, applying concepts from accounting, economics, and statistics
discount rate
1. a measure of risk or uncertainly used in present value calculations; also capitalization rate. 2. rate changed by the Federal Reserve on loans made to member banks 3. required rate of return to justify an investment
What does one mill equal?
1/1000 of a dollar
Inflation premium
An inflation premium is the part of prevailing interest rates that results from lenders compensating for expected inflation by pushing nominal interest rates to higher levels.
Maturity risk premium
A maturity risk premium is the amount of extra return you'll see on your investment by purchasing a bond with a longer maturity date. Maturity risk premiums are designed to compensate investors for taking on the risk of holding bonds over a lengthy period of time
statement rate
A rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment's cost. ... Rate of return can also be defined as the net amount of discounted cash flows received on an investment.
corporate demand
A specific corporation's portion of the overall market's purchasing interest for a good or service over a given time frame. Company demand can be computed for a business by taking its product's market share and multiplying it by the total market demand for a product
Accelerating depreciation
Accelerated depreciation is a depreciation method whereby an asset loses book value at a faster rate than the traditional straight-line method. Generally, this method allows greater deductions in the earlier years of an asset and is used to minimize taxable income.
Default risk premium
Default risk is the chance that companies or individuals will be unable to make the required payments on their debt obligations. Lenders and investors are exposed to default risk in virtually all forms of credit extensions.
Decelerating depreciation
Depreciation is the reduction in an asset's value caused by the passage of time due to use or abuse, wear and tear. Depreciation is a method of cost allocation. ... Depreciation expense is the amount of cost allocation within an accounting period.
Government
For all sport and entertainment organizations, __________ financing may include land use, tax abatements, direct facility financing, and infrastructure improvements.
Liquidity premium
If it is expected that it will be hard to sell a security, which of the following will be added?
Liquidity premium
In economics, a liquidity premium is the explanation for a difference between two types of financial securities (e.g. stocks), that have all the same qualities except liquidity. It is a segment of a three-part theory that works to explain the behavior of yield curves for interest rates.
budget unit
In the Compensation Management Budgeting component, a budget unit defines funds used for compensation.
Money and capital markets
Money markets are used for a short-term basis, usually for assets up to one year. Conversely, capital markets are used for long-term assets, which are those with maturities of greater than one year. Capital markets include the equity (stock) market and debt (bond) market.
finance unit
It is one of three well-known functions of money. It lends meaning to profits, losses, liability, or assets. A unit of account in financial accounting refers to the words that are used to describe the specific assets and liabilities that are reported in financial statements rather than the units used to measure them.
distribution ownership
Rather, it is the case that the amount of control that a shareholder achieves with a particular ownership stake is determined by the distribution of ownership, and not only by the concentration of ownership
return earnings
Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under shareholders' equity on the balance sheet.
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.
Derivation Trading
The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes
Sole proprietorship
The vast majority of for-profit businesses in the United States operate as which of the following?
forecast unit
Unit sales refers to the measure of the total sales that a firm earns in a given reporting period, as expressed on a per-unit of output basis
Prime rate
What is the interest rate that banks charge their best customers?
100%
What percentage of businesses have equity ownership?
Opportunity Cost
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?
Capital expenditure budget
Which of the following budgets allows management to forecast future requirements related to property, facilities, and major equipment?
Balance sheet
Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time?
Phoenix Coyotes
Which of the following was the first major professional sports team to declare bankruptcy in the middle of a long-term facility lease?
zero based budgeting
a budgeting approach and financial management strategy that requires building a budget from a zero base rather than the previous years budget
modified program planning budgeting systems
a budgeting concept that starts at a base higher than zero and matches spending levels with services to be performed
modified zero based budgeting
a budgeting concept that starts at a base higher than zero and matches spending levels with services to be performed
Subchapter S corporations
a business structure under which shareholder's distributions are taxed as ordinary income and shareholders are shielded from personal liability
Limited liability corporations (LLC)
a business structure under which shareholders distributions are taxed as ordinary income and shareholders are shielded from personal liability
C Corporations
a business structure under which the company may seek investors and conduct business activities around the world. The corporation must hold annual meetings, elect a board of directors, and provide specific annual paperwork to the government and to shareholders
variable cost
a cost that varies with the level of output.
Straight-line depreciation
a depreciation method in which the total cost of the item, less its estimated salvage value, is divided by its useful life to determine its yearly depreciation allowance
cash budget
a forecast of how much each an organization will have on hand in a specific time period and how much it will need to meet expenses during that time
revenue budget
a forecast of revenues based on projections of the organizations sales
Incremental budgeting
a form of line-term budgeting in which next years budget is arrived at by either decreasing or increasing last year's budget, based on projected changes in operations and conditions
synergistic premium
an additional amount that a buyer would be willing to pay for an asset or business because ownership would provide benefits beyond those of owning the asset or business as a standalone investment
Program planning budgeting systems
an approach to developing a program budget that falls between the line item budget and the performance budget
controlling interest
an ownership interest that effectively controls the business
scaricity
availability of a resource does not meet current demand
Gift
charitable donations, either cash or in-kind, made to an organization
Units of production
deprecation calculated by dividing the total number of items produced during a given year by the total number of items that asset will produce during its useful life
arms length
describes a buyer and seller who are not related to each other in any way, individuals, businesses, or estates; they have no familial relationship, neither company subsidiary of another, neither company has an ownership interest in the other
indirect economic impact
economic impact that represents the circulation of initial expenditures in economy
tax abatements
exempt the beneficiary from paying certain taxes such s property or sales (governments forgoing on collection of taxes)
Individual ticket demand
is the act of reselling tickets for admission to events. Tickets are bought from licensed sellers and are then sold for a price determined by the individual or company in possession of the tickets.
time preferences for consumption
is the current relative valuation placed on receiving a good at an earlier date compared with receiving it at a later date.
Sustainability
meeting today's needs without compromising the future generation's ability to meet their own needs
accounts receivable
money owed to a company by its debtors
sales tax
most common soure of public financing for sport facilities. (goods and services)
Finance
science of fund management, includes accounting, economics and satistics
Investments
security choices made by individual and institutional investors as they build portfolios
sin taxes
taxes on all and cigs; efficient at revenue bc demand is price elastic
economic impact
the net economic change in host community resulting from spending attributed to an event or facility
marginal cost
the cost added by producing one additional unit of a product or service.
Financial Management
the decision making of acquisition or use of funds
market demand
the demand within a marketplace for a facility
inflation
the devaluation of money over time
induced economic impact
the effect of direct and indirect economic impacts on earnings and employment
vertical equity
the idea that a tax should not cause poorer persons to bear a disproportionate share
benefit principle
the idea that those who benefit from a particular project ought to be the ones taxed to pay for it
horizontal equity
the idea that those with similar incomes should pay similar amounts of a tax
Federal Funds rate
the interest rate on overnight loans between banks
General partnerships
the joining of two or more individuals with the intent to own and operate a business
economic impacts
the net economic change in a host community resulting from spending attributed to an event or facility
Demand
the quantity of a product or service desired by consumers
real-risk free rate
the rate of interest on a diskless security if inflation were not expected; the rate of interest on a short-term U.S. Treasury bill in an inflation-free environment
Real-risk free rate
the rate of interest on a risk less security if inflation were not expected; the rate of interest on a short-term U.S. Treasury bill in an inflation-free environment
production opportunites
the reason a company needs capital and the possibility that the money can be turned into more money or benefits
A use tax is a levy imposed on certain goods and services that are purchased outside a state and brought into the state.
true
Not measuring opportunity cost causes the overestimation of economic impact.
true
price
what one party (the buyer) must give to obtain what is offered by another party (the seller)
