KIN 3804 Sports Finance Midterm Review
Exam Questions With Correct Answers
Financial Management |
the job of managing a firm's resources so it can meet its goals and objectives
| | | | | | | | | | | | | |
Why is financial management important in the sports industry?
| | | | | | | |
to earn money for owners and shareholders or increase revenue generation to
| | | | | | | | | | | |
grow programs and fulfill the mission
| | | | |
TRUE/FALSE: The sports industry is one of the most expensive and growing
| | | | | | | | | | | |
industries in the world. | | |
TRUE
1990s and the Early 2000s: Era of Expansion
| | | | | | |
- New sport facilities, teams, and leagues were being built and created
| | | | | | | | | | |
- Sports became mainstreamed and dependent on corporations.
| | | | | | |
2007-2009: The Great Recession | | |
- The sport industry is assumed to be "recession-proof" due to being unaffected
| | | | | | | | | | | | |
by them during the previous four decades
| | | | | |
- The average American couldn't go to a game; rapidly declining attendance
| | | | | | | | | | |
2010s: The New Contemporary Environment
| | | |
- There were more challenging economic and environmental issues
| | | | | | | |
2020-2022: The Pandemic | |
- Significant financial challenges due to the closing of venues and canceled
| | | | | | | | | | | |
events.
,- Realized the importance of fiscal responsibility and having financial reserves for
| | | | | | | | | | | |
uncertainty
2023-Present: The Post-Pandemic Era | | |
- Innovation continues to reshape how the sports industry functions with a
| | | | | | | | | | | |
greater focus on a competitive advantage
| | | | |
Starvation Cycle |
an underinvestment in the organizational infrastructure needed to sustain
| | | | | | | | |
nonprofits
The starvation cycle is driven by three factors
| | | | | | |
1. donors having unrealistic expectations
| | | |
2. nonprofit feeling pressured to comply with donor expectations
| | | | | | | |
3. nonprofits neglecting to develop the necessary infrastructure while also
| | | | | | | | | |
misinterpreting data |
Federal Reserve System
| |
- provides central banking for the entire U.S.
| | | | | | |
- Controls interest rates, money supply, and banking oversight
| | | | | | | |
Main Sources of Financing Sport
| | | |
1) Debt - Borrowing money, must be repaid over time with interest
| | | | | | | | | | |
2) Equity - exchanging a portion of ownership for money
| | | | | | | | |
3) Retained Earnings - Reinvestment of prior earnings
| | | | | | |
4) Government - Funding by federal, state or municipal sources
| | | | | | | | |
5) Gifts - Cash or in-kind charitable donations
| | | | | | |
Small Business Administration (SBA)
| | |
, developed by the government in the 1950s to "aid, counsel, and protect the
| | | | | | | | | | | | |
interest of the nation's small business community."
| | | | | |
- Lending partner → Loan → Small Business (you)
| | | | | | | |
SBA Small Business Loans
| | |
- favorable terms
| |
- organizational support
| |
- unique benefits
| |
Examples of SBA-Backed Funding | | |
- 7(a) loan program: funds for working capital, expansion
| | | | | | | |
- 504 loan program: funds for buying land, machinery, facilities
| | | | | | | | |
- Microloans: funds for inventory, equipment, business start-up
| | | | | | |
- SBA disaster loans: funds for natural disasters
| | | | | | |
Traditional Funding |
Bank Financing |
1) Term Loan - fixed sum of cash that needs to be paid back with interest
| | | | | | | | | | | | | | |
2) Collateral - utilized to secure a loan
| | | | | | |
3) Line of Credit - pre-approved funds that a business can access
| | | | | | | | | | |
5 C's of Credit
| | |
1. Character: credit history, truthfulness
| | | |
2. Capacity: will the business succeed/profit
| | | | |
3. Collateral: assets that can be pledged
| | | | | |
4. Capital: applicant's equity in business
| | | | |
5. Conditions: sell the lender on the value of business
| | | | | | | | |
Crowdfunding
- leveraging smaller contributions from a large amount of individuals and/or other
| | | | | | | | | | |
|businesses
- a very common source for start-up funding but no guarantee if you meet your
| | | | | | | | | | | | | | |
financial goals |
Exam Questions With Correct Answers
Financial Management |
the job of managing a firm's resources so it can meet its goals and objectives
| | | | | | | | | | | | | |
Why is financial management important in the sports industry?
| | | | | | | |
to earn money for owners and shareholders or increase revenue generation to
| | | | | | | | | | | |
grow programs and fulfill the mission
| | | | |
TRUE/FALSE: The sports industry is one of the most expensive and growing
| | | | | | | | | | | |
industries in the world. | | |
TRUE
1990s and the Early 2000s: Era of Expansion
| | | | | | |
- New sport facilities, teams, and leagues were being built and created
| | | | | | | | | | |
- Sports became mainstreamed and dependent on corporations.
| | | | | | |
2007-2009: The Great Recession | | |
- The sport industry is assumed to be "recession-proof" due to being unaffected
| | | | | | | | | | | | |
by them during the previous four decades
| | | | | |
- The average American couldn't go to a game; rapidly declining attendance
| | | | | | | | | | |
2010s: The New Contemporary Environment
| | | |
- There were more challenging economic and environmental issues
| | | | | | | |
2020-2022: The Pandemic | |
- Significant financial challenges due to the closing of venues and canceled
| | | | | | | | | | | |
events.
,- Realized the importance of fiscal responsibility and having financial reserves for
| | | | | | | | | | | |
uncertainty
2023-Present: The Post-Pandemic Era | | |
- Innovation continues to reshape how the sports industry functions with a
| | | | | | | | | | | |
greater focus on a competitive advantage
| | | | |
Starvation Cycle |
an underinvestment in the organizational infrastructure needed to sustain
| | | | | | | | |
nonprofits
The starvation cycle is driven by three factors
| | | | | | |
1. donors having unrealistic expectations
| | | |
2. nonprofit feeling pressured to comply with donor expectations
| | | | | | | |
3. nonprofits neglecting to develop the necessary infrastructure while also
| | | | | | | | | |
misinterpreting data |
Federal Reserve System
| |
- provides central banking for the entire U.S.
| | | | | | |
- Controls interest rates, money supply, and banking oversight
| | | | | | | |
Main Sources of Financing Sport
| | | |
1) Debt - Borrowing money, must be repaid over time with interest
| | | | | | | | | | |
2) Equity - exchanging a portion of ownership for money
| | | | | | | | |
3) Retained Earnings - Reinvestment of prior earnings
| | | | | | |
4) Government - Funding by federal, state or municipal sources
| | | | | | | | |
5) Gifts - Cash or in-kind charitable donations
| | | | | | |
Small Business Administration (SBA)
| | |
, developed by the government in the 1950s to "aid, counsel, and protect the
| | | | | | | | | | | | |
interest of the nation's small business community."
| | | | | |
- Lending partner → Loan → Small Business (you)
| | | | | | | |
SBA Small Business Loans
| | |
- favorable terms
| |
- organizational support
| |
- unique benefits
| |
Examples of SBA-Backed Funding | | |
- 7(a) loan program: funds for working capital, expansion
| | | | | | | |
- 504 loan program: funds for buying land, machinery, facilities
| | | | | | | | |
- Microloans: funds for inventory, equipment, business start-up
| | | | | | |
- SBA disaster loans: funds for natural disasters
| | | | | | |
Traditional Funding |
Bank Financing |
1) Term Loan - fixed sum of cash that needs to be paid back with interest
| | | | | | | | | | | | | | |
2) Collateral - utilized to secure a loan
| | | | | | |
3) Line of Credit - pre-approved funds that a business can access
| | | | | | | | | | |
5 C's of Credit
| | |
1. Character: credit history, truthfulness
| | | |
2. Capacity: will the business succeed/profit
| | | | |
3. Collateral: assets that can be pledged
| | | | | |
4. Capital: applicant's equity in business
| | | | |
5. Conditions: sell the lender on the value of business
| | | | | | | | |
Crowdfunding
- leveraging smaller contributions from a large amount of individuals and/or other
| | | | | | | | | | |
|businesses
- a very common source for start-up funding but no guarantee if you meet your
| | | | | | | | | | | | | | |
financial goals |
