Be sure to know all the basics before our interview with Dr. Luy tomorrow!

Two types of money sources discussed here: taxes (can be general or selective), and bonds (government borrows money to pay for things).

Types of taxes:

• General taxes
  • Property taxes
    • Real property
      • Land
      • Buildings
      • Etc.
    • Personal property
      • Vehicles
      • Stocks/bonds
      • Patents
      • Etc.
  • Sales Taxes
    • Regressive by nature (property taxes are as well!)
    • Can be used to fund specific projects
• Selective Taxes
  • Tourist taxes
    • Hotels, car rental, etc.
  • Sin taxes
    • Alcohol, cigarettes, lotteries, etc.
    • Many states have lotteries can be used to fund all kinds of things
      • Except Hawaii and Utah!
  • Jersey tax
    • No one has actually gotten this through a legislature yet though
• Income Tax
  • It is actually legal to impose state tax on business done within the state, including sports games!
• Game-Day Surcharges
  • Primarily additional cost to tickets and parking at events

Debt Financing: many ways to make the money move.

• Three vital principles for using debt to make things happen:
  • Use more time to make the tax burden less onerous
  • Use more time to make the financial pain smaller and get the rewards up front, for politics
  • Use more time so that the beneficiaries are paying (people who leave or come are paying for what they have access to).
    • Note that the debt should still only reach out to the expected end of usefulness of the product, or else you’re paying money for nothing on the back end.

Bonds!

• Straight serial method
  • Paying more up front, interest decreases to end
• Graduated serial method
  • Paying less up front, more total interest

Bond rating is mentioned, including S&P rating. Ahh memories. I wonder if the USA’s credit score is back up to AAA.

Tax-exempt bonds can only be issues by governments. In 1986 the Tax Reform Act was passed to try and prevent cities from using tax-exempt bonds to pay for stadiums but there were loopholes (of course) and things got messier.

Some blast from the past of sport marketing! Specifically w/r/t getting a new bond passed.

• Market segmentation: different groups behave differently and have different priorities
• Benefit principle: sell based on desire
• Development of a strategic plan: campaign before the referendum to create the best chance for success

Bonds are guaranteed debt. There are also non-guaranteed debt instruments:

• Revenue bond
  • Paid specifically from revenues generated by facility
• Certificate of participation
  • Public trust model
    • A nonprofit or other org acts on behalf of the government entity
  • Public-private partnership model
    • The local government itself behaves as the intermediary
• Tax-Increment Financing Bonds
  • Paid for by the increase in property values and resulting increase in property taxes
    • Super attractive, but be suspicious, people will eagerly assume it can’t fail
• Asset-Backed Securities
  • Securitization
    • Selling future revenue streams to investors
  • Player sale-and-leaseback arrangement
    • European football instrument for trying to get more money

OUTLINE:

• Sports Facility Boom
  • Measurement challenges
  • Description of the trend tables
• The evolution of facility funding
• Who pays and how much?
  • Cost sharing trends for arenas & stadiums
• Factors contributing to increased team/owner investment in facilities
  • The equity issue
• Factors contributing to continuing public subsidies
  • Owner leverage
  • The community power structure
• The rationale for public subsidy
  • Trends in the minor leagues
  • Trends in colleges

Let’s just take a quick overview today…. no quiz available yet, not sure there will be one.

Ok I saw the thing about GWB and I’m so mad I don’t want to do this anymore.

Leagues covered:

• Big 4
  • NFL
  • NBA
  • MLB
  • NHL
• Other major leagues
  • MLS
  • WNBA
• Minor leagues
  • mLB
  • AFL
  • NBDL
• Probably some other ones

The 1990s were a time of huge growth, but after the market saturated and the recessions things have gotten tougher.

The NFL is covered starting on page 92. A profit margin of 23.8% is INSANE. Good god.

The NBA is as profitable as ever. Only 3 franchises losing money (0 NFL, even the Raiders! lol)

The NHL is the least profitable and has a huge disparity (in terms of %) between the top and bottom teams in revenue. Also 8 teams losing money.

This is a leaked MLB team’s breakdown. The NFL is the easiest to monitor because of the publicly owned Green Bay Packers.

Lockouts, strikes, and other key parts of CBA negotiation are covered in the next section. NFL CBA is covered on pages 107-108, may need it for the paper.

Do the rest next week. It’s pretty straightforward.

MONEYYYYYY. Obviously.

But really a big part of the challenges are that it’s an industry, not a service like it should be. This creates an arms race for recruitment, facilities, coaches, etc.

Revenue growth, the rich getting richer, all of these are serious issues with billions of dollars at stake.

Title IX stuff, I already wrote a ton about it for the last class and this one so no rehashing today.

The US Economy was “strong” in the 1990s… especially for sports (ok that’s certainly true) and then bad things have happened for more than a decade straight.

Corporate investment in sport was a big trend in the 90s/00s.

I wonder if this book will have the courage to explore why sports used to be recession-proof and now they’re not :3

“The NFL is primarily a television show” smart, because that’s where the real money is eh.

This book is pretty good at laying out the realities but doesn’t seem too interested (at least yet) in interrogating why things are the way they are. Maybe that comes later.

Globalization creates new markets, for those daring enough to collect the support and make a go of it.