ISS 328 Final- Assignment Answers

Suppose the demand for tickets to the Big 10 women's basketball tournament at Banker's Life Fieldhouse in Indianapolis is shown below. Capacity is 18,000 and demand line starts at $300. To maximize revenue from ticket sales, what price should the NCAA set?

$150

Super Bowls historically have been among the highest rated TV shows, that is shows with the largest number of viewers. Because of this, Super Bowl advertising is important. In recent years, the typical cost of a 30-second ad on the Super Bowl broadcast has been about

$5,000,000

According to NCAA data, in 2021 what percentage of student-athletes in all components of Division 1 were women?

47%

Which of the following is most likely a true local economic benefit to a city from hosting the NCAA Final Four (basketball tournament)? A. Increase in restaurant spending during the event compared to other periods B. Full amount of hotel charges paid by those attending the event C. Concession spending by city residents at the games/event D. Ticket purchases from the NCAA or StubHub E. Travel expenses (air, train, car) for visitors to the event

A. Increase in restaurant spending during the event compared to other periods

How much greater was the average attendance at MSU home football games in 2020 than the approximate average attendance per game for FBS college football overall (among the 130 teams in the FBS, the top division of college football) last year?

About twice as great

In a recent normal year, about how much money does the Big 10 conference distribute to member schools from its broadcasting contracts and earnings from post-season events (including the College Football Playoff and NCAA basketball tournament)?

At least $50 million

Which of the following gambling activities in the US is legal currently? A - Winning money playing poker on the internet. B - Betting on the outcome of a college football game at a casino in Las Vegas. C - Betting on the outcome of a Rutgers football game at a casino in New Jersey. D - Betting a dinner with your friend based on the outcome of the MSU football team's bowl game.

B. Betting on the outcome of a college football game at a casino in Las Vegas.

The probability of a Division 1-A football or basketball player having a professional career in that sport is:

Between 1-5%

The first Black head coach of a major US pro sports team was

Bill Russell for the Boston Celtics

According to the most recent data from USA Today, which college basketball coach has the highest salary and how much is it?

Bill Self, $10.2 million

Under its recent contract (that ran through 2021) how much does ESPN pay the NFL annually for the rights to broadcast Monday Night Football?

$1.9 Billion

In recent years, naming rights for sports facilities have become an important form of marketing and a source of revenue for both pro and college teams. Which statement reflects the state of naming rights for college sports facilities? A. The typical annual value for college naming rights is less than for naming rights of professional sports venues. B. The largest college naming rights agreements are for the University of Washington football stadium from Alaska Airlines and the stadium where USC plays home football games from United Airlines. C. The largest college naming rights revenue for the MSU athletics department is from the Breslin Center and Munn Arena.

Both A and B

Compare the market value of the Detroit Tigers to the Chicago White Sox (MLB) and the value of the Detroit Red Wings to the Chicago Blackhawks (NHL). (You will want to look up the value for pro sports teams as estimated by Forbes using the URL from the class lecture notes). In each case, which is the higher value team?

Both Chicago Teams: White Sox and Blackhawks

Which statement regarding NCAA sports and alcohol is correct? A. NCAA rules prohibit the sale of alcoholic beverages at any NCAA school athletic event. B. Advertising for alcoholic beverages is not allowed at an athletics event or broadcast. C. Alcoholic beverages are sold at more than 50 college sports venues including several in the Big 10. D. Alcoholic beverages are sold only at college sports venues that are located off campus. E. No schools in the Big10 permit alcohol sales at athletic events.

C. Alcoholic beverages are sold at more than 50 college sports venues including several in the Big 10.

Which of the following is true? A. Top athletic superstars earn much less than the top entertainment superstars. B. MLB players have the highest average salary among the four major professional sports leagues. C. NFL and NHL players have the lowest average salary among the 4 major professional sports leagues. D. Professional sport salaries have increased about the same rate as the increase in national economy since the 1970s.

C. NFL and NHL players have the lowest average salary among the 4 major professional sports leagues.

In response to several state laws (CA: "Fair Pay to Play") and court cases, the NCAA is now allowing student-athletes to earn income from NIL. What is "NIL?"

Compensation for use of a student-athlete's name, image, or likeness.

Which of the following statements about gambling in the U.S. is false? A. A college athlete at an NCAA institution may not place a bet in Las Vegas on an NBA game without violating NCAA rules. B. A football coach at an NCAA institution may not place a bet in Las Vegas on an English soccer game without violating NCAA rules. C. An MSU student (not an athlete) may not legally participate in an on-campus pool picking the winners in the NCAA basketball tournament. D. An athletics director at an NCAA institution may not participate in the World Series of Poker (in Las Vegas) without violating NCAA rules. E. An MSU professor may not legally place a bet on the British Open with a London betting house over the internet.

D. An athletics director at an NCAA institution may not participate in the World Series of Poker (in Las Vegas) without violating NCAA rules.

Which professional sports team has the highest market value (according to Forbes' latest data)?

Dallas Cowboys

For the 2021 season, which MLB teams had to pay the "competitive balance tax" (sometimes referred to as the luxury tax)?

Dodgers and Padres

If a game is not sold out, then the marginal cost to a team of letting one additional fan into the game venue is

Essentially zero

Which statement best reflects recent graduation success rates for college athletes?

Graduation rates for "revenue sports" are lower than for other sports.

Unions of professional sports athletes have

Grown in importance at the same time overall union importance in the economy has declined.

How Did ESPN Begin?

It began as an attempt to broadcast one college's games

What was the effect of the federal Sports Broadcasting Act of 1961?

It permits the pro sports leagues to negotiate league-wide media contracts and specify how the revenue is divided.

How does ESPN make money?

It receives advertising revenue and receives payments from broadcast providers (cable and satellite).

Who authored, sponsored, and was most responsible for the adoption of the first major federal antitrust (anti-monopoly) law in the U.S., adopted in 1890? (You may have to do some independent research for this one.)

John Sherman

In the U.S. the spectator sports industry accounts for about what percentage of national GDP (that is, total national income)?

Less than 1%

According to Forbes, what pro athlete earned the most money in 2021-22, and how much is that?

Lionel Messi, $130 million

In the NFL (pro football), what source of revenue is not shared?

Luxury boxes and suites

Which professional sports league has had the fewest challengers (rival leagues) historically?

MLB

Among MLB, the NFL, and the NBA in the U.S., which team was the last overall to add non-white players? And which was the last team in MLB only to add non-white players?

MLB, Boston Red Sox

Which US pro league has the lowest average face-value ticket price?

MLB, most amount of games

Suppose adding pitcher Mark Mulder to the Detroit Tigers roster yielded 3 additional wins and each additional win added $3 million in revenue to the Tigers. The Tigers paid Mulder $5 million. What is the Marginal Revenue Product of Mulder to the Tigers, and what is the amount of monopsonistic exploitation given his salary?

MRP: $9 million Exploitation: $4 million

What is the most recent (cohort year 2014) official Graduation Success Rate (GSR) for the MSU men's and women's basketball teams as measured by the NCAA?

Men's BB: 100 Women's BB: 82

Among the major revenue-generating college sports, the sport with the relatively greatest number of Black head coaches is

Men's Basketball

What is the APR for the MSU men's and women's basketball teams according to the most recent data (for 2020-21)?

Men's: 980, Women's: 948

Among the four major Detroit pro sports teams, which had the highest and which had the lowest attendance for last (non-COVID) season? (You will want to look up the attendance for pro sports teams for last season (2019-2020 or 2020-21) using the URL from the class lecture notes).

Most- Tigers, Least- Lions

Of the four major pro sports leagues in the U.S., which was the first to sell corporate advertising on the uniform?

NBA

Since 2000, which of the pro sports leagues in the U.S. has had the fewest number of teams win the league championship?

NBA

Which of the four major professional leagues in the US has the greatest average attendance per event?

NFL

Which pro league gets the smallest share (that is, percentage) of revenue from ticket sales?

NFL

Which pro sports league in the U.S. relies on broadcasting (TV) for the largest share of revenue?

NFL

Which pro sports league in the US shares the most revenue?

NFL

Which of the four major professional leagues in the US was the first to integrate in modern times, that is include non-white players?

NFL, in 1946

Which US pro league has the highest average face-value ticket price?

NFL, least amount of games

Which pro league gets the largest share (that is, percentage) of revenue from ticket sales?

NHL

Sometimes owners of sports teams are not concerned about the amount of profit earned by the team because they are using the team to sell another product. Historical examples often cited in the US include the Atlanta Braves and Anaheim Mighty Ducks. According to research, pro baseball in Japan, especially represented by the Yomiuri Giants, likely started as a way to increase sales of what product?

Newspapers

For 2021 (most recent NCAA data), how many college athletics programs generated positive net revenue (that is, had generated revenue greater than expenses or to put it another way, covered their costs)?

Nine

After the implementation of Title IX: A. the number of men's and women's teams are equal at each school. B. the coach's salary for women's basketball equals that for men's basketball. C. the total (aggregate) amount of money spent for athletic scholarships is the same for women and men student-athletes. D. the total (aggregate) amount of money spent for women's sports is within 2 percentage points of the total amount spent on men's sports.

None of the above

According to the research by Baade, Baumann, and Matheson reported in the Journal of Sports Economics, over the long run localities that have major college football teams and games A. see higher income and more employment than similar cities without football. B. have higher income and more employment than similar cities without football if the local team consistently has a winning record. C. have higher income and more employment than similar cities without football if the local team has a large number of home games.

None of the above is correct.

Which professional athlete earned the most in endorsement income for 2021-22 (according to Forbes)?

Roger Federer

Colleges as well as pro teams have embraced secondary ticket markets, and most have contracted with one company for reselling their tickets. For example, "The Official Ticket Marketplace of the Spartans" is

StubHub

"Generated" revenue includes all of the following except

Student athletic fees

Considering play during the season, which statement best characterizes competitive balance historically (variation in winning percentages) among the U.S. pro sports leagues?

The NFL has been the most balanced and NBA the least.

According to data reported by USA Today, which college athletics department had the greatest revenue in 2019-20?

The University of Texas

If an individual buys a ticket to a sporting event from another individual through the official marketplace "StubHub", which is true?

The buyer, seller, home team, and StubHub are all better off (or at least not worse off).

Suppose in one league the observed actual standard deviation in winning percentages among the teams in one year is 0.375. If the teams were all of equal quality so the each team had an equal chance of winning every game, the expected standard deviation of winning percentages would be 0.125. Calculate the competitive balance statistic "R." What do you conclude?

The league is very imbalanced

More than 45 years after the implementation of Title IX, what happened to the number of men's and women's athletic teams at NCAA member schools?

The number of women's teams increased and the number of men's team increased

The NFL is the most valuable sports league in the U.S. Who owns the NFL?

The owners of the NFL franchises

The NCAA is

a voluntary organization established by colleges and governed by college presidents.

Suppose a professional sports team in the US has an operating profit for a year (that is, operating revenue is greater than operating costs that year). Despite earning a profit, such a team may pay no US federal business income tax that year because

additional tax deductions for player depreciation may eliminate the operating profit and create a tax loss.

According to the most common application of Title IX, participation on women's intercollegiate athletics teams

and men's teams should be proportional to the enrollment of men and women within +/- 2 percent.

MLB is exempt from US antitrust laws because

baseball is not interstate commerce, according to a Supreme Court case and decision.

The largest source of generated revenue for FBS athletics departments is

broadcasting/postseason earnings

If the quality of a sports team decreases dramatically (that is, it wins many fewer games or loses by larger margins), then

demand for tickets is expected to decrease (shift leftward) because of a change in consumers' attitudes about the team.

Recent "APR" reforms of academic standards for student-athletes by the NCAA:

focus more on progress towards graduation than on admission standards.

According to the PASPA

gambling was legal in the U.S. on sports only if it was in states where it existed before 1992.

According to accounting data, athletics departments at NCAA institutions

in the Big 10 only some schools generate positive net revenues for athletics.

The observed increase in sports ticket prices in recent years is primarily due to

increase in fan interest in and increase in the demand for attending games.

Since 1970, the salaries of professional athletes in aggregate have

increased at a faster rate than salaries in the economy overall.

A traditional Full Athletic Scholarship according to the NCAA definition included:

just tuition, room and board, and books

Gambling or betting in the US on the outcome of a college football game is

legal if the bet is placed with a registered gambling organization in a state where the state government has authorized it.

A monopsonist pays a wage that is

less than the marginal revenue product of the worker.

According to NCAA regulations, a college athlete or coach

may gamble legally but not on any sporting events (college or professional).

A player on the Detroit Lions who lives in Michigan owes taxes where?

owes state income tax to Michigan and other states where the Lions play (if that state has an income tax).

Ford Field, where the Detroit Lions play football, is owned by

owned jointly by the City of Detroit and Wayne County.

The largest cost item in the athletic department budgets of FBS (Division IA) schools, on average, is for

salaries and benefits of coaches and athletic department staff.

The original purpose for which the NCAA was founded was to

set rules of play for college football to curb violence.

The "Reserve Clause" meant that

teams had a perpetual option (or right) to keep players.

According to the most recent estimates, the most valuable of the four Detroit-area professional sports teams is the Detroit Lions primarily because?

the Detroit Lions benefit from being in the most valuable of the U.S. professional sports leagues.

The Cornell-Dartmouth football game in 1940 is especially interesting because

the eventual outcome represented the notions of high character, honesty, and fair play.

Baseball teams might charge higher prices for Saturday games than Tuesday games because

they expect demand to be greater on Saturday than Tuesday.

The Chicago White Sox baseball players implicated in the 1919 "Black Sox" Scandal for "fixing" the outcome of the World Series were

tried in court and found innocent but banned from baseball anyway.

The current "Full Cost of Attendance" for college athletes according to the NCAA definition equals

tuition, room & board, books, supplies, and transportation

What percentage of revenue for the four major professional sports leagues in the US comes from ticket sales, on average approximately?

25%

Suppose the demand for tickets to the Big 10 women's basketball tournament at Banker's Life Fieldhouse in Indianapolis is shown below. Capacity is 18,000. At the revenue-maximizing price, how many tickets would the NCAA sell?

12,000

Under NCAA rules, the number of permitted scholarships for men's & women's basketball is

15 for women's basketball and 13 for men's

Ticket sales provide about what share of MSU athletics revenue?

18%

An all-star game is held in Our City one weekend day. 50,000 spectators attend the event at a price per ticket of $100. The league sponsoring the game receives all ticket revenue. Revenue from concession sales goes to the local arena. Half of the spectators live in OC, and half are from outside the area. If this special event was not being held in OC this day, there would be 5000 similar visitors from outside the City. Residents of OC who attend the game spend $20 at the game besides the ticket price. Residents of OC also regularly spend $20 per day on local weekend entertainment. Visitors to OC to attend the event spend $200 that day besides the ticket price, and, in addition, visitors spend $100 on traveling to OC. The best estimate of the direct local economic impact (no multiplier effects) of the event is?

$7,500,000

Because of MLB's treatment under the antitrust laws, MLB team owners may engage in which of the following activities that NFL team owners are not allowed to do?

- Block the moves of teams to different cities. - Cooperate in preventing a new baseball league from forming. - Control ticket prices for all of the teams, if the League wished.

Who was Pete Rozelle and what did he do?

- He was Commissioner of the NFL from 1960 to 1989. - He lobbied Congress to adopt the Sports Broadcasting Act in 1961. - As Commissioner, he introduced revenue sharing to the NFL. - He arranged the NFL's first national TV contract (CBS in 1962).

The NFL Super Bowl is the most watched single sports event on television broadcasting in the U.S. each year. Which of the following is correct (identify all that apply)?

- In recent years, about 41 percent of U.S. households with TVs were tuned to the Super Bowl. - Super Bowl TV ratings were higher 10 years ago than in the last several years. - Less than half of the people in the U.S. watch the Super Bowl typically.

The Marginal Revenue Product of Labor is

- Marginal Product of Labor x Marginal Revenue. - the monetary gain from another worker. - the demand for labor.

Who was Bill Veeck?

- Owner of the Chicago White Sox and the the Cleveland Indians, who first integrated the American League - Originator of the idea for video replay scoreboards and "speed guns" in baseball - A sports promoter who developed a number of advertising ploys to attract fans - Owner who first convinced the IRS that players should have tax depreciation like other assets

Which statement best reflects the construction of the newest stadiums in Detroit?

- They have shared financing, with both a public subsidy and team finance. - Specific local or state taxes are dedicated to funding the stadiums.

Indirect or "quality of life benefits from having a sports team include

- the benefit to local residents who attend the team's games if the ticket price is less than what they were willing to pay. - the enjoyment received by local residents who do not buy tickets and attend the games, but watch on television. - businesses unrelated that move to the city because of the team.

Under current law, sports team tax deductions for player depreciation are limited to

100% of the team purchase price over 15 years.