EXAM 1 SPORTS BUSINESS
PRACTICES QUESTIONS AND
ANSWERS 100% CORRECT
Similarities Between Sport and Traditional Business - ANSWER--Customer satisfaction
-Customer/Fan Experience
-Competition exists between businesses/teams
-Revenue creation and growth is the ultimate goal
-Collective bargaining & labor unions
Differences Between Sport and Traditional Business - ANSWER--Brand Loyalty
-Regionalism/ Customer Location
-Competition
-Disneyfication
-Sports mostly an Entertainment Function
-Subsidized/Public Funding more common in Sport
-Seasonal Element to sports
-Limited financial info disclosure in sport
Positional Bargaining - ANSWER-each side takes a position, argues for it, and makes
concessions to reach a compromise
Soft Negotiation - ANSWER-wants to avoid personal conflict and so makes concessions
readily in order to reach agreement. Emphasizes the importance of building and
maintaining a relationship. Standard moves are to make offers and concessions, trust
the other side, be friendly, and yield as necessary to avoid confrontation
Distributed Club Ownership - ANSWER-each individual team in a league is owned by a
single individual, group, or publicly owned. (most common in US)
Single-Entity Advantages - ANSWER-Place teams wherever they wish
Place players on whatever team (competitive balance)
Limit salary escalation
Even revenue distribution between teams
Distributed Club Advantages - ANSWER-Teams can individualize to market to their fans
Incentive for teams to maximize revenues
Owner get input on new league-wide policies
Teams that started as Single-Entity then transitioned to distributed club - ANSWER-
WNBA
NBA D-League
,MLS
Hard Negotiation - ANSWER-sees any situation as a contest of wills in which the side
that takes the more extreme positions and holds out longer fares better. Standard
moves are to dig in to your position,make threats, mislead, and demand one-sided
gains.
Principled Negotiation - ANSWER-decide issues on their merits rather than through a
haggling process. Look for mutual gains wherever possible and the result should be
based on some fair standards independent of the will of either side.
Three criteria upon which any method of negotiation should be judged - ANSWER-1) It
should produce a wise agreement if agreement is possible
2) it should be efficient
3) it should improve or at least not damage the relationship between parties
Four Basic Steps of Principled Negotiation - ANSWER-1) Separate the people from the
problem
2) Focus on interests, not positions
3) Generate a variety of possibilities before deciding what to do
4) Insist that the result be based on some objective standard
Four Major Changes in Business of Sport - ANSWER-1) Utilizing Sports Teams for
Maximizing Revenue in Non-Sport Related Areas (Disneyfication)
2) Media Changes (contracts, own networks)
3) Stadium Design (single-purpose)
4) League Policies (reserve clauses, revenue sharing, salary caps, player drafts, etc)
Functions Professional Sport Leagues serve for their Member Teams - ANSWER--
Promote the common interests of the member teams.
-Structured competition.
-Create measures and policies to help competitive balance
-Brand development
-Television Contracts
-Territorial Boundaries
-Negotiate with Player Unions collectively on behalf of team owners
-Exercise some level of control over ownership and sale of teams
Single-Entity Ownership - ANSWER-when a single individual (or group) owns the
league and all the teams in that league
Competitive Balance - ANSWER-Level of parity between teams:
-during games
-competing for postseason eligibility
, Salary Cap - ANSWER-Limit on what teams are allowed to spend on team payroll
(soft=exceptions or hard=no exceptions)
Luxury Tax - ANSWER-Penalty used to deter spending above a certain amount on team
payroll, but teams are allowed to go over the amount as long as they are willing to pay
the tax
Competitive Balance policies - ANSWER--Revenue Sharing
-Salary Caps (payroll caps)
-Luxury Taxes
-Reverse-Order Player Draft
-Promotion and Relegation
-Expanded Playoff Pool
Promotion and Relegation - ANSWER-a competitive balance measure that moves high
and low performing teams up and down between higher and lower level leagues based
on team performance
Disneyfication - ANSWER-Major category of recent change in the business of sport
Sports team owners expanding their facilities to capture pre- and post-game spending
by fans, as well as sports teams serving as anchors for larger real estate developments
American Needle vs. NFL - ANSWER-American Needle apparel manufacturer sued the
NFL for antitrust law violations
NFL argues that the league was a single entity
US Supreme Court ultimately disagreed
Cooperation between sport team owners - ANSWER-Is considered a difference
between the business of sport and more traditional business, where competitors do not
typically engage int he same level of cooperation
Expansion in the Broadcasting of Sporting events - ANSWER-has NOT led to a decline
in revenues due to over exposure
Territorial Rights - ANSWER--Help teams avoid competition for local fans, viewers,
media coverage, broadcasting and advertising revenue that would occur in an open
system if team decided to move into another's territory
-Gives teams greater leverage when negotiating with local communities
Three Big Problems in Communication - ANSWER-1) Negotiators may not pay enough
attention to what the other party is saying in the negotiation
2) Negotiators may not speak with the objective of being understood by the other side
3) Misunderstanding of what the other party is saying
Solutions to Communication Problems - ANSWER-Listen actively and acknowledge
what is being said
PRACTICES QUESTIONS AND
ANSWERS 100% CORRECT
Similarities Between Sport and Traditional Business - ANSWER--Customer satisfaction
-Customer/Fan Experience
-Competition exists between businesses/teams
-Revenue creation and growth is the ultimate goal
-Collective bargaining & labor unions
Differences Between Sport and Traditional Business - ANSWER--Brand Loyalty
-Regionalism/ Customer Location
-Competition
-Disneyfication
-Sports mostly an Entertainment Function
-Subsidized/Public Funding more common in Sport
-Seasonal Element to sports
-Limited financial info disclosure in sport
Positional Bargaining - ANSWER-each side takes a position, argues for it, and makes
concessions to reach a compromise
Soft Negotiation - ANSWER-wants to avoid personal conflict and so makes concessions
readily in order to reach agreement. Emphasizes the importance of building and
maintaining a relationship. Standard moves are to make offers and concessions, trust
the other side, be friendly, and yield as necessary to avoid confrontation
Distributed Club Ownership - ANSWER-each individual team in a league is owned by a
single individual, group, or publicly owned. (most common in US)
Single-Entity Advantages - ANSWER-Place teams wherever they wish
Place players on whatever team (competitive balance)
Limit salary escalation
Even revenue distribution between teams
Distributed Club Advantages - ANSWER-Teams can individualize to market to their fans
Incentive for teams to maximize revenues
Owner get input on new league-wide policies
Teams that started as Single-Entity then transitioned to distributed club - ANSWER-
WNBA
NBA D-League
,MLS
Hard Negotiation - ANSWER-sees any situation as a contest of wills in which the side
that takes the more extreme positions and holds out longer fares better. Standard
moves are to dig in to your position,make threats, mislead, and demand one-sided
gains.
Principled Negotiation - ANSWER-decide issues on their merits rather than through a
haggling process. Look for mutual gains wherever possible and the result should be
based on some fair standards independent of the will of either side.
Three criteria upon which any method of negotiation should be judged - ANSWER-1) It
should produce a wise agreement if agreement is possible
2) it should be efficient
3) it should improve or at least not damage the relationship between parties
Four Basic Steps of Principled Negotiation - ANSWER-1) Separate the people from the
problem
2) Focus on interests, not positions
3) Generate a variety of possibilities before deciding what to do
4) Insist that the result be based on some objective standard
Four Major Changes in Business of Sport - ANSWER-1) Utilizing Sports Teams for
Maximizing Revenue in Non-Sport Related Areas (Disneyfication)
2) Media Changes (contracts, own networks)
3) Stadium Design (single-purpose)
4) League Policies (reserve clauses, revenue sharing, salary caps, player drafts, etc)
Functions Professional Sport Leagues serve for their Member Teams - ANSWER--
Promote the common interests of the member teams.
-Structured competition.
-Create measures and policies to help competitive balance
-Brand development
-Television Contracts
-Territorial Boundaries
-Negotiate with Player Unions collectively on behalf of team owners
-Exercise some level of control over ownership and sale of teams
Single-Entity Ownership - ANSWER-when a single individual (or group) owns the
league and all the teams in that league
Competitive Balance - ANSWER-Level of parity between teams:
-during games
-competing for postseason eligibility
, Salary Cap - ANSWER-Limit on what teams are allowed to spend on team payroll
(soft=exceptions or hard=no exceptions)
Luxury Tax - ANSWER-Penalty used to deter spending above a certain amount on team
payroll, but teams are allowed to go over the amount as long as they are willing to pay
the tax
Competitive Balance policies - ANSWER--Revenue Sharing
-Salary Caps (payroll caps)
-Luxury Taxes
-Reverse-Order Player Draft
-Promotion and Relegation
-Expanded Playoff Pool
Promotion and Relegation - ANSWER-a competitive balance measure that moves high
and low performing teams up and down between higher and lower level leagues based
on team performance
Disneyfication - ANSWER-Major category of recent change in the business of sport
Sports team owners expanding their facilities to capture pre- and post-game spending
by fans, as well as sports teams serving as anchors for larger real estate developments
American Needle vs. NFL - ANSWER-American Needle apparel manufacturer sued the
NFL for antitrust law violations
NFL argues that the league was a single entity
US Supreme Court ultimately disagreed
Cooperation between sport team owners - ANSWER-Is considered a difference
between the business of sport and more traditional business, where competitors do not
typically engage int he same level of cooperation
Expansion in the Broadcasting of Sporting events - ANSWER-has NOT led to a decline
in revenues due to over exposure
Territorial Rights - ANSWER--Help teams avoid competition for local fans, viewers,
media coverage, broadcasting and advertising revenue that would occur in an open
system if team decided to move into another's territory
-Gives teams greater leverage when negotiating with local communities
Three Big Problems in Communication - ANSWER-1) Negotiators may not pay enough
attention to what the other party is saying in the negotiation
2) Negotiators may not speak with the objective of being understood by the other side
3) Misunderstanding of what the other party is saying
Solutions to Communication Problems - ANSWER-Listen actively and acknowledge
what is being said
