LESSON 18 - finance and economics in the sport industry

Question 1

what are current financial situations of U.S. professional sport :

Answer 1

• growth of segment
• financial problems and recovery
• revenue sharing
• media impact and revenue sources
• issue of controlling spending

Question 2

what is the formula for profitability ?

Answer 2

profit = total revenues - total costs

Question 3

what is the current financial situation for U.S. collegiate athletics ?

Answer 3

• costs are rising
• most programs fail to cover their costs
• many athletic departments face difficult financial futures

Question 4

what are the two areas of study in economics of sport ?

Answer 4

microeconomics and macroeconomics

Question 5

what does scarcity mean ?

Answer 5

the state of being scarce or in short supply; shortage

Question 6

what do economic models explain ?

Answer 6

the behaviour of procedures and consumers

Question 7

what do models describe ?

Answer 7

how markets operate

Question 8

what are the two areas functions of financial management fall into ?

Answer 8

1) what to do with current financial resources
2) how to procure additional financial resources

Question 9

what are the two key roles of the financial manager ?

Answer 9

1) determine how much money the organization will need to meet long-term obligations
2) determine how the organization will procure those funds

Question 10

what two things do income statements express ?

Answer 10

revenue and expenses

Question 11

what are three sources of revenue and expenses for sport organizations ?

Answer 11

1) geared toward sport participation
2) seeking to make a profit
3) focused on sport spectators

Question 12

name four sources of revenue unique to the sport industry ?

Answer 12

1) game attendance and ancillary purchases
2) media rights
3) sponsorships and endorsements
4) licensed merchandise

Question 13

name two sources of expenses unique to the sport industry :

Answer 13

1) cost of sport facilities
2) cost of salaries