Deck 2: Ownership Structures

Question 1

1 The most general structure of business ownership is a

A) Sole Proprietorship
B) General Partnership
C) Limited Partnership
D) Corporation

Answer 1

A
Explanation: Choice A (Sole Proprietorship) is correct because a sport facility under this form of ownership has only one individual who owns the facility, and hence that individual is responsible for the overall administration of the sport facility. In addition, the sole proprietor is accountable for all business operations, including the management of all assets, and having personal responsibility for all debt and liabilities incurred by the sport facility. The other choices are incorrect because while Choice B (General Partnership) is the most basic form of partnership, it is more complex that the sole proprietorship because it is an ownership structure where two or more partners are responsible for all business operations and management responsibilities for a business; a limited partnership (Choice C) is more complex because owners provide financial backing for a business, but do not take an active role in the day-to-day operation and management of the business; and a corporation (Choice D) is complex as it is created under the laws and regulations of governmental authority made up of a group of individuals who obtain a charter authorizing them as a legal body where the powers, rights, authority, and liabilities of the entity are distinct from the individuals making up the group.

Question 2

2 All of the following are advantages of a general partnership EXCEPT

A) Similar to a sole proprietorship in that there is personal responsibility for all debt and liabilities incurred by the sport facility including tax liability
B) The liabilities are shared by the partners based on the percent of ownership each partner has in the sport facility.
C) Stronger top management structure, as multiple owners bring multiple strengths to the business - and often one partner's strength is another partner's weakness.
D) Created under the laws and regulations of governmental authority by obtaining a charter authorizing them as a legal body where the powers, rights, authority, and liabilities of the entity are distinct from the partners.

Answer 2

D
Explanation: Choices A, B, and C are advantages of a general partnership. Choice D is not because the statement is the definition of how to start a corporation.

Question 3

3 What is the major difference between a general partnership and a limited partnership?

A) General partnerships and limited partnership do not have equal power in making major decisions.
B) Limited partners do not have the same financial risk as a general partner.
C) The limited partner provides financial backing, but does not take an active role in the day-to-day operation and management of the sport facility.
D) Limited partners do not have the same liability risk when it comes to personal negligence related to a partner's actions in the business.

Answer 3

C
Explanation: Choice C is the correct answer because the limited partner provides financial backing, but does not take an active role in the day-to-day operation and management of the sport facility (this responsibility reverts solely to the general partner(s) in the limited partnership). This is why this ownership structure is an especially attractive financial investment for an individual who does not have the expertise or time to run the sport facility. The other three choices are the same for both general and limited partners.

Question 4

4 Which of the following is NOT a step in the incorporation process?

A) Determining a name for the corporation and verify with the appropriate jurisdiction that the company name is available for incorporation.
B) Filing all the necessary documentation as required by the specific incorporation, including an Articles of Incorporation
C) Trademark a logo representing the incorporated business.
D) Pay any fees charged by the specific jurisdictions.

Question 5

5 Which of the following corporate structures is prevalent in sport business, but NOT as widely seen in the ownership structure of sport facilities?

A) C-Corporation
B) S-Corporation
C) Limited Liability Corporation
D) Non-Profit Corporation

Question 6

6 What is the main reason for having publicly-owned sport facilities?

A) Have a professional sport team in the community.
B) Important to offer high-quality facilities for the use of the population based on their needs.
C) Act as an engine for economic development by creating new spending and jobs in a municipality.
D) Increase the image of a community.

Question 7

7 Which of the following is an advantage of private governance of a sport facility?

A) The owners have the ability to exercise their own power and authority over the entire governance structure of the sport facility.
B) The owners are able to determine who the users of the facility are.
C) The owners are the sole regulatory power for anything that happens within the sport facility.
D) All of the Above

Question 8

8 Non-profit and voluntary governance is usually limited to what type of owners of sport facilities?

A) Commercial entities
B) Educational, charitable, and religious sport entities
C) Major and minor league sport teams
D) Private recreation facilities and fitness centers

Question 9

9 Which of the following is NOT an integral component of trust governance?

A) Governmental Authority
B) Benefactors
C) Trust Managers
D) Beneficiaries

Question 10

10 Which of the following statements is most true?

A) A contingency approach to organizational effectiveness is best, as there is no one model better than the other, regardless of ownership structure.
B) Changes in organizational structure do not always influence organizational effectiveness.
C) The implementation of new technologies will not negatively affect organizational effectiveness.
D) Opportunities and threats in the environment that affect the sport facility will only negatively affect organizational effectiveness if not dealt with quickly.

Question 11

11 Compare and contrast sole proprietorships vs. general partnerships as an ownership structure for sport facilities.

Question 12

Explain each of the corporate structure discussed in the chapter. If you had the choice of any corporate structure for a private multipurpose sport arena, which structure would you choose? Defend your answer.

Question 13

13 Explain the advantages and disadvantages of bringing in a private management company such as SMG, Global Spectrum, or AEG to manage a public sport facility? If you were the lead government official in your municipality, would you hire private management or keep the facility under in-house control? Why?

Question 14

14 You are the new general managers of a municipal recreational facility. There have been numerous problems in the past, especially as related to not meeting goals and objectives, and not reacting efficiently to changes in the environment. You need to evaluate organizational effectiveness, and have determined to analyze the numerous models have been developed to help sport facilities measure organization effectiveness based on the varying levels of environmental and organizational attributes. Choose one model (or multiple if you see fit), and discuss how you would implement that model into your organization.