Sport Econ Exam 2

Which company has a monopoly (or near a monopoly) on official MLB-licensed baseball cards

Fanatics

What was the primary “crime” that the NCAA committed that is causing all of the current chaos in NCAAs divison I

Colleges colluded to not pay student-athletes above tuition and room-and-board

When two or more companies formally agree to manipulate prices or wages, economists and lawyers call this a what?

Cartel

Prof. Ormiston identified that monopoly markets have clear social downsides. which is the exception

Lower company profits

What happens in a monopsony

prices fall

We learned about the trilogy of court cases that ended amateurism in the NCAA. which cases came first

O’Bannon v NCAA

Which of the three cases went to the supreme court and justice cavanaugh effectively told the world that the NCAAs entire buisness model of amateur was a violation of antittrust law

NCAA v Alston

What did the case of O’Bannon v NCAA make legal

NIL Deals

The House v NCAA cases established all of the following except one. which was the exception

A limitation on how many years a student-athlete is eligible to play college sports

Discussed in class, what is the primary “win” of the protect college sports act for ncaa d-1 college

An Antitrust exemption

Which element below is not a part of the protect college sports act in its current form

A college-administered clearinghouse to limit NIL deals

In the 1980s, two colleges sued the ncaa for antitrust violations because the organization was restricting the amount of times individual colleges could appear on national television. which was the lead plaintiff in this case

University of Oklahoma

After the NCAA v. Oklahoma decision, what happened to many teams television revenue and why

it went down because teams and conferences now had to compete for tv money

To an economist, which of the following would not increase TV revenue for Ohio State University

If donors to colleges in the ACC triple their investment in players and facilities

Which NFL team tried to move cities in the early 1980s and after the NFL owners tried to stop them, won a case in US district court in 1982 that established that leagues cannot prohibit

Raiders

in 1922, the supreme court ruled that major league baseball was exempt from antitrust law. what was the justification offered?

Baseball is not interstate commerce and thus not subject to antitrust

Which financial statement shows an organizations annual revenues and expenses

income statement

Which two schools sued their own athletic conference in an effort to get out of the conference? while their lawsuit was settled this leverage caused the conference to acquiesce and grant larger and more competitive schools a larger slice of the conference’s tv revenue compared to smaller and less cometitive schools. which were these two schools that sued in 2023 and 2024, respectively

Flordia State and Clemson

What is the primary reason that the NFL, MLB and NBA have been hesitant to add expansion teams according to class discussion

Team owners reluctance to reduce their own shares of television money

What is the primary reason that NCAA Division ! universities establish student fees, to be paid by all students

Because athletics departments typically spend more thanthey generate in revenue

What was the biggest general expense paid by the unversity of georgia department of athletics as discussed in class?

Salaries and other labor costs

Which of these equations is correct

Profit= Revenue - Expenses

The NFL, NBA, and NHL have something that MLB does not and some sports economists theorize this is why team values are lower in MLB. What is that thing?

A Salary Cap

Which of the following is not a reason for increasing sports franchise valuations

Increased scarcity of teams

BONUS WORD FOR 9/25/30

PICKLE

BONUS WORD 9/30/26

GREEN

In major professional sports leagues in North America, which of the following is divided equally among teams

National Television Revenue

Which of the following statements best describes the outcome of research when it comes to the uncertainty of outcome hypothesis for individual games?

The research is mixed

Which of the following statement best describes the outcome of research when it comes to the uncertainty of outcome hypothesis across seasons

Fan generally prefer parity, with different teams winning each year

T or F: There is more parity in major US sports than in the top European Soccer leagues

true

Which of the following statements is true regarding the exonomic research on the uncertainty of outcome hypothesis

There are mixed findings as to whether fans like game to games uncertainity when making decisions to attend games

T or F: The NFL has its teams share the most local revenue among the four major pro sports leagues in North America

False (MLB)

What did diamond Sports Group do that substantially harmed the revenue streams of many major professional sports teams in North America

It stategically declared bankruptcy

Monopoly

A market structure where one firm has exclusive control over a good or resource and there are no close substitute

Monopsony

A market situation in which there is only one possible buyer

Cartel

An agreement between two or more competitiors to limit competition and/or manipulate the price of a good service

Income Statement

Summarize revenues and expenses in a specified time period

Balance Sheet

Summarize an organizations assets, liabilities and shareholder equity at a specific point in time

Assets

A resource owned or controlled by an organization

Accounts Receivable

Money owed to an organization but not yet paid

Liabilities

Financial debts or obligations that a buisness owe to another party

Accounts Payable

Money owed to vendors but not yet paid

Net Assets

The difference between assets and liabilities

Depreciation

The reduction in value of an asset with the passage of time

Amortization

The reduction in value of an intangible asset with the passage of time

Statement of Cash Flow

Summarize how cash flow into, and out of, an organization

return on investment

the ratio of an investment’s gain or loss to its cost; expressed as a %

liquidity

the ability to quickly turn assets and investments into cash without affecting their market price

Uncertainty of outcome hypothesis

the hypothesis that fans will prefer to see games when the outcome is uncertain

Antitrust Law: US Sherman Act of 1890

prohibits monopolies and anti-competitive behavior

Sport Organization two competing goals

1. winning 2. money

4 types of assets

current assets, inventory, fixed asset, intangible asset

American Jobs creation act

allows a new professional sports teams owner to amortize a large portion of a teams assets- including player contracts - an expense over 15 year

why are sport value increased

explosion in media rights

counterargument

wouldnt the MLB want the soxs, yankees, always be good

cordcutting

decline in cable television, no longer use cable which lowers viewership means less revenue for cable tv networks

Massey + thaler

shows teams are overconfident in their picks

highlighted that monopolies- whether they be baseball card companies or pharmaceutical companies— have three negative effects on society. which of the following was not on that list

increasd company profits

Market equilibrium is the price and quantity of a market featuring a monopoloy firm

false

suppose that a bowling alley is charging unusually high prices on consumers and generating huge profits. if “entry” is relatively cheap in that industry, what will likely happen in the long run

more bowling alleys will open charging lower prices

by and large, companies want to be monopolies in their respective industry

true

what is the name of the primary antitrust law in the united states

sherman act of 1890

What it comes to the crumbling of the NCAA due to the organization being in violation of antitrust law, what was indentified as the primary legal problem that led to all of this

college formally came together to limit student-athletes compensation without their input or agreement

economists have long held that the NCAA is a ________ or an organization of competitiors that maintains an illegal agreement to fix prices. what name do economists use

cartel

What is the likely outcome of a market featuring a monopsony

prices will be artificially low

The crumbling of the NCAA in recent years was started by a lawsuit filed by Ed O’Bannon, a former basketball player at UCLA. what was he suing over

Student-athletes NIL rights

The case of NCAA v Alston was particularly important in the case against the NCAAs buinsess model. what was the primary issue

The supreme court wrote in its opinion that, effectively, the NCAA’s business model would be illegal in any other industry opening the door for new lawsuits

the settlement in the house v ncaa case fundamentally reshaped the business model of college athletics at the division 1 level. the settlement featured all of the following except which one

the permission of the NCAA to student-athletes to collect money in NIL deals

which of the following is false about House v NCAA

Given that student-athletes would now be receiving money directly from colleges, the parties agreed that student-athletes would no longer be able to generate money from NIL deals

as discussed in class, economists and lawyers had a fundamental issue with the settlement in the case of house v ncaa. what was their primary concern

the artificial limit imposed on colleges revenue sharing with student athletes and the NIL clearinghouse still represented illegal collusion that would likely still be deem to be antitrust violations

the men’s basketball team at which college was the first to form a labor union of college athletes

dartmouth college

The house v NCAA settlement required the NCAA to issue backpay to former student-athletes totaling 2.8 billion. that is alot of money. but it is not as if the ncaa as an organization has a bank account with billions of dollars: a lot of that money instead had to come directly from each member college in the NCAA

Colleges in non-power conferences (smaller schools)

what might be the top reason that economists and lawyer might worry about the legality of the settlement in the house v ncaa case

colleges are coordinating to establish limits on current student-athletes compensation without their consent

what might be the top reason that economists and lawyers might worry about the legality of the settlement in the House v NCAA

Colleges are coordinating to establish limits on current student-athletes compensation without their consent

which of the following is not a part of the protect college sports act

the act explicitly forbids student-athletes to ever being deemed employees

As explicitly discussed in class, the typical economist would view the protect college sports acts as being primarily about what

an antitrust exemption allowing colleges to limit their labor cost

Why are restrictions on player pay legal in the NFL but have not found to be legal in college football?

Restrictions are collectively bargained through the players' union in the NFL and set unilaterally without players' input in the NCAA.

As discussed in class, the case of NCAA v. Oklahoma (1984) was a critical turning point in the history of college athletics--and specifically conference realignment--in this country. In the years leading up to Oklahoma's lawsuit, which of the following was NOT true?

The NCAA kept showing the same teams over and over every week on national broadcasts (e.g., Notre Dame, USC, Alabama).

It has been argued in sports economics textbooks that television money for colleges DECLINED after the NCAA v. Oklahoma (1984) ruling. From an economist's perspective, why was that?

Prices fell because the market went from a monopoly (single seller; high prices) to a competitive market (many sellers; low prices).

True or false. The economic trends in college football--specifically the consolidation of teams into smaller numbers of power conferences--is unique to college sports and has not largely been reflective in the larger economy and capitalistic system in the United States since the mid-1980s.

False

Per our class discussions, any large firm that has a monopoly is likely to have which of the following effects on society?

Higher prices on products compared to competitive markets.

What is the name of the primary antitrust law in the United States?

The Sherman Act

Which situation below best describes a monopsony?

A single buyer paying low prices

Why were restrictions on player pay found illegal in the NCAA but are legal in the NFL and NBA (i.e., a salary cap)?

The players' unions in the NFL and NBA agreed to those restrictions with their respective leagues; the NCAA made such restrictions without any players agreeing to it.

Which court case opened the door for name, image, and likeness deals for student-athletes in the NCAA?

O'Bannon v. NCAA

Which court case was nominally about the legality of the NCAA capping education-related funding (e.g., study abroad, internships) for student athletes?

NCAA v. Alston

In the most recent of the four court cases mentioned above, the plaintiffs--former student-athletes who were deemed to have been illegally denied pay while in college--settled with the NCAA for a large settlement. This number is well known around college sports circles. How much did the NCAA have to pay all of these former student-athletes?

$2.8 billion

Economists would unanimously believe that the limitations on student-athlete pay established in the House v. NCAA (2025) settlement would be legal under U.S. antitrust law.

False

True or false. The Protect College Sports Act is an antitrust exemption that would limit the amount of money colleges could directly pay student-athletes.

True

According to the lessons of class, something happened in 1984 that started--and continues to shape--conference realignment in NCAA Division I college sports. What was it?

A lawsuit by colleges against the NCAA for restricting national television broadcasts.

True or false. Suppose that the owner of the NBA's Memphis Grizzlies decides to move the team to Chicago despite there already being a team in that city (i.e., the Bulls). Because there is already a team in that city, the NBA would have the legal right to stop the Grizzlies' move to Chicago.

False

Which of the following is NOT true about the Supreme Court case Federal Baseball vs. National League (1922) and the subsequent consequences of the ruling?

Economic and legal scholars largely agree that Supreme Court's decision was of sound legal reasoning and establishes a solid precedent.

Which of the statements below is TRUE about the Protect College Sports Act?

It would eliminate the pathway of professional players from returning to play college sports.

As explicitly discussed in class, what are the two competing goals of most sports organizations?

Winning and making money

What is the name of the financial document that summarizes a company's revenues and expenses in a given time period (e.g., a year)?

Income Statements

There was an explosion of new stadium construction in many sports in the 1990s and early 2000s (e.g., all three Cleveland stadiums). While there are often many reasons a new stadium is built, the defining characteristic of many of these stadiums built in this period was meant to do what?

Maximize suite revenue

As discussed in class, most leagues distribute television rights money--such as that paid by Fox to the Big Ten for the rights to broadcast conference games on TV--evenly across teams in the league. While this may seem fair, why might it be an unstable outcome in the NCAA? (Note: Multiple answers might have some element of truth, but one was explicitly identified in class as the major problem.)

Teams that are bigger television draws will eventually want a bigger share of the league's distributions.

As discussed in class, what is the primary reason why professional sports leagues have considerably slowed the rate of team expansion in the last couple of decades?

League revenues from TV and other media rights have gotten so large that adding any new teams would necessarily reduce the revenue stream available for each time.

As discussed in class, many NCAA Division I athletics teams are not profitable and, in fact, lose money annually. Why do colleges and universities give them money from things like student fees to keep them afloat?

Athletics is the biggest marketing tool for most colleges

With rare exceptions, most colleges and universities operate as "non-profits."

True or false. Non-profits do not need to pay taxes on their earnings

True