chapter 4 sports management

The average player salary in the NBA is now approximately ________

$4 million

SportBusiness Journal estimates that total spending across the entire sports industry amounted to approximately ______ in 2006.

214 billion

The NFL's current TV contract calls for the league to be paid more than _______ per year.

3 billion

Increased revenue in spectator sports has come from:

All of the above.

Which of the following most accurately defines the managerial discipline of finance?

Answers A & B above. Any decision relating to money. How an organization allocates its funds once they are in the organization.

Which of the following are contributing factors to the competitive balance issue?

Both A & B.

The increase in ticket prices in all leagues in recent years reflects:

Both A & C above.

If a golf club manufacturer sells a set of golf clubs to a retailer for $1000, who in turn sells the clubs to a customer for $1500, then the total output of the industry is $2500.

False

Which statement concerning the tradeoff between financing through debt or equity is true?

Generally, financing with debt carries more risk than equity.

What challenge does the non-spectator sport sector face as the industry continues to grow?

Increasingly large capital investments are needed to be able to continue to generate revenue.

Which two leagues utilize a form of luxury tax?

MLB and NBA

Which of the following leagues uses a "soft" salary cap?

NBA

Which league has seen the most dramatic growth in TV revenues over the last 15 years?

NFL

Which league has the highest credit rating in sports?

NFL

Why do economists suggest that revenue sharing, in and of itself, will do little to improve competitive balance?

Teams receiving revenue-sharing transfers may have little incentive to use the money to increase payroll, simply choosing to retain the transfer as added profit.

All of the following are examples of publicly traded sport companies EXCEPT:

University of Notre Dame athletic department

Which of the following are "non-financial" mechanisms for altering competitive balance?

Using the scheduling system to give teams with poorer records easier schedules.

The concept of _______ is probably the best single measure of an industry's impact.

aggregate market value of firms in industry

______ is/are anything that an organization owns that can be used to generate future revenues.

assets

In which American major league sport has a rival league NOT emerged since World War II?

baseball

In spectator sports, stadium construction projects are often financed with _____.

bonds

Why have no rival leagues to the major American sport leagues emerged in more than 20 years?

both a & b

The philosophy behind a "hard" salary cap is to:

constrain all franchises to spend the same amount on payroll

What is the term given to the amount of their own money owners have invested in the firm?

equity

Finance within the sports industry is unique from other industries with a unique set of terminology

false

MLB negotiated a provision into its 2002 collective bargaining agreement that allowed teams to carry unlimited amounts of debt

false

Of the four major professional leagues, only three have shown growth in franchise values over the last 15 years.

false

Teams prefer their stadiums to have more ordinary regular seating to having luxury seating and club seating.

false

The payroll threshold set for a luxury tax acts the same as a hard salary cap.

false

The salary cap used in the NFL is an example of a "soft" cap.

false

Where revenue sharing may be effective as a tool to improve competitive balance is when it is used in conjunction with a ________.

hard salary cap

Which financial statement measures the financial performance of an organization over a specified time period, usually a year?

income statement

In a basic sense, the financial success of an organization is ultimately dependent on:

profits

As chronicled in the book Moneyball, the strategy employed by the small-market Oakland A's general manager Billy Beane to better compete with large-market teams by identifying and acquiring undervalued players is an example of an organization maximizing its ______.

return on investment

All of the following are examples of "financial" mechanisms for altering competitive balance EXCEPT:

reverse-order draft

Leagues such as the NFL, NBA, and MLB all maintain "credit facilities" because:

the leagues can borrow less expensively than can individual teams

When organizations borrow, they are legally obligated to pay back _____, plus ______.

the principal, interest

An entire subfield of economics has developed that examines the spectator sport industry because, while teams may compete against each other on the field, they must cooperate off the field.

true

Generally, financing with borrowed money is less expensive than equity, but it carries more risk.

true

If businesses in the sports industry are to remain competitive, they must always be evaluating the quality of their capital assets.

true

Leagues can borrow less expensively than individual teams.

true

Of the major revenue-generating college sports, between 1989 and 2003, revenues in women's basketball grew at a higher rate than in football or men's basketball.

true

The NFL uses its scheduling system to foster competitive balance by giving teams with poorer records during the previous season "easier" schedules in the following season.

true

The average annual growth of NFL franchises has been greater than that for the other three major professional sports leagues over the last 15 years.

true

There is a difference between an industry's sales and value added

true