Ch 4. Financial and Economic Principles Flashcards
What is finance?
how an organization generates and allocates funds
What are three words to describe finance?
- forecasting (needing a car in two years)
- decision making (can we afford to renovate the stadium)
- evaluating (how are the players salaries doing)
What is the equation for the flow of funds?
revenues - expenses = profit
What are the two main focuses in budgeting?
revenues and expenses
What are some examples of revenues?
- ticket sales
- sponsorships
- parking
- merchandise
- concessions
- luxury seating
What are some examples of expenses?
- player salaries
- staff salaries
- facilities (repairs, upgrades)
- HR expenses (health insurance)
- health and safety measures
How would a team increase profit?
by increasing revenue or decreasing expenses
What would happen if a team did not sell out seats for a game?
they would not make much revenue
What is spending more to make more?
Return on Investment or Return on Objectives
What is return investment?
the expected dollar value return on an investment (stated as a percentage of the original cost of the investment)
What does one do to calculate the return on investment?
need to know the initial cost of the investment and estimate the revenues that the investment will make
What are Esports?
a growing field of electronic sport tournaments that have been sponsored by professional sport teams
How long is the “useful life” of a stadium?
30 years
Why would a professional sports team build a new stadium?
for higher revenue areas:
- premium seating
- personal seat licenses
- additional sponsorships
- potential celebrity events
What are the three different types of bonds?
U.S. Government, Agency, and Municipal
