Sport Finance midterm

If we assume a 6% interest rate, what will the future value of receiving $100 today be in 10 years?

$179.08

The NBA has national TV deals with both ESPN and TNT. How much annual revenue does the NBA generate from these two deals?

$2.6 billion

What is the annual amount that Nike is paying LeBron James to serve as an athlete endorser?

$30 million

What is the present value of receiving $1,000 per year for the next 5 years if we assume a 4% rate of return?

$4,451.80

In 2017, the average annual player salary in Major League Baseball was

$4.47 million

MetLife signed a 25-year deal to acquire the naming rights of MetLife Stadium, the home of the New York Jets and New York Giants. What is the total dollar value of the 25-year deal?

$450 million

What is the average player salary in the Women's National Basketball Association?

$51,000

The average annual median revenue for NCAA Division I institutions is

$63 million

What is the present value of receiving $1,000 in seven years given that the rate of return (interest rate) is 5%?

$710.10

In the United States, the 2017 Tax Cuts and Jobs Act cut the corporate tax rate from 35% to _____.

20%

Within major North American professional sports leagues, the percentage amount for team salary cap purposes is approximately what percentage of overall league revenues?

50%

Within the Major League Baseball luxury tax system, the highest tax rate is:

50%

What rate of return (interest rate) will result in the present value of receiving $1,000 in 5 years being $747.30?

6%

Within most licensed merchandise deals, the royalty payment to the property rights holder is

6%-18%

What is the maximum number of scholarships for an NCAA Division I FBS football team?

85

Define a current asset.

Anything that can quickly be turned into cash to pay bills.

What is Under Armour's largest source of revenue?

Apparel

The NCAA distributes approximately $250 million each year to its membership through which of the following funds?

Basketball fund

What was the first professional team that Robert Kraft owned?

Boston Lobsters

What was the most valuable sport franchise in the world in 2017?

Dallas Cowboys

In 2017, who was the highest paid player in the National Football League at a salary of $25 million?

Derek Carr

The NCAA owns and operates all NCAA championship events except the

FBS football championship and postseason bowl games.

Cristiano Ronaldo received the largest transfer fee payment in the history of international soccer/football.

False

MetLife is paying $100 million over 25 years for the naming rights to MetLife Stadium in East Rutherford, New Jersey, the home of the New York Giants and Jets.

False

Upselling is unethical and should never be undertaken.

False

What Is Sport Finance? It is always appropriate to compare two professional teams with each other for financial purposes.

False

Name three common expenses at the amateur youth sport level.

Field and facility expenses, uniform, equipment, travel, and related expenses

How would you define finance?

Finance is both an art and a science; it uses numbers to track how a business is doing and to direct the business forward in a profitable way.

What is the primary cost fueling the increased expenditures in collegiate athletics?

Financial grant in aid to cover tuition and related educational expenses.

Three of the keys to financial success highlighted in the text include:

Know your numbers; measure twice, cut once; plan, plan, and plan; always be prepared; honesty counts

The rule permitting NBA teams to re-sign their own player even if it means the team is over the salary cap as long as that player has been with the team for a minimum of 3 years is known as the

Larry Bird exception

Which of the following is a company that sport organizations use to manage their concessions operations at sporting events?

Levy, Aramark, Delaware North

Which Major League Baseball team had the highest team salary amount in 2017 at $242.07 million?

Los Angeles Dodgers

In the 2016-2017 season, which professional league had a salary cap of $94.1 million?

NBA

What is the most profitable league in the United States?

NFL

Which North American professional sports league generated the most revenue in 2016 at $13 billion?

NFL

As of 2017, what world soccer player commanded the highest transfer fee in history?

Neymar

What is the largest sporting goods company in the world, as measured by annual sales?

Nike

Geographically, the largest market for Under Armour is

North America

What is the single largest source of expense for NCAA Division I FBS athletic departments?

Salaries and benefits

Why might inventory not be considered a current asset?

Specialized inventory might take a while to convert to cash.

Name five of the most common revenue sources for amateur sports.

Sponsorship, membership fees, registration fees, tax subsidies, national lotteries, fund-raising opportunities (such as raffles or 5K races), and social events

What are some potential problems with the CBS/Turner contract to broadcast the NCAA basketball tournament through 2032?

Such a long-term contract can lead to various issues such as a decline in the sport's popularity, scandals, or economic changes.

The largest single donation to an athletic department occurred in 2006 at Oklahoma State University. Who was the billionaire benefactor who made that donation?

T. Boone Pickens

List and explain at least three reasons for the increase in college athletics expenses over the last decade.

The increase in college athletics expenses is due to increases in different areas such as the overall staff sizes, salary and benefit expenses for intercollegiate sport administrators, grants-in-aid (scholarships), team travel, and event and facility expenses. The increases are due to the growing number of sports on campus and competition among facilities. Title IX has increased the amount of spending on women's sports. As revenues increase, colleges spend more.

How do you define current assets?

They can be converted to cash in a short time period.

Why has Curves suffered with the closing of a number of their franchises and a decrease in franchise resale value?

They offered a one-stop shop and customers were looking for specialization.

What are the costs associated with borrowing money?

Time to go to bank, interest expense, principal repayment, and cost to maintain an open line of credit.

In financial terms, what does leveraging a resource mean?

To multiply the resource's productivity.

A leveraged buyout is when a company is purchased primarily with borrowed funds.

True

Finance sometimes overlaps with economics and accounting.

True

Financial decisions are not made in a vacuum.

True

In 2016, which of the following sporting goods companies had approximately $4.8 billion in revenue?

Under Armour

The art of processing the revenue and expense numbers to develop appropriate reporting procedures upon which financial decisions are made is known as

accounting

Which of the following is not a source of revenue for a professional sports team?

alumni and booster donations

Sport Finance Affects an Entire Organization The benefit of a limited liability corporation (LLC) includes all of the following except

audited financial statements

Over the past several decades, a new approach to managerial accounting has been the ____________, which examines numerical and subjective criteria to understand how an organization is doing.

balanced scoreboard approach

Approximately 90% of the NCAA's annual revenue comes from what source?

broadcasting and marketing rights from Men's NCAA Basketball Championship

Which of the following is not one of the most common revenue sources for amateur sports?

broadcasting rights

The largest source of revenue at the NCAA Division I FBS level is

cash contributions from alumni and others

_______ refers to cash flowing both into and out of the business. (Recall that income statements include noncash expenses such as depreciation.)

cash flow

Money owed to others is called _______.

debt

Money that is owed to others is called

debt

Money that is owed to others is referred to as

debt

What are some of the functions of a travel team treasurer?

developing and implementing a budget for the team, managing the team's account and team fee's budget, collecting team funds, assisting in the collection of player club and team fees,

What does liquid mean in terms of assets?

easy to convert to cash

___________ is a social science focused on the production, distribution and consumption of goods and services by people, companies, and nations.

economics

The degree to which a change in pricing effects the unit sales of a product is

elasticity of demand

Which of the following is a form of revenue for a private fitness center?

equipment sales, fitness class fees, membership fees, personal training fees

Costs that are incurred by a business are called ________. Examples include salaries, equipment, travel, rent, and insurance.

expenses

Costs that are incurred by an organization are

expenses

A tangible asset cannot be touched or held.

false

Amateur sports encompasses only youth and high school sport.

false

An NCAA Football Bowl Subdivision football team is limited to 65 scholarships per year.

false

Assets are easy to value.

false

For the 2017 Major League Baseball season, the New York Yankees had the largest team payroll.

false

Issuing bonds is the easiest way to generate needed funds for growth.

false

Major League Baseball has the highest annual revenue of any professional sports league in the world.

false

Managerial accounting is the process of recording, summarizing, and reporting the financial transactions of an organization. The end result of this process is the creation of three primary financial statements: balance sheets, income statements, and cash flow statements.

false

Most e-sports games started similar to how traditional sports were started.

false

Time value of money represents the concept that money in today's dollars decreases in value the further out into the future it is expected to be received.

false

To open a Curves franchise, a potential franchiser needs to have at least a million dollars of equity.

false

Uniform expenses are the single largest expense for a travel team.

false

When The Sports Authority went bankrupt, the only ones really hurt were the investors.

false

When the Oakland Raiders decided to move to Las Vegas, it was strictly an economic decision.

false

The management, creation, and study of money, investments, and other financial instruments is known as

finance

The process of recording, summarizing, and reporting the financial transactions of an organization is

financial accounting

Which group of financial ratios provides information about the extent to which an organization relies on debt rather equity for financing?

financial leverage ratios

Which assets are the most difficult to convert to cash?

fixed assets

Costs that do not change as production changes are known as

fixed costs

_________ is the value of an initial lump sum of money after it is invested over one or more periods.

future value

Within collegiate athletics, a payment made from one athletic department to another to entice a team to play another team in a sporting event is known as a

game guarntee

On what documents are revenue and expenses highlighted?

income statements

Which of the following is a valuation approach?

liquidation, the difference between book and value market value, the fair value option

The ability of an organization to meet its short-term financial obligations is

liquidity

The process utilized to develop financial forecasts and monitor various budgets and costing models is called

managerial accounting

Which of the following is not one of the objectives for accounting?

none of the above

What is the largest source of expense for major North American professional sports teams?

player salaries and benefits

The most common scam according to government research involves

pressure to pay an alleged tax liability or face arrest

Which of the following is an expense for a fitness center?

rent, equipment, insurance, advertising

Money coming into a business is called ________. Examples include tickets, broadcast contracts, concessions, and sponsorships.

revenue

Which of the following is an example of a revenue source for a public high school athletic department?

state taxes, participation fees, booster club revenue, donations

Which of the following is not a current liability

stocks

A soccer team facing relegation is an example of a financial hardship.

true

An annuity is a constant stream of payments that is received for a fixed number of periods.

true

An asset can be valued based on government officials such as tax collectors.

true

Assets help generate revenue or have the potential to generate revenue.

true

Book value examines what a product is worth based on the balance sheet.

true

Employees are considered an asset because they have value.

true

Every debt obligation has an associated cost.

true

Every team in the National Football League splits the revenue from broadcasting and licensing deals equally.

true

For a first-time offender, the payroll tax percentage penalty in Major League Baseball is 20%.

true

Liquidated value for a business is the value if all the assets are sold.

true

Salaries and benefits are the highest expense category for NCAA Division I institutions.

true

Sport Finance helps determine the value of financial decisions.

true

Tangible assets can be touched.

true

The National Football League generates over $4 billion a year in broadcasting rights fees.

true

Unsold game tickets represent lost revenue for a team.

true

Your car is considered an asset.

true

Your education is an asset.

true

Youth sports organizations often struggle financially.

true

What is the single largest expense for college athletic departments?

tuition and financial aid

Which of the following is an example of an expense for a high school athletic program?

uniform and equipment costs, facility repair and maintenance costs, travel costs, umpire costs

Sport finance requires

using information from various sources and times, utilizing economics, accounting, planning for the future

Issues in Sport Finance Which of the following is not a sport finance issue?

valuation of sports teams, borrowing of money to finance sports teams, stadium funding, sports apparel

Costs that change as production changes are known as

variable costs

Personal Finance Which consideration (or considerations) will affect personal financial decisions?

your age, income level, family situation, credit level

What was Chelsea Football Club's annual expenditure on player salaries in 2016-2017?

£224 million

Not having enough money in your bank account is an example of

budgeting and cash management

Because extreme competitions are so popular, nonprofits are running them on a regular basis and are making a lot of money due to their popularity.

false

The cord-cutting trend is reducing sport broadcast contracts and values all over the world.

false

The typical income statement consists of two sections.

false

The youth sport industry in the U.S. generates over $300 billion annually.

false

When a company goes bankrupt, any leases they have are still enforced against the company and landlords will be paid first.

false

Why is cord cutting such a problem for sport?

Broadcasters bid for certain rights based on assumed viewership numbers which declined with people not using cable as much. In addition to receiving fewer subscriber dollars each month, and with lower subscriber numbers, the broadcasters could not charge as much for advertising.

Give three examples of current assets.

cash, bank accounts, marketable securities, accounts receivable, and prepaid expenses.

Which of the following is an asset?

cash, inventory, accounts receivable, intangible assets

Name five examples of assets.

cash, inventory, accounts receivable, land, buildings, equipment, and intangible assets

The ones who are making the greatest amount of money from shoe company contracts are

coaches

Book value examines what a product is worth based on the income statement

false

Debt is pushing most brick and mortar stores into bankruptcy.

false

Great Britain spends more on a gross domestic product (GDP) percentage than any other country.

false

Intangible assets can be touched.

false

Inventory is always considered a current asset.

false

Owners regularly disclose their financial condition to benefit local voters.

false

Personal finance is rarely impacted by external variables.

false

Financial accounting is the process of recording, summarizing, and reporting the financial transactions of an organization. The end result of this process is the creation of three primary financial statements: balance sheets, income statements, and cash flow statements.

true

For tax purposes in the United States, professional teams can treat players as an asset that can depreciate over time.

true

In financial terms, leveraging a resource means multiplying the resource's productivity.

true

It is beneficial to compare how much one earns against others the same way that sport facilities compare themselves to other facilities.

true

Market value is based on what people would pay for the asset.

true