Revenue Test

According to data provided by the NCAA, very few intercollegiate athletic departments achieve financial self-sufficiency. In fact, the average FBS division program relies on $_______ in "institutional support" to break even. A. $14.7million B. $ 9.5 million C. $ 3.2 million D. $15.6 million

A) $14.7 Million

The authors estimate that only _______ of households in a typical U.S. market can afford to regularly attend major league sporting events. A. 15 to 20% B. 5 to 10% C. about one-third D. nearly half

A) 15% - 20%

Athletic departments have become increasingly dependent on institutional support. Which of the following is the fastest growing source of institutional revenue allocated to athletic programs? A. Mandatory student fees B. State appropriated funds C. Tuition dollars D. Transfer of funds from university general budget

A) Mandatory student fees

Over the last two decades, the NFL has received generous public tax support for many of its publicly-subsidized new stadiums. Which of the following taxes has the NFL used most frequently to finance the construction of new facilities: A. Property taxes B. Sales tax C. Selective taxes (e.g., hotel-motel and/or car rental) D. Ticket surcharge

A) Property Taxes

Which of the following factors has had the most significant impact on the extraordinary increase in the cost of new sports facilities over the past two decades? A. The new luxury features demanded by team owners B. Inflation which has meant higher prices for construction materials (steel, concrete) C. The willingness of teams and owners to pay their fair share of the construction costs D. The willingness of cities to provide ever-increasing public subsidies to attract (or keep) a team in their community.

A) The new luxury features demanded by team owners

The collegiate "arms race" has led to lavish spending on new sports facilities. PAC 12 schools alone have spent nearly $3 billion on renovating or building extravagance over the past decade. According to the discussion in Chapter 2, which of the following is the most serious concern raised by critics of the arms race? A. The significant debt burden incurred by school's competing in the arms race B. The lavish spending benefits only athletes and is unfair to other students C. The extravagant amenities (theaters, barber shops, laser tag) go well beyond the academic mission of a university D. Coaches are the real beneficiaries of the unnecessary spending

A) The significant debt burden incurred by school's competing in the arms race

Which of the following factors most accounts for why the demand for watching televised sports is considered "insatiable?" A. There is now more sports programming on TV (about 127,000 hours per year) than ever before. B. The growth of regional sports networks (40+), offering more relevant "customized" content to local viewers. C. Almost all (95%) sports programming is live. D. Home entertainment offers more attractive entertainment options than ever before.

A) There is now more sports programming on TV (about 127,000 hours per year) than ever before.

Which of the following is NOT one of the franchise ownership models? a. Multiple owners/private syndicate b. Government owned c. Single owner d. Multiple owners/publicly traded corporation

B) Government Owned

Why do some professional sport leagues implement revenue sharing? a. Reduces risk in expanding to new or small markets b. Maintain competitive balance within the league c. Allow owners to have a larger portion of profits, leaving players with less d. Both A & B e. Both B & C

B) Maintain competitive balance within the league

In recent years, a number of "billion-dollar" sports facilities have been built. To date, which of the following venues is the most expensive ever built? A. Wembley Stadium B. MetLife Stadium C. The Barclays Center D. Yankee Stadium

B) Metlife Stadium

Recently, teams and their owners have paid an increasing share of the cost of building new sports facilities. What has been one major consequence of team's having to assume an increased financial burden for facility development? A. Owners have transferred much of the increased cost on to their fans B. Players have received a smaller share of team revenues C. Leagues have stepped up by providing team owners low-cost subsidies to offset their D. Increased development costs. E. Teams have built less expensive new facilities.

B) Players have received a smaller share of team revenues

Which of the following is NOT a feature of the current NFL collective bargaining agreement? A. Players will receive 55% of the Total Football Revenues B. Players will received 55% of the national media revenue (rights fees from national TV agreements with ESPN, Fox, etc.) C. Rookies salaries will be limited to an average of veteran salaries D. Players are "guaranteed" a minimum floor of no less than 89% of the salary cap

B) Players will receive 55% of the Total Football Revenues

The so-called "Sanders Provision" provides a loophole in the NFL salary cap by: A. Allowing players already on a team's roster to extend their contracts with out regard for the salary cap limit. B. Prorating large signing bonuses over the length of player contracts rather than accounting for the entire amount in the year paid. C. Exempting designated "franchise players" from the salary cap limit. D. Allowing performance bonuses (e.g., number of touchdowns scored) to be exempted from cap limits.

B) Prorating large signing bonuses over the length of player contracts rather than accounting for the entire amount in the year paid.

The most common approach used by analysts for determining the market value of sports franchises is: A. Discounted cash flow B. Revenue multiple C. Comparable market value D. Forbes Appraisal Method

B) Revenue multiple

Over the last two decades, the public sector's share of overall costs for professional sports facilities has: A. Continued to rise, exceeding 50% over the last decade. B. Steadily declined to around 40% of the total cost since 2010. C. More than doubled the amount teams have contributed. D. Declined both in the proportion and actual amount contributed.

B) Steadily declined to around 40% of the total cost since 2010.

The single largest source of "generated revenue" for the largest (FBS) athletic programs is: A. Donations from alumni and boosters B. Television rights fees distributed by conferences C. Ticket sales D. Corporate support

B) Television rights fees distributed by conferences

The "southern growth strategy" pertains to: A. The NFL's growing dependence on drafting players from the southeastern part of the U.S. B. The NHL's aggressive effort to establish new franchises in the U.S. sunbelt. C. The NBA's recent international initiative to expand the league's presence in southern hemisphere countries. D. NASAR's increased commitment to its historically loyal fan base in the southern U.S.

B) The NHL's aggressive effort to establish new franchises in the U.S. sunbelt.

Very few Division I athletic programs meet the Title IX Substantial Proportionality Test because: A. Men's coaching salaries are on average twice as high as women's salaries. B. The number of grants-in-aid or scholarships awarded football players is four times greater than any women's sport. C. Men constitute more than twice the number of varsity athletes than women. D. Women are offered a narrower range of varsity sports in which to compete than men.

B) The number of grants-in-aid or scholarships awarded football players is four times greater than any women's sport.

What is the single most profitable sporting event in North America? A. NASCAR's Daytona 500 B. U.S. Open Tennis Championship C. Kentucky Derby D. Indianapolis 500

B) U.S. Open Tennis Championship

As a result of an Act passed by Congress in 2004, owners who purchase professional sports teams can now claim the following depreciation allowance: A. 50% of the purchase price over 6 years B. 100% of the player roster value over 5 years C. 100% of the purchase price over 15 years D. 50% of the purchase price over 5 years

C) 100% of the purchase price over 15 years

Which decade saw a large boost in sport revenue due to a growing economy? a. 70s b. 80s c. 90s d. 00s

C) 1990s

When a College Athletics department raises funds within a given time frame for a specific cause, it is: a. Annual Giving Program b. Capital Campaign c. Athletic Support Group (Boosters) d. Endowment

C) Athletic Support Group (Boosters)

Which of the following is NOT a requirement for admission to the highest level of NCAA membership, the Football Bowl Subdivision (FBS): A. Must meet a minimum football attendance requirement of 15,000 paid home attendance per game. B. Allowed to award a maximum of 85 football scholarships C. Must offer a minimum of six varsity sports for women student athletes D. Must award no fewer than 90% of the allowable number of football scholarships in any given season.

C) Must offer a minimum of six varsity sports for women student athletes

Under the current NBA collective bargaining agreement (CBA), if players' salaries exceed approximately 50% of BRI, the CBA stipulates that an Escrow Tax goes into effect. This tax: A. Requires that teams pay $1 for every dollar they are over the salary cap. B. May cost the Los Angeles Lakers an estimated $30 million. C. Requires that players "give back" 10% of their salaries. D. A and B.

C) Requires that players "give back" 10% of their salaries.

Since the mid-'90s, the primary public source used to finance new stadiums has been: A. General sales or excise taxes B. Property taxes C. Selective taxes such in the form of hotel or car rental taxes D. Ticket surcharges

C) Selective taxes such in the form of hotel or car rental taxes

Which of the following is NOT a direct source of public revenue to finance sport facilities: a. Property Tax b. Sales Tax c. Sin Tax (Alcohol/Tabaco) d. Tourism Tax

C) Sin Tax (Alcohol/Tabaco)

Which of the following uncontrollable expenses imposes the biggest financial burden on collegiate athletic programs: A. Complying with NCAA and federal government mandates B. Paying the cost of the new Full Cost of Attendance requirement C. Skyrocketing coaches' salaries D. The impact of pending lawsuits brought against the NCAA (i.e., Alston v. NCAA)

C) Skyrocketing coaches' salaries

The "full" financial contribution of major football programs may exceed 70% of the total amount of an athletic department's revenues. Yet, according to the chapter, for every one "big-time" football program turning a major profit, there are _______________________. A. Three to four struggling to make ends meet B. Fully 50% in desperate financial shape C. Surviving only due to massive institutional support D. Many considering dropping football

C) Surviving only due to massive institutional support

Which form of revenue insulates professional sports the most from economic downturn? a. Ticket Sales b. Concession Sales c. Television contracts d. Donations

C) Television contracts

Chapter 3 cites a number of reasons for why minor league baseball has continued to thrive over the past two decades. Which of the following is the single most important factor in sustaining the growth of minor league baseball? A. The unique "parent-team" arrangement in which major league teams underwrite the cost of all the operational expenses of their minor league affiliates. B. The development of many new and modern minor league baseball stadiums. C. The emphasis of providing family-affordable entertainment. D. Minor league baseball benefits from its long tradition as "America's pastime."

C) The emphasis of providing family-affordable entertainment

In order for the Portland Trailblazers to avoid paying a Luxury Tax this season, the team's player payroll may not exceed: A. $99.093 million B. $107.34 million C. $119.266 million D. $76.8 million

D) $76.8 million

The gap between the "Haves" and "Have Lesses" is a serious concern across all four major leagues. In fact, A. The top 8 NFL teams generate on average more than $100 million more the bottom 8 teams. B. The rapid growth of regional sports networks (RSNs) has allowed NBA teams in smaller markets to close the revenue gap. C. Even the generous revenue sharing arrangement in MLB is not sufficient enough to make small market teams profitable. D. All of the above are true.

D) All of the Above

The reason that the publicly-reported cost for building a new sports arena or stadium often underestimates the true or actual cost is due to: A. The failure to include the cost of the land upon which the facility is built. B. An omission of infrastructure costs such as enhanced road and utilities C. The failure to include ongoing public subsidies such as abated property taxes, free utilities, and "sweet heart" lease agreements. D. All of the above

D) All of the Above

Which of the following statements is TRUE regarding the NFL's revenue sharing policy: A. The owners receive 55% of all national TV rights revenues. B. Under the VTS provision, the league collects 40% of all gate receipts and distributes equal shares to every team. C. Of the $9.5 billion in total revenues generated by the NFL in 2012, 75% was shared equally among the 32 franchises. D. By 2014, analysts predict that the league will distribute as much as $100 million to each team by the start of the season.

D) By 2014, analysts predict that the league will distribute as much as $100 million to each team by the start of the season.

Which of the following is NOT an indirect source of public financing of a new stadium? a. Land donations b. Infrastructure Improvements c. Tax abetments d. Lotteries and gaming revenues

D) Lotteries and gaming revenues

Which of the four major leagues experienced the lowest attendance declines during the Great Recession? A. NFL B. NBA C. NHL D. MLB

D) MLB

When a league adds an expansion team, where does the revenue from the expansion fee go? a. Players b. Team Owners c. Split 50/50 between players and owners d. The League

D) The League

The two primary reasons for why major league sports teams continue to obtain substantial public subsidies for the construction of new sports venues are: A. Owners political support and influence over local media. B. Exemption from the constraints of the Sherman Antitrust Act and their ability to use C. Selective taxes. D. The threat of team owners to relocate their teams and the support of the local community power structure. E. Overwhelming economic impact evidence and owners threat to relocate the team.

D) The threat of team owners to relocate their teams and the support of the local community power structure.

What factors account for the enormous gap between the NHL and the other Big 4 major leagues? A. Declining value of Canadian currency B. The NHL's relatively modest national TV contracts C. The huge gap in the financial performance between high and low performing teams D. A and B E. All of the above

E) All of the above

While there is a recent trend toward increased private sector financing, a number of new arenas have received substantial public sector tax support. Which of the following is a primary factor in these facilities receiving generous tax support? A. The threat of the team relocating to another city B. The potential of the new facility to stimulate economic development C. The ability of the new arena to pay for itself D. Growing public support for new downtown public sports facilities E. A and B F. All of the above

F) All of the Above

All professional sport teams must make their financial data publicly available True or False

False

It is illegal for a government to issue bonds to help fund a new stadium True or False

False

The primary model of sports facility development continues to be the: A. Public Subsidy Era B. Civic Development Era C. Corporate Welfare Era D. Fully Loaded Era

Fully Loaded Era

NHL Collective Bargaining Agreement

Imposes a cap on both team payrolls as well as individual player salaries.

According to the latest U.S. Census data, less than 20% of U.S. households have aggregate income in excess of $100,000? True or False

True

Both the proportional and actual amount of public sector subsidies for the construction of new arenas have increased substantially over the last decade. True or False

True

Politics have an impact on the financial governance of sport True or False

True

Schools are permitted to count "emerging sports" toward meeting the minimum NCAA eligibility requirement for Division I and II status True or False

True

NFL Collective Bargaining Agreement

has set a 2017 team salary cap of $168 million based on sharing approximately 48% of all revenues with players

NBA Collective Bargaining Agreement

requires that teams pay a penalty of as much as $3.50 for every dollar they spend on salary over a certain threshold

MLB Collective Bargaining Agreement

teams are required to share 34% of their locally-derived revenues