Deck 11: Sport and the Economy Main Themes

Question 1

To understand the economics of sport, it is important to understand that professional sports is
a business-it is made up of incorporated businesses whose major purpose is profit.

Answer 1

True

Question 2

The entire sports industry is one of the top four largest industries in North America.

Answer 2

False

Question 3

Professional sports teams are forms of corporate organizations that function very similarly in many respects to corporations of any other kind.

Answer 3

True

Question 4

Compared to other top professional entertainers, professional athletes' salaries are very similar.

Question 5

Professional sport is one of several nonregulated monopolies in the United States.

Question 6

Economists Coates and Humphreys report that their research indicates that sports subsidies can be justified on the grounds of local economic development or income growth or creation.

Question 7

The monopolistic situation of professional team sports enables a league to negotiate television contracts as a single entity without being subject to the antitrust laws.

Question 8

Presently, about 70 percent of professional sports stadiums are owned by the franchise owners.

Question 9

Intercollegiate athletics has collusive (monopolistic practices) that protect the institutions rather than the student-athletes.

Question 10

The more successful (profitable) a professional team sports franchise is, the lower the admissions prices tend to be for its home games.

Question 11

Sports fans tend to resent the high salaries of athletes but do not resent the huge salaries of other entertainers.

Question 12

The trend toward greater bureaucratization, commercialization, and institutionalism is restricted to professional sports.

Question 13

As an indication of good faith on its part, the National Collegiate Athletic Association has not opposed student-athletes leaving early for professional careers.

Question 14

In describing the salary structure of a team, the mean (average) salary of the players is usually higher than the median of those salaries.

Question 15

Although the richest owners are wealthy and are worth millions of dollars, only a couple of them can be called "billionaires."

Question 16

The strong ties between professional team owners and the decision-makers at the highest political, corporate, financial, and media levels may explain the commonly found affirmative consensus among the political and economic elites for the building of public sports venues.

Question 17

Gambling is a big business although, according to research, most Canadians and Americans don't gamble.

Question 18

Which of the following typically creates the most capital gain for a professional sports team owner?

A) Low salaries for players
B) Selling advertising
C) Selling a franchise
D) Tax breaks

Question 19

Presently, about percent of professional sports stadiums and arenas have been provided by taxpayers.

A) 10
B) 0
C) 70
D) 50

Question 20

Compared to other top professional entertainers, professional team athletes' salaries are

A) similar.
B) much higher.
C) slightly higher.
D) lower.

Question 21

Professional team sports is the only monopoly in the United States.

A) regulated
B) publicly owned
C) unregulated
D) profitable

Question 22

In the sport structure of the United States, ownership of the majority of professionally organized teams and leagues is in the hands of

A) private enterprise.
B) public entities.
C) mixed private and public entities.
D) None of the above

Question 23

In general, the value of professional team sport franchises over the past decade has

A) appreciated very little.
B) diminished in value.
C) appreciated greatly.
D) None of the above

Question 24

Public sports arenas built at taxpayers' expense are a good investment for the city because they

A) result in the lowering of admission prices.
B) add well-paying long-term jobs.
C) their construction over the past twenty years has been accomplished with gradually lower costs.
D) None of the above

Question 25

The reserve clause in professional sports refers to the

A) right of players to "play out their option."
B) segregation of fans by the differential price by location of seating.
C) binding of a player perpetually to negotiate only with the owner of the contract.
D) right of a team finishing last to select first in next year's draft.

Question 26

The is the only major professional sports team owned by the public.

A) Atlanta Hawks
B) Green Bay Packers
C) Dallas Cowboys
D) Colorado Rockies

Question 27

In addition to their salary, successful professional athletes often receive benefits gained through

A) product endorsements.
B) public appearances.
C) speeches.
D) All of the above
E) A and B only

Question 28

What are the major characteristics of the owners of professional sports teams in the United States? What are their reasons for investing money in the business of sport?

Question 29

From the 1880s to the mid-1970s Major League Baseball used a reserve clause in all standard player contracts, which was protected by the Supreme Court, thus exempting baseball from federal antitrust laws. Describe what the reserve clause meant and its consequences for Major League Baseball players and franchise owners.

Question 30

The professional team sport leagues operate as a cartel. Identify and discuss several of the advantages of the cartel arrangement to the professional sports leagues.

Question 31

Professional team owners receive public subsidies. Identify at least two forms this takes and discuss how it benefits the owners.

Question 32

"Operating a big-time collegiate athletic program is a business proposition." Discuss the various ways in which this statement true.

Question 33

Typically, an announcer introduces the home team as "Your " (e.g., "Your Denver Broncos"). Are they really "yours"? If they are, in what way are they "yours"? If they are not, why are they not "yours"?