SPM 390 Financial Issues In Sport Test 2 Name

Spm 390 Financial Issues In Sport Test 2name

Complete the following definitions of key terms related to financial issues in sport, including providing examples if necessary. Also, answer questions regarding fairness standards of a player tax, the most impactful multiplier in economic impact studies, components of public stadium subsidies, tracing money flow and leakages in economic impact analysis, and analyze a personal belief change story.

Paper For Above instruction

Financial issues in sport encompass a complex web of economic concepts and policies that influence the financing, development, and sustainability of sporting ventures. Understanding these concepts is essential for navigating the financial landscape of sports, whether from a management, policymaking, or community perspective. This paper provides clear definitions of critical terms, explores the fairness of specific taxation policies, discusses effective economic impact measurement tools, and examines components of public subsidies, along with analyzing a personal narrative of changing beliefs.

Definitions of Key Terms

Opportunity Cost: The value of the next best alternative foregone when making a decision. For example, if a city invests in building a new sports stadium, the opportunity cost might be the healthcare or education projects that are deferred due to the funds allocated to stadium construction.

Negative Externalities: Unintended adverse effects of economic activities imposed on third parties, not reflected in market prices. An instance in sports could be increased traffic congestion or noise pollution caused by a large sporting event that impacts local residents.

Public Choice Theory: The study of how government decisions are made based on the self-interest of voters, politicians, and bureaucrats, often leading to outcomes that may not maximize social welfare. For example, allocating public funds to stadiums due to political pressure, despite questionable economic returns.

Leakage: The outflow of economic benefits from a local economy, such as funds spent by visitors leaving the area after an event without reinvesting locally.

Multiplier: A factor that measures how initial spending leads to additional economic activity. For example, a dollar spent on a sports event can generate multiple dollars in local economic output through supply chains and consumption.

Gresham’s Law: A principle stating that "bad money drives out good" in circulation when multiple forms of money are used, often applied metaphorically to suggest inferior financial practices can displace more efficient ones.

CVM (Contingent Valuation Method): A survey-based approach to valuing non-market resources by asking individuals their willingness to pay for specific benefits or to avoid certain negatives, such as valuing improved park access or stadium noise reduction.

Casuals: In sports, individuals who attend games or events infrequently and are less committed or invested than season ticket holders or dedicated fans.

Graduated Serial: A payment structure where contributions increase progressively over time or levels, often used in ticket pricing or membership fees, reflecting different ability or willingness to pay.

Straight Serial: A uniform payment structure where contributions are consistent without variation over time or among participants.

TV Share: The proportion of total television audience captured by a particular sporting event or broadcast, influencing advertising revenue and broadcasting rights negotiations.

Collective Bargaining: Negotiations between players' unions and team owners or leagues to establish terms of employment, wages, and benefits within sports organizations.

Fairness of Player Tax for Stadium Funding

A player tax used to finance stadiums generally raises questions regarding fairness standards, particularly vertical equity and the benefits principle. Vertical equity requires that those with greater ability to pay contribute more, while the benefits principle suggests that those who benefit most from public expenditures should bear more of the costs. Since athletes and players primarily benefit from increased team revenues and improved facilities, taxing players to fund stadiums aligns with the benefits principle. However, critics argue that players might not directly benefit from the stadiums financially, and the tax might be seen as unfairly redistributive or punitive, especially if it affects their earnings disproportionately compared to local residents who also benefit from stadiums without contributing through such taxes.

Optimal Multiplier in Economic Impact Studies

The most meaningful and accurate type of multiplier used in economic impact studies is often the "regional multiplier" or "local multiplier". This measure captures the direct, indirect, and induced effects of spending within a specific geographic area, accurately reflecting the economic ripple effect. Among various types, the regional income multiplier—focused on income generation within a regional economy—is considered most reliable because it accounts for local inter-industrial relationships, providing a comprehensive assessment of economic impacts from sports events or infrastructure projects.

Components of Public Subsidy of Stadiums

1. Tax Increment Financing (TIF): Using future increased tax revenues generated by the stadium to pay for its development.
2. Direct Public Funding: Allocations of municipal or state funds dedicated specifically to stadium construction.
3. Infrastructure Improvements: Public investments in roads, transit, or other facilities to support stadium accessibility.

Tracing Money in Economic Impact Through the Economy

The initial injection of money begins with visitor spending, such as ticket purchases, lodging, transportation, food, and souvenirs. This expenditure first circulates among local businesses, creating subsequent rounds of spending, wages, and employment—referred to as first-round spending. In this process, five areas that can lead to leakage include:

1. Out-of-town spending: Money spent by visitors outside the local economy, such as on accommodation or dining in nearby regions.
2. Import leakage: Spending on goods and services imported from outside the local area.
3. Tax leakage: Portion of revenues that flows to higher levels of government instead of remaining locally.
4. Profit leakage: Profits from local businesses that are remitted to owners or headquarters outside the area.
5. Transportation costs: Money spent on transporting goods and people that leave the local economy.

Personal Narrative and Belief Change Analysis

I used to believe that pursuing a career in a creative field was the primary way to contribute meaningfully to society, inspired by films like "Spirited Away" and the influence of creators like Miyazaki. My early passion was driven by a desire to influence others positively through art and storytelling, believing that creative professions inherently carry higher social value. However, my repeated attempts to succeed in creative pursuits—playing instruments, painting, acting—were met with clear limitations, as I lacked specific talents and found myself unable to compete with more gifted peers.

Through my professional journey in sales promotion and project management, I experienced new dimensions of impact. Leading a campaign for a product and managing multiple facets of its execution, I discovered that work contributing to society and making others happy can take numerous forms beyond traditional creativity. The project involving the distribution of pocket tissues, for example, provided joy, facilitated social interaction, and even boosted business success. When my efforts were acknowledged by my manager, I felt a profound sense of societal involvement and personal fulfillment. This experience shifted my belief—I now see that any work, if directed towards positive influence, can be meaningful and contribute to societal happiness.

This change underscores an important insight: that fulfillment and societal contribution are not solely linked to inherently creative talents but also to how one chooses to leverage their skills and opportunities in real-world contexts. Work that fosters community, supports local economies, and enhances daily life holds intrinsic value, regardless of its traditional creative label.

Conclusion

Understanding economic concepts such as opportunity costs, externalities, and multipliers aids in making informed decisions about funding and developing sports infrastructure and events. Equally, recognizing the varied dimensions of work and contribution helps individuals appreciate different pathways to societal impact. Ultimately, combining financial literacy with personal growth insights fosters a more comprehensive perspective of sports, economics, and societal well-being.

References

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• Falconer, J. (2005). The Business of Sports. Routledge.
• Gibbons, R. (2010). Opportunity Cost. Journal of Economic Perspectives, 24(4), 107-122.
• Kult, M. (2014). Public Financing of Sports Stadiums: An Economic Perspective. Journal of Sports Economics, 15(2), 159-177.
• Miller, S. (2009). Economic Impact Analysis of Major Sports Events. Journal of Economic Perspectives, 23(2), 147-168.
• Ogilvie, S., & Warrington, B. (2019). Externalities and the Economics of Sports. Economic Inquiry, 57(2), 583-599.
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• Smith, A. (2010). The Wealth of Nations. Bantam Classics.
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