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MSA 643
Sport Finance and Budgeting Belhaven University
Unit 1
Financial Issues in Sport
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Throughout this course, we will engage the literature by
raising awareness of the financial aspects of sport
management from a Christian Worldview perspective. This
will assist each of you to identify the Christian principles of
honesty and the deleterious effect of greed as they relate to
financial reporting and ethical business practices.
Moreover, each student will be able to understand how the
basic financial statements articulate to each other; as well
as, understand the importance and derivation of a cash
budget. These practices, throughout the literature, will
assist each student in gaining the knowledge needed in
understanding finance.
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Welcome to Sport Finance
Introduction
Topics
Objectives
Lecture
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Format for Unit Sessions
Class lectures
Hearing and seeing
Textbook
Reading
Individual homework
Analyzing
Discussion forum
Applying and
examining
Completing all
components is very
important to
accomplish the
objectives of the
course.
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Learning Tools
Characteristics
Online learners must
be highly self-
motivated.
Online learners must
have high responsibility
for assignments and
discussions.
Facts
Online learning is not
easier than traditional
classroom learning.
Learners must meet
deadlines.
It’s easy to think we’re
anonymous because
there’s no face time.
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Online Learning
Course Page
Activities
Individual homework
Discussion forum
Weekly discussions
Media
Module
Handouts & links
Class lectures
Schedule
Be attentive to
deadlines.
The week (unit) begins
on Monday and ends
on Saturday.
Observe Sabbath
Manage your time
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Tips for Success
Communicate
Ask questions
Participate
Be engaged in discussion
Seek handouts
Contact the professor with
questions or problems
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Tips for Success, cont.
Understand where revenue comes from for
sport enterprises.
Understand the difference between cash and
accrual accounting systems.
Understand the value and use of budgets.
Compare the various types of financial markets
and the way in which they affect the sport
industry.
Identify the elements of the balance sheet and
income statement.
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Course Objectives
This unit begins by focusing on the importance
of managing money and how it impactful it is for
anyone in the sport industry.
It will also analyze the value of sport
broadcasting contracts with the top professional
leagues.
Lastly, this unit will end by defining special key
terms that will benefit each student throughout
this course.
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Introduction
Financial Issues in Sport
Managing Money
Financial Skills
Sports Sponsorships
Financial New Stadiums and Arenas
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Topics
Understand how important managing money is for
anyone in the sport industry.
Understand how math, strategy, and managerial skills
are crucial for financial decision making.
Appreciate that some sport businesses are billion-dollar
enterprises.
Critically analyze the value of sport broadcasting
contracts.
Appreciate that sport sponsorship represents a strategic
financial decision.
Understand major developments in stadium construction
trends.
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Objectives
Should a team join a league?
What is the value of players, and should they be
traded?
How do you create budgets to run a team, gym, or
facility?
Should the cost of tickets go up or remain the same?
How do you obtain funds for a new sport business,
new stadium, or new college campus athletic facility?
Should colleges cut teams in order to close a budget
gap? Should they add teams in order to produce more
revenue?
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Unique Issues in Sport Finance
Finding, managing, tracking, and spending
money refer to specific finance-related functions
in a company or business.
Failure to properly manage money can cause a
business to fail.
Financial planning is necessary for keeping the
business successful and prosperous.
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Managing Money
Managing Money, cont.
Internal constraints: Include a company’s past credit history, sales volume, product lines, accounts receivable,
inventory balances, and management structure.
External constraints: Include inflationary conditions,
significant competition, high interest rates, weak
economic indicators, shrinking of the money supply by
the government, and the political environment.
Although it takes money to make money, you cannot make
money unless you understand all the internal and
external variables that affect your ability to properly
manage your finances.
Sport Ownership
Tampa Bay Buccaneers owner Malcolm Glazer spent
$1.47 billion to purchase a controlling interest in
Manchester United.
$503 million of his own money
$490 million in loans
$509 million from issuing preferred securities
Dallas Cowboys worth $1.8 billion in 2011.
New York Yankees worth $1.7 billion in 2011.
Ten NFL teams in 2010 were worth at least $1 billion.
Sport Broadcasting Rights
Large broadcasting contracts
The NCAA received $2.8 billion from CBS for a
seven-year contract.
NFL biggest money maker
Fox has a National Conference deal worth $4.4
billion ($550 million per season), which included
rights to half the Super Bowl games when it was
signed.
In 2011, ESPN extended its contract to cover
Monday Night Football for nearly $2 billion a year
through 2022-2023.
Sport Broadcasting Rights, cont.
NASCAR
Second only to the NFL in sports viewership
$2.4 billion, six-year contract with General
Electric–owned NBC and AOL Time Warner’s TNT
Advances in technology that are changing how
sports are attracting fans and being broadcast to
fans (e.g., mobile apps) are helping to fuel larger
contracts.
Financing New Stadiums & Arenas
Through 2001, 111 major professional sports
franchises were operating in North America,
and 91.9% (102) moved into new or
significantly renovated stadiums.
In 2009, more than $3.2 billion was spent on
professional facilities and more than $1 billion
on college facilities.
Financing New Stadiums & Arenas, cont.
Total taxpayers’cost for stadiums or arenas built from 1995 through 2000 has been
estimated at more than $9 billion.
The average level of team contribution to new
NFL stadiums built through 2001 was only
29%, or $82 million, of the typical
construction cost for a football stadium.
Financing New Stadiums & Arenas, cont.
Many studies have shown that very few facilities
are able to cover their costs.
One major study concluded that older arenas
with little debt and numerous scheduled
events (NBA, NHL, Ice Capades, family
shows, circuses, and so on) tended to make
the highest profit, while new stadiums for
outdoor sports were least profitable.
Financing New Stadiums & Arenas, cont.
New stadium and arena projects rely on
various funding techniques ranging from
private contributions to municipal bonds.
Municipal bonds: Municipal notes and bonds are
publicly traded debt with the benefit of not having
to comply with all of the registration requirements
that other publicly traded securities need to follow.
Questions for Class Discussion
DQ1: From a financial standpoint, what are similarities and
differences between events that happened in the past and
events that occur today? Please answer in complete detail
and use examples.
DQ2: Sports are big business for any college or university.
Why do modern Universities build major sport and recreation
complexes on campuses? What is the financial benefit and
what sort of financial resources are needed to complete such
an undertaking. Provide an example of a university, which just
built a new athletic facility. Include the finances in your
discussion.
Requirements: 250 words minimum initial post, 100 words minimum
reply
Accounting: The process of calculating revenue and expenses
through receipts and other facts to determine the numbers for a
company or entity.
Managerial accounting: More closely aligned with finance as it
focuses on identifying the costs to produce a good or service so
that financial planning can more effectively plan for the future.
Finance: The process of examining the numbers and
determining what they mean and what the past was and future
will be for a company or entity; often entails identifying current
and future revenue and expenses and determining future
budgets to help an organization succeed.
Economics: In contrast, takes the numbers and financial
projections from numerous companies or entities to explore
future trends.
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Unit Recap: Key Terms
Required Textbook:
Fried, G., DeSchriver, T. D., & Mondello, M. (2020). Sport finance (4th ed.). Champaign, IL: Human Kinetics.
Article Listed for Unit 1:
Baade, R.A. & Matheson, V.A. (2011). Financing
Professional Sport Facilities. International Association of
Sport Economists. Retrieved from
http://college.holycross.edu/RePEc/spe
MathesonBaade_FinancingSports.pdf
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References