Question 1

1 Which of the following is a key factor in determining how much a sport facility is worth?&#10;A) How well the sport facility is performing financially&#10;B) The condition of the land, buildings, fixtures, and local infrastructure&#10;C) The opportunity for future development internal and external to the sport facility&#10;D) All of the Above

Accepted Answer

Sports facilities are investments that have the potential to grown in value. Most property tends to increase in value over time and sports facilities are no different. One method by which investors can profit from their initial investment in a sports facility is by selling it for a higher price than the facility cost to develop in the first place. Choice D (All of the Above) is the correct answer because some of the key factors that determine how much a business is worth are:
F1F1F1S1F1F1F10how well the business is performing financially;
F1F1F1S1F1F1F10the condition of the land, buildings, fixtures, and local infrastructure; and
F1F1F1S1F1F1F10the opportunity for future development in the locality

Question 2

2 As much as what percentage of lifetime costs attributable to a sport facility is determined by decisions made in the early stages of management and operations?&#10;A) 80%&#10;B) 85%&#10;C) 90%&#10;D) 95%

Accepted Answer

Choice C is correct because the importance of being aware of life cycle costing can be appreciated by the finding that as much as 90% of the lifetime costs attributable to an asset are determined by decisions made in the early part of the asset's life.

Question 3

3 What is the definition of economic impact?&#10;A) The net economic change in a host community that is directly attributable to a facility or an event&#10;B) The gross economic change in a host community that is directly attributable to a facility or an event&#10;C) The net economic change in a host community that is indirectly attributable to a facility or an event&#10;D) The gross economic change in a host community that is indirectly attributable to a facility or an event

Accepted Answer

As defined in the chapter, economic impact is the net economic change in a host community that is directly attributable to a facility or an event (Choice A).

Question 4

4 Hard taxes are assessments that are applied to the entire population. Which of the following are NOT hard taxes?&#10;A) Real Estate and Property Taxes&#10;B) Income and General Sales Taxes&#10;C) Road and Utility Taxes&#10;D) Sin Taxes, such as on liquor and tobacco

Accepted Answer

All of the choices listed are hard taxes except for Choice D. Sin taxes are only levied on those who use those specific items (liquor, tobacco), and hence are not levied on the entire population. Sin taxes are soft taxes.

Question 5

5 Soft taxes are assessments applied specific product users, or to non-residents of a municipality. Which of the following are NOT soft taxes?&#10;A) Road and Utility Taxes&#10;B) Sin Taxes, such as on liquor and tobacco&#10;C) Hotel/Motel and Restaurant/Food Service Taxes&#10;D) Automobile Rental and Taxi/Limousine/Livery Service Taxes

Accepted Answer

All of the choices listed are hard taxes except for Choice A. Road and utility taxes are levied on the entire population, and hence is a hard tax. Other soft taxes not mentioned in the question include:
F1F1F1S1F1F1F10Tourist Development Tax
F1F1F1S1F1F1F10Players Tax
F1F1F1S1F1F1F10Team Tax
F1F1F1S1F1F1F10Business License/Permit Tax
F1F1F1S1F1F1F10Lottery and Gaming Tax

Question 6

6 Which of the following is a private source of revenue?&#10;A) Private Seat Licenses&#10;B) Debentures&#10;C) Ticket Sales&#10;D) All of the Above

Accepted Answer

All of the above (Choice D) is correct because each is a private source of revenue. Other private sources of revenue include naming rights and other sponsorships, lease agreements and building rentals, advertising rights, concessionaire exclusivity/restaurant rights, concessions revenue, luxury suites, corporate/private boxes, preferred/premium/club seating, parking fees, and ancillary entertainment revenue.

Question 7

7 Which of the following are NOT types of public-private partnerships?&#10;A) Public Sector Leasing and Private Sector Leasing&#10;B) Public Sector Trusts and Private Sector Trusts&#10;C) Public Sector Takeovers and Private Sector Takeovers&#10;D) Private Pump Priming and Multiparty Arrangements

Accepted Answer

Choices A, C, and D are types of public-private partnerships. Choice B is incorrect because in addition to not even being discussed in the chapter, public sector trusts import ideas from the private sector but do not partner with them. This is mainly because there is a lack of trust and discussion that takes place between public sector managers and professionals.

Question 8

8 The Tax Reform Act of 1986 significantly reduced the availability of tax exempt bonds for building sport facilities. According to the chapter, this was during what period in the history of sport facilities?

A) Period of Antiquity
B) Period of Discontinuance
C) Period of Change
D) Period of Revitalization

Accepted Answer

As defined in the chapter, The Period of Discontinuance hit between 1984 and 1986. This was a significant time of change in the way in which sport facilities of the future would be financed. They were significant questions regarding the logic of dumping significant amounts of money into sport facilities when there were bigger economic and financial issues that needed to be address with governmental appropriations. In the United States, two laws were passed that had a direct effect of sport facility financing. The Deficit Reduction Act of 1984 mandated that because of the need to lower the national deficit, public funding of projects such as sport facilities were to be given a lower priority. This was followed up two years later by the Tax Reform Act of 1986, which significantly reduced the availability of tax exempt bonds for building sport facilities. Many other countries around the world followed this lead, exacting similar laws and regulations reducing the amount of public subsidy available for sport facility financing.

Question 9

9 In what period in the history of sport facilities was there a transition from fully public financing to public-private partnerships?&#10;A) Period of Antiquity&#10;B) Period of Discontinuance&#10;C) Period of Change&#10;D) Period of Revitalization

Accepted Answer

As defined in the chapter, the period from 1986 to around 1995 is referred to as a Period of Change in sport facility financing. During this time, there was a transition from fully public financing to public-private partnerships, and there was some growth taking place in privatized facilities. The public-private partnerships that were indicative of this period involved public entities providing land, investment capital through debt or equity financing, some operating knowledge, and the ability to take of some of risk associated with sport facilities. In turn, private entities paid taxes that resulted from facility operations and corporate guarantees; and also ushering in the introduction of alternative sources of revenue through luxury suites, premium seating, personal seat licenses, concessionaire rights, and naming rights.

Question 10

10 Which of the following statements about the future of sport facilities going forward from 2010 is TRUE?&#10;A) There is an emergence of the voluntary sector as an additional niche in the financing of sport facilities&#10;B) As a result of the globalization of sport, the effects of currency values as related to international/global investments will be significant&#10;C) Both a and b&#10;D) None of the Above

Accepted Answer

Both Choices A and B are correct (and hence the correct answer is C) because as defined in the chapter, there are two areas we can project will have direct effect on the future of sport facility financing: (1) the emergence of the voluntary sector as an additional niche in the financing of sport facilities; and (2) as a result of the globalization of sport, the effects of currency values as related to international/global investments will be significant.

Question 11

As discussed in the chapter, positive economic benefits can be delivered by a sport facility across five key areas. You are in charge of bringing a multi-court basketball to your community. Explain how your facility will bring economic benefits to the community.

Accepted Answer

The answer of As discussed in the chapter, positive economic...

Question 12

There are always questions about the uncertainty by the public about whether available alternative sources of private financing should supersede the use of public financing, and the contention that the economic returns accruing from public investments do not necessarily equate to the initial investment in the sport facility. For the sport facility discussed in question 11, justify your use of public subsidies to finance the sport facility in terms of the appropriate spillover benefits discussed in the chapter. Defend your answer.

Accepted Answer

The answer of There are always questions about the uncertainty...

Question 13

Continuing with the multi-court facility, explain how you would secure private sources of revenue from each of the categories describe in the chapter.

Accepted Answer

The answer of Continuing with the multi-court facility, explain how...

Question 14

Assume you have decided that in order to maximize success, your multi-court basketball facility should enter into a public-private partnership. Which method of public-private partnership would you implement? Defend your answer.

Accepted Answer

The answer of Assume you have decided that in order...

Deck 3: Financing Sport Facilities