WIAA ACTUAL TEST PAPER COMPLETE
QUESTIONS AND ANSWERS FULL
SOLUTION
●● Differences Between Sports and Other Industries (5)
Answer: 1.Simultaneous Cooperation and Competition
(sports have cooperation through revenue sharing)
2.Public Funding of Facilities for Pro Sports Teams
(cities+states provide millions to pro teams for new facilities)
3.Management Occurs in a Fishbowl
(receive public scrutiny by media+fans)
4.Limited Disclosure of Financial Records
(privately owned teams rarely share)
(illegal for businesses not to)
5.Systems in Place to Support Weakest Performers and Handicap the
Strongest
,(struggling teams supported while wealthy clubs penalized through
revenue sharing, luxury tax, player draft) *league intervenes rather than
let team disappear*
●● Major Changes in Business of Sport (4)
Answer: 1.Disneyfacation of Sport
(create multiple entertainment options in one facility)
2.Media Changes
(expanded broadcasting of sports and sharp revenue increases)
3.Stadium Changes
(Focus on single purpose stadiums and a rise in luxury seating)
4.Changes in league policies and player rights impacting competition
and distribution of revenue
(salary cap, luxury tax, 50/50 split for revenue between owners and
players)
●● Single-Entity Ownership Model
Answer: The league and all teams in the league are owned by a single
ownership group (Arena Football and MLS)
,●● Distributed Club Ownership Model
Answer: Each team has an individual ownership that posses independent
property rights in their team, but agree to contractually share some of
those rights with others
●● Advantages of Single-Entity League (7)
Answer: 1.Ability to place teams in preferred cities regardless of the
availability of local ownership groups
2.Ability to assign players in a way that promotes fan interest and
competitive balance
3.Large market teams do not have an advantage over teams in small
markets
4.Ability to control player salaries by reducing competition between
teams and reduce other expenses with centralized purchasing
5.Improved Value as a league-wide entity for potential sponsorships
(sponsors buy league affiliation not local team)
6.If single-entity owner is made of partners, financial risk is spread over
partners
, 7.Antitrust laws do not apply, league can engage in anticompetitive
business behavior
(illegal for business competitors)
●● New Arena Football League Following Bankruptcy of Original AFL
Answer: -Operate as single-entity
-Players+coaches paid by league
-Team sells own tickets, local sponsors, local media deals
-League owned equally by 15 team owners
-Single-entity model facilitates group purchasing power for expensive
items(workers+sharing of other costs)
-Old AFL salary cap reached 2.2M/now paid $400 a game plus room and
board
-2008 was highest revenue, 12% increase in Revenue, 20% increase in
Expenses
●● Disadvantages of a Single-Entity League Structure (2)
Answer: 1. Reduced economic incentives for individual teams to
succeed on the field or generating revenue if it all goes back to the
league
2. Reduced competition between teams because all operators of teams
are ownership partners
QUESTIONS AND ANSWERS FULL
SOLUTION
●● Differences Between Sports and Other Industries (5)
Answer: 1.Simultaneous Cooperation and Competition
(sports have cooperation through revenue sharing)
2.Public Funding of Facilities for Pro Sports Teams
(cities+states provide millions to pro teams for new facilities)
3.Management Occurs in a Fishbowl
(receive public scrutiny by media+fans)
4.Limited Disclosure of Financial Records
(privately owned teams rarely share)
(illegal for businesses not to)
5.Systems in Place to Support Weakest Performers and Handicap the
Strongest
,(struggling teams supported while wealthy clubs penalized through
revenue sharing, luxury tax, player draft) *league intervenes rather than
let team disappear*
●● Major Changes in Business of Sport (4)
Answer: 1.Disneyfacation of Sport
(create multiple entertainment options in one facility)
2.Media Changes
(expanded broadcasting of sports and sharp revenue increases)
3.Stadium Changes
(Focus on single purpose stadiums and a rise in luxury seating)
4.Changes in league policies and player rights impacting competition
and distribution of revenue
(salary cap, luxury tax, 50/50 split for revenue between owners and
players)
●● Single-Entity Ownership Model
Answer: The league and all teams in the league are owned by a single
ownership group (Arena Football and MLS)
,●● Distributed Club Ownership Model
Answer: Each team has an individual ownership that posses independent
property rights in their team, but agree to contractually share some of
those rights with others
●● Advantages of Single-Entity League (7)
Answer: 1.Ability to place teams in preferred cities regardless of the
availability of local ownership groups
2.Ability to assign players in a way that promotes fan interest and
competitive balance
3.Large market teams do not have an advantage over teams in small
markets
4.Ability to control player salaries by reducing competition between
teams and reduce other expenses with centralized purchasing
5.Improved Value as a league-wide entity for potential sponsorships
(sponsors buy league affiliation not local team)
6.If single-entity owner is made of partners, financial risk is spread over
partners
, 7.Antitrust laws do not apply, league can engage in anticompetitive
business behavior
(illegal for business competitors)
●● New Arena Football League Following Bankruptcy of Original AFL
Answer: -Operate as single-entity
-Players+coaches paid by league
-Team sells own tickets, local sponsors, local media deals
-League owned equally by 15 team owners
-Single-entity model facilitates group purchasing power for expensive
items(workers+sharing of other costs)
-Old AFL salary cap reached 2.2M/now paid $400 a game plus room and
board
-2008 was highest revenue, 12% increase in Revenue, 20% increase in
Expenses
●● Disadvantages of a Single-Entity League Structure (2)
Answer: 1. Reduced economic incentives for individual teams to
succeed on the field or generating revenue if it all goes back to the
league
2. Reduced competition between teams because all operators of teams
are ownership partners
