Final Exam Prep Flashcards
What is the primary purpose of the G4 program?
to prevent large market teams from moving to small markets
What are 3 qualifications for the G4 program?
- must be combo of private/public funding
- must exceed $400 million
- Cannot leave home territory/relocate
What are 4 characteristics of the G4 loan program?
- Loaned $200 million new
- Loaned $250 million for renovations
- 15 year repayment
- repayment is from visitor/team sharing of premium seating revenue
Explain personal seat license:
If you want specific seats, you buy seat license, then buy season tickets. Can’t have license if don’t have season tickets. License is tradable.
Why have costs of stadium risen so dramatically?
- nicer/more elaborate
- larger, takes up more space
- per-unit cost of urban spaces have skyrocketed
What is marginal revenue product?
marginal product * marginal revenue
How can marginal revenue product be used to value talent?
higher marginal revenue product, the higher your wage rate
What are two forms of arbitration? Explain both
- binding (whatever I come up with, you will accept)
2. non-binding ( significant pressure to accept but not legally binding)
What is the difference between an arbitrator and a mediator?
arbitrator plays judge
mediator plays middle man
Explain how “final offer arbitration works”
Arbitrator receives offers from player and team and has to pick one of the two offers, cannot come up with his own offer
Who has binding arbitration?
MBL and NHL
What is a monopsony?
buyers have power instead of sellers
What gives the NBA their monopsony power?
No other league/business are buying basketball talent
What gives the players monopoly power?
Not very many elite basketball talent out there
How to find price at monopsony?
- Find where MR=MC
- go to supply curve at that point
- price of that point
What is a restricted free agent?
Players original team has the right of first refusal by matching offer
What is an unrestricted free agent?
Can sign with any team
What is the Rozelle Rule?
Whenever a team lost a free agent, the team singing the free agent had to compensate the players former team. If couldn’t come up with an agreement, Rozelle had final say on compensation.
Why did most teams find it better not to sign free-agents under the Rozelle rule?
Rozelle came up with unfair decisions
What is the reverse clause?
the team owns you/can trade you but you can’t play anywhere else`
What role did DVR’s, Hulu and Netflix play in the growth of sports programming?
Put higher value on live sports and devalued non-live entertainment (tv)
What was the growth in sports programming also good for the players?
More money to pay players
What three brackets is ‘all revenues’ divided into and what percent do the players receive from that bracket?
league media, NFL ventures/post season, Local
47-48.5%
What percent of the cap must the league spend? Each team?
league= 95%
each team= 89%
What is the Top 51 rule
only the top 51 player salaries for team count against a salary cap during off season
What impact do free-agents have on the salary cap?
qualifying offer is included in team salary until player is signed
What does it mean to ‘back-load’ a contract and how does the 30% rule help mitigate back-loading
pushing all the big money toward the end of contract, contract can only increase annually by 30%
From the player’s perspective, what are the drawbacks to back loading your contract? How do teams give players an incentive to sign a back loaded contract?
signing bonuses
How do signing bonuses impact the salary cap?
counts against the cap
When must a team be in compliance with the salary cap and what are the ramifications if they fail to meet the salary cap?
one the first day of the league
What are ‘voidable years’?
allow player to file for free agency sooner
What’s the difference between ‘likely to be earned’ and ‘not likely to be earned’ cash incentives and how do each impact the salary cap
likely to be earned counts towards salary
