Deck 43: If We Build It, Will They Come and Other Sports Questions

Question 1

In terms of an economic contribution, building a football stadium

A)to attract a team has always been a successful strategy in growing an community's economy.
B)to keep a team that would otherwise leave has always been a successful strategy in growing an community's economy.
C)with public dollars has never been shown to enhance a community's economy.
D)has been shown to be futile. The team leaves anyway.

Answer 1

C

Question 2

Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community and unlikely to ever leave. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

A)the jobs created in the area will make it worth the investment.
B)there will be no new jobs created.
C)there will be no new jobs created in net because there will be about the same number of restaurant jobs lost near the old stadium as gained near the new one.
D)It may be a short-term cost, but in the long term it will be worthwhile.

Answer 2

C

Question 3

The biggest factor in separating out baseball teams in terms of revenues is

A)ticket sales.
B)local television contracts.
C)the cost of living in the city.
D)memorabilia sales.

Answer 3

B

Question 4

The biggest difference among football teams in terms of revenue-generating capacity is

A)luxury box revenue.
B)local television contracts.
C)the cost of living in the city.
D)memorabilia sales.

Question 5

Suppose your community is considering using public money to build a new sports stadium for a new team that will only come to the community if it is built for them. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

A)the economic activity created in the area will make it worth the investment.
B)there will be no new economic activity created.
C)there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else.
D)it may be a short-term cost, but in the long term it will be worthwhile.

Question 6

Which of the following teams is not in its original franchise?

A)The Tennessee Titans (football).
B)The Green Bay Packers (football).
C)The Pittsburgh Steelers (football).
D)The Kansas City Royals (baseball).

Question 7

Football franchise movement since 1970 has generally seen teams move from

A)larger cities to smaller ones.
B)smaller cities to larger ones.
C)richer cities to poorer ones.
D)there has been no pattern.

Question 8

The smallest metropolitan area in the United States that has at least one major league baseball, basketball, football, or hockey franchise is

A)Green Bay, Wisconsin.
B)Indianapolis, Indiana.
C)Oklahoma City, Oklahoma.
D)Fargo, North Dakota.

Question 9

Suppose your community is considering using public money to build a new sports stadium for a new team that will only stay in the community if it is built for them. Suppose you are watching a news broadcast in which the supporters are saying that it is a good idea because, even though they don't go to the games, it is more fun to live in a town with a team and it is to live in a town without a team. The supporters are relying on the

A)stupidity of voters.
B)externality argument.
C)local substitution argument.
D)present value argument.

Question 10

The largest metropolitan area in the United States that has no major league baseball, basketball, football, or hockey franchise is

A)Austin, Texas.
B)Ft. Myers, Florida.
C)Birmingham, Alabama.
D)Las Vegas, Nevada.

Question 11

Which of the following teams is not in its original franchise?

A)The Arizona Cardinals (football).
B)The Green Bay Packers (football).
C)The Pittsburgh Steelers (football).
D)The Kansas City Royals (baseball).

Question 12

The positive externality argument in favor of a city seeking a professional sports franchise is

A)the jobs created in the area will make it worth the investment.
B)there are people in the city that will be happier when the team is in the city and they will be the one who buy tickets.
C)there are people in the city that will be happier when the team is in the city even if they do not buy tickets.
D)that the benefits occur at a different time as the costs.

Question 13

Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community but is likely to leave without a new stadium. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

A)the economic activity created in the area will make it worth the investment.
B)there will be no new economic activity created.
C)there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else.
D)it may be a short-term cost, but in the long term it will be worthwhile.

Question 14

Which statement is false, given what you know about the local substitution argument?

A)People in the town will buy their clothes with team logos on them so the economic impact of that buying must be counted as additional money to the city from having the sports team there.
B)People in the town will go the games, therefore buying tickets, food and souvenirs causing the economy of the town to get better.
C)People from out of town will go to the games therefore buying tickets, food and souvenirs causing the economy of the town to get better.
D)People in the town will buy their clothes with team logos on them so the economic impact of that buying must be counted as additional money to the city from having the sports team there. Also, people in the town will go the games, therefore buying tickets, food and souvenirs causing the economy of the town to get better.

Question 15

Major westward moves in sports franchises began in earnest in the major sports in

A)the 1950s with two New York teams (the Dodgers and the Giants)moving to California.
B)1969 with the Seattle Pilots as an expansion team.
C)1972 with the Washington Senators becoming the Texas Rangers.
D)1922 with the Boston Braves moving to Atlanta.

Question 16

In general, a city using taxpayer money to build a new sports stadium will realize

A)a large positive return on its investment.
B)a substantial negative return on its investment.
C)no significant positive return on its investment.
D)an irreversible expansion of organized criminal activity.

Question 17

In general, team owners move to a new city

A)to get a new stadium.
B)to get more luxury box revenue.
C)to win.
D)to get a new stadium and to get more luxury box revenue.

Question 18

The economic contribution of a sports franchise to a community is roughly on the same order of magnitude as a

A)new McDonald's on a city street.
B)a new automobile factory.
C)a new Walmart Supercenter.
D)a hotdog stand.

Question 19

Tampa-St. Petersburg built new facilities to attract a sports franchise, but got a team only after waiting

A)two years.
B)four years.
C)five years.
D)ten years.

Question 20

The era of free agency brought salaries closer to

A)the marginal revenue product of players.
B)the reservation wage of players.
C)their long run average.
D)their universally agreed-upon, morally justifiable level.

Question 21

The Larry Bird exception to the salary cap allows

A)teams to sign players out of high school.
B)teams to sign their own stars in order to keep them.
C)teams to sign other team's stars to allow competitive balance.
D)players to be paid while injured and not have their salaries count against the cap.

Question 22

A player draft is the

A)negotiation between owners and the players' union.
B)process by which new talent is assigned to teams.
C)process by which teams request to be traded.
D)process by which owners decide who plays.

Question 23

The suggestions that have been made to allow small-market baseball teams to compete include

A)a salary cap.
B)expansion to smaller cities.
C)revenue sharing.
D)both a salary cap and revenue sharing.

Question 24

The era of free agency dawned in major sports in

A)1946.
B)1977.
C)1985.
D)1998.

Question 25

The clause which bonds a player to his former team was known as the

A)free agency clause.
B)reserve clause.
C)competition clause.
D)Santa clause.

Question 26

The use of public money to attract sports entities

A)is limited to football.
B)is overwhelmingly in baseball.
C)was used by the city of Indianapolis to attract the offices of the NCAA from Kansas City.
D)is now causing the Master's golf tournament to move to Las Vegas.

Question 27

The least amount of money that a player will accept to play for a team is called the player's

A)reservation wage.
B)marginal revenue product.
C)average compensation.
D)minimum wage.

Question 28

The annual rate of return that is generated when you compare the purchase price and the current market value of teams suggests that _____ generate a good rate of return.

A)only big name teams
B)only NFL teams
C)only MLB teams
D)most franchises

Question 29

Salary caps were instituted to

A)reduce overall player costs to teams.
B)make it so that one team could not sign all of the good talent.
C)keep player salaries from becoming uneven.
D)reduce overall player costs to teams and make it so that one team could not sign all of the good talent.

Question 30

The use of public money to attract sports is

A)limited to football.
B)overwhelmingly in baseball.
C)expanding to include spring training baseball sites.
D)now causing the Master's golf tournament to move to Las Vegas.

Question 31

The local substitution argument against using public money to attract baseball spring training sites is

A)less valid as the argument against regular stadiums because most of the fans at a spring training game are tourists who would not be in that city otherwise.
B)just as valid as the argument against regular stadiums.
C)even more valid than the argument against regular stadiums.
D)completely invalid because no one at a spring training game is from the local community.

Question 32

Under a free agent structure the wage paid to a professional athlete is likely to be close to his

A)reservation wage.
B)marginal revenue product.
C)average compensation.
D)deadweight loss.

Question 33

The sport where free agency first dominated was

A)baseball.
B)soccer.
C)football.
D)hockey.

Question 34

A free agent is a player who

A)is bound to the team he was under contract with the previous year.
B)can sell his services to the highest bidder.
C)is eligible to be drafted.
D)must play for free.

Question 35

Under a reserve clause structure the wage paid to a professional athlete is likely to be close to his

A)reservation wage.
B)marginal revenue product.
C)average compensation.
D)deadweight loss.

Question 36

Though the owners of NFL and MLB teams may be able to show that they lose money each year, economists who study the subject insist that they

A)lose the same amount as they do in their other businesses.
B)still make money, because they can sell their team for much more than they paid for it.
C)lose money only if they lose games.
D)are using phony accounting tricks to come up with those losses and that every franchise makes money.

Question 37

The draft lottery was created in the NBA to

A)eliminate the incentive to lose on purpose in order to guarantee a better draft position.
B)create a chance for good teams to get better.
C)add excitement to the post-season.
D)add excitement to the pre-season.

Question 38

The use of public money to attract baseball spring training sites

A)has no economic rationale.
B)makes sense because such sites attract many tourists to that location during the months of February and March when those tourists might go elsewhere to follow their team if the money is not spent on a facility.
C)suffers from exactly the same logical problem (of local substitution)that the use of public money to keep an NFL team suffers from.
D)is always warranted just like building an NFL facility is always warranted.

Question 39

The extra revenue to a team associated with a player is called the player's

A)reservation wage.
B)marginal revenue product.
C)average compensation.
D)minimum wage.

Question 40

In the era of free agency, small market franchises in baseball

A)can only make money when they win games.
B)will lose money regardless of whether they win games.
C)often must choose between making money and winning games.
D)will make money whether or not they win games.

Question 41

Franchises with the lowest team revenues in their league

A)make it into the playoffs much more often than other teams.
B)build the largest number of luxury suites, due to the intense loyalty of their diehard fans.
C)usually find it difficult both to win and make money in the same season.
D)sign by far the most talented players among the free agents.

Question 42

Which major sports' players were locked out during 2011 (whether or not the season was affected)?

A)Baseball and football
B)Football and basketball
C)NASCAR and the IRL
D)Hockey and soccer

Question 43

The sport where labor restrictions on player movement are the hardest to enforce is

A)NBA basketball.
B)NFL football.
C)Major League Baseball.
D)European soccer.

Question 44

European soccer doesn't have issues with a reserve clause because

A)there are leagues in other countries where players can always play.
B)soccer pays so little.
C)soccer pays so much.
D)soccer teams are owned by the players.

Question 45

If an athlete were to pick the sport where being the best at a position would easily allow you to move to a city destined to win a championship, it would be

A)NBA basketball.
B)NFL football.
C)Major League Baseball.
D)European soccer.

Question 46

In golf and tennis, there is little concern over player strikes because

A)even the average players make more than the stars in the other sports.
B)the golf and tennis owners have always been fair.
C)there is a direct relationship between winning and earning.
D)they are amateurs and do not wish to be paid.

Question 47

A European soccer player who has completed a contract

A)can sell his services to the highest bidder because the teams from various leagues are bidding against one another.
B)is bound to his previous team by the reserve clause.
C)must stay within their country's league.
D)must leave the league of their present country's team.

Question 48

During the labor dispute of 2011, the owners contended that the NFL players were

A)garnering an unfair portion or league revenues because the 60% of everything above $1 billion had grown from 40% of revenues to more than half of revenues.
B)intentionally playing poorly to weaken the value of the league.
C)pretending to be hurt when they really were not.
D)using performance enhancing drugs.

Question 49

The one major sport to have lost an entire season to a work stoppage was

A)baseball.
B)football.
C)NASCAR.
D)hockey.

Question 50

During the labor dispute of 2011, the NFL players used which of the following tactics to prevent the teams from succeeding in their lockout?

A)Decertifying their union
B)Forming a players-owned league
C)Striking
D)Signing with Canadian teams

Question 51

Suppose an owner makes a substantial operating loss while owning a team, if history is any guide the money lost will be

A)compounded by the fact that the team will lose even more money when he sells the team.
B)just about offset by the slight gain the owner will get when he sells the team.
C)slightly more than offset by the gain the owner will get when he sells the team.
D)much more than offset by the enormous gain the owner will get when he sells the team.

Question 52

If NASCAR makes a business decision in favor of one track rather than another, based upon the fact that the track it chooses is owned by the same family who owns NASCAR, rather than the overall profitability of the chosen track, economists will insist that

A)this is simply a consequence of the family's monopoly power.
B)competition will quickly lead to NASCAR's demise.
C)this is what happens when there is significant economic competition in racing.
D)monopoly does not really govern auto racing.

Question 53

Existing teams have the bargaining power to induce cities to build stadiums for them because of the

A)difficulty of obtaining expansion franchises.
B)ease of obtaining expansion franchises.
C)fact that they have won national championships.
D)fact that land in some urban areas is still relatively cheap.

Question 54

The market power in racing goes to the

A)owners of the independent tracks.
B)drivers.
C)owners of the respective racing series.
D)fans.

Question 55

The original sales price the Rooney family paid for the Pittsburgh Steelers was

A)$2,500.
B)$2.5 million.
C)$25 million.
D)$2.5 billion.

Question 56

If an athlete were to pick the sport where it would be the easiest to move to a desired city it would be

A)NBA basketball.
B)NFL football.
C)Major League Baseball.
D)European soccer.

Question 57

In NFL football, which of the following forms of revenue is not shared?

A)ticket receipts.
B)television revenue.
C)NFL licensing revenue.
D)luxury box revenue.

Question 58

During the labor dispute of 2011, the owners contended that the NFL players were

A)decertifying their union as an artificial tactic.
B)forming a players-owned league.
C)striking.
D)signing with Canadian teams.

Question 59

In NASCAR, the IRL and Formula 1 racing, the common key feature of the ownership structure is that they are all governed by

A)family owned monopolies.
B)corporate governance structures that requires that all decisions be made by a Board of Directors.
C)cooperative arrangements of drivers and team owners.
D)perfect competition.

Question 60

The prospective gain per season to an owner from recruiting a new star player is that player's

A)marginal cost.
B)marginal revenue product.
C)capital value.
D)reservation wage.

Question 61

The sport where the teams winning the championship are almost always from a narrow list of teams is

A)NBA basketball.
B)NFL football.
C)Major League Baseball.
D)European soccer.