Sports Finance Test 2

Front 1

What is the difference between Public Interest Vs. Public Choice?

Back 1

Public Interest: use government as an allocator of resources to meet the public welfare to maximize public benefits
Public Choice: Use government as an allocation of favors to a tight coalition of groups or special interest

Front 2

When was the Gestation Era?

Back 2

1961-1969, It marked the beginning of a period in which the norm was for governments to finance an construct facilities for the franchise.

Front 3

When was the public Subsidy Era?

Back 3

1970-1984 The popularity of professional sports grew substantially.

Front 4

From what years was the transitional( public private partnership)

Back 4

1985-2994 Governments assumed a progressively diminishing proportionate role in the financing a major new sport facilities.

Front 5

When was the fully loaded( private-public)

Back 5

1995-2003 47 major new facilities were constructed.

Front 6

In terms of spending, who should pay for the cost of a stadium?

Back 6

Owners Opportunity Cost
Public Equity
Private Investors Owners Leverage
Public/Private Partnership Power in the Community

Front 7

What are some hidden costs of a new facility?

Back 7

The cost of land ( ex:Marlins → City of Miami Dade)
-Cost of infrastructure needs
-The personal Costs of these being relocated

Front 8

Public subsidization refers to:

Back 8

Legal Status of Professional Leagues
Exempt from normal antitrust rules

Front 9

Cartels refers to:

Back 9

Restrict inter team competition for players
Control location of teams & broadcast rights

Front 10

What occurs when one restricts a free market entry of competition?

Back 10

There is an imbalance of supply and demand

Front 11

If the city has 8 million dollars to invest, which of the following options is their best option?

1) Minor league baseball facility
2) Road Repairs
3) Public Transportation
4) School Repairs
5) Find an entrepreneur to build 8 KFC restaurants

Back 11

5. KFC

KFC
-$7 million capital investment $350K Utility
-$7 million annual sales $1 Million Local Contracts
-payroll $2.6 million 20 yrs. commitment
Employ 210 people
363 day a year
-$860K sales tax revenue

Front 12

The political reality of economic impact analysis is:

Back 12

to justify a position that either a sports organization or community elected officials have an adopted are proposing

Their point not to find the truth, but rather to legitimize something the sponsoring groups wants to “Prove”

Front 13

What does the Integrity of El analysis depend on?

Back 13

1) Exclusion of local residents
2) Exclusion of “time –switchers” and “casuals”
3) Use of income rather than sales out-put measures of economic impact
4) Use of multiplier coefficients rather than multipliers and
5) Careful interpretation of employment measures

Front 14

What is the Economic Impact Analysis

Back 14

Rationale for economic impact analysis to measure the broader economic benefits traces the flow of money

Front 15

Boade and Dye stated:

Back 15

That the economic impact analysis had no significant impact on the economy
- Bias towards low income jobs

Front 16

Archer stated what?

Back 16

In 1982 Archer came up with 3 abuses of studies:

-failure to explain what a multiplier analysis is
-use of different & controlling concepts of multiplier
-misuse of multiplier concepts
-studies indicate only 30% is “new money”

Front 17

According to the economic impact analysis/principles of the multiplier concept, what are the themes of spending patterns

Back 17

local inter-industry purchases
-direct household income
-local government revenue
-nonlocal governments
-nonlocal leakage

Front 18

What is the Net Economic Gain?

Back 18

It is the dollars after leakage

Front 19

Sales Multipliers are used to:

Back 19

Multipliers are used to capture the secondary effects of visitor spending in a region.

Front 20

What are the two numbers you have to memorize when calculating sales multipliers?

Back 20

Sales 1.8 to 1.4

Front 21

Direct Impact refers to?

Back 21

The dollars spent by the consumer

Front 22

Indirect Impact refers to:

Back 22

Indirect effects are the changes in sales, jobs and income within backward-linked industries in the region, i.e., businesses that supply goods and services to tourism-related firms.

For example, hotels purchase a variety of goods and services in the local area in order to produce a night of lodging. Each business that provides goods or services to hotels benefits indirectly from visitor spending in hotels.

Front 23

Induce Impact refers to:

Back 23

Induced effects are the changes in sales, jobs and income in the region resulting from household spending of income earned either directly or indirectly from visitor spending.

Employees in tourism firms and backward linked industries spend their income in the local region creating additional sales and economic activity. These impacts are most readily seen when there is a significant drop in tourism activity.

Front 24

True or False: When Calculating sales the numbers used are .8 and .4

Back 24

False: You use 1.8 and 1.4

Front 25

Fte refers to:

Back 25

Full time Employment

Front 26

The Labor hrs of emplyoment per week are 1280? T/F?

Back 26

False they are 2080

Front 27

What do the Labor Hrs of Emplyoment tell you?

Back 27

They inform you how many full time employees 1 can house

Front 28

What does the below detail
12 FTE
81 games
50 part time employee
5 hours

5 hours * 81 games = 405 hrs * 50 PTE = 20,250 hrs
20,250 hrs/2080 = 9.7355 ⇒ 9.7

9.7 + 12 = 21 jobs

Back 28

12 fte= 12 full time employment
81 games at home per season
5 hrs per game

Says 5 hrs * 81 games= 405 hrs * 50 pte= 20,250 hrs/

Front 29

What does the magnitude of the multiplier depend on?

Back 29

depends on the size & structure of the host community

Front 30

Less Linkage=

Back 30

A High Multiplier
It means the state is higher

Front 31

What are 3 big question one asks out of town visitors?

Back 31

1) What is your home zip code?
2) How many people were in your group?
3) Would you have come to the city anyway?

Front 32

What are some alternative justifications for public money justification for the investment

Back 32

Increased visibility
Enhanced community image
Become a major league city
Increased Development

Front 33

What are 2 crucial factors for success

Back 33

-must have a threshold level of cumulative attraction
-ensure the facility is part of an integrated master plan for the development area

Front 34

Detail 3 types of development

Back 34

-proximate development (restaurants ex)
-complementary development (direct link to the facility)
-general development (catch up everything)
-Gresham’s Law (bad $ drive good $, out of market place)

Front 35

Psychic Income refers to

Back 35

-is the emotional and psychological benefit resident perceive they receive, even though they do not physically attend sports events and are not involved in organizing them

Front 36

What are some examples of Hard Taxes?

Back 36

Property Taxes – local government (1 source)
Sales Taxes – state government
Sources Taxes – City Taxes
City Sales Income Tax

Front 37

What is an advantage of living in florida?

Back 37

The is no State income tax

Front 38

What does a tax base=

Back 38

Tax Base= aggregate value of assessed value property tax

Front 39

Define: Property Tax:

Back 39

owner is required to pay on the value of the property being taxed.

Front 40

Soft Taxes refer to:

Back 40

Tourist Development Taxes
Hotel/Motel Tax
Car Rental Tax

Front 41

Municipal Bonds are:

Back 41

-issued by state and local government to finance capital spending programs

Front 42

General Obligation Bonds

Back 42

-paid back through taxation – full faith backing
-normally involve property tax require votes

Front 43

Tax on Revenue refers to:

Back 43

-“sin tax” tourism tax
-tax on revenue streams at the event/facility
-approval but not public vote

Front 44

Certification of participation refers to

Back 44

-government creates corporation to buy/build a facility
-government leases the facility to pay back the bonds

Front 45

What are the different Bond Ratings?

Back 45

AAA > AA > A
BBB > BB > B
CCC > CC > C
D

Higher you rating less you have to pay


*** Lower you go, you pay more

Front 46

Generally how much do u pay on Bond Rates?

Back 46

Rates= Amount needed/Tax Base

Front 47

What are Public Sector Assets?

Back 47

-Land Bank
-Tax Waiver
-Low Cost Capital
-Control over permit & zoning process

Front 48

What is Public Choice Theory?

Back 48

The use of economic tools to deal with traditional problems of political science. Its content includes the study of political behavior.

Front 49

What is Privatization?

Back 49

Changing something from state to private ownership or control

Front 50

What is economic Impact

Back 50

To trace the flow of money, the ripple effect of every dollar spent.

Front 51

The Political Reality of economic Impact analysis is?

Back 51

To justify a position that either a sport organization or community elected officials have adopted or are proposing. Their point is not to find the truth but rather to legitimize something that the sponsoring group wants to prove.

Front 52

What is the purpose of an economic Impact statement?

Back 52

To prove your point, and follow the flow of money.

Front 53

What is Direct Impact?

Back 53

Is the value of the first dollar spent.

Front 54

What is basically Indirect Impact?

Back 54

The first ripple affect that takes place.

Front 55

What is basically Induced Impact?

Back 55

All the people who work there, that get their paycheck and spend it in the local economy.

Front 56

What is Proximate Development?

Back 56

All the new businesses that want to go in (hotels etc)

Front 57

What is Complementary Development?

Back 57

All new business that are associated with the venue. (Concessions, apparel, security)

Front 58

What is General development?

Back 58

The Chamber of Commerce tries to quantify the event or venue.

Front 59

What is Gresham's Law?

Back 59

Bad Money runs Good Money out of the marketplace.. If you invest in something bad, new money will not follow.

Front 60

Private Sector Assests

Back 60

Management Expertise
Reduced labor cost
Adaptability to scale of service
Reduced liability risk.

Front 61

Public -Private Partnership Model.

Back 61

Public Sector Leasing
Leaseback Arrangements
Public Sector Takeovers
Private Sector Takeover
Private Sector Pump Priming
Expansions of Existing Public
Multiparty Arrangements

Front 62

What is the Economic Impact Model Equation?

Back 62

Direct Spending x Multiplier = Economic Impact.

Front 63

What is the Part Time to Full time Equation?

Back 63

Total Hours worked/2080 = How many FTE jobs.

Front 64

What is the Tax Rate/Raises equation?

Back 64

Rates = Amount needed/Tax base

*Break it down by how long the project is and them divide it by the tax base.