PSM W10

What is the primary reason why sport organisations seek external investors?

• To improve fan engagement

• To secure long-term financial sustainability

• To avoid paying player wages

• To expand grassroots development programmes

The introduction of Financial Fair Play (FFP) by UEFA was primarily designed to limit sponsorship revenue for clubs.

• True

• False

Which of the following is NOT a common revenue stream for professional sports organisations?

• Ticket Sales

• Player Transfer Fees

• Broadcasting Rights

• Coaching Certification Programmes

A private equity firm invests in a sports league with the expectation of long-term financial returns. What is the most common risk associated with this type of investment?

• Loss of fan engagement due to commercialisation

• Increased transparency in financial reporting

• More government funding for the league

• Reduced pressure to generate profits

A well-structured salary cap system in professional leagues can help maintain financial stability and competitive balance among teams.

• True

• False

Which of the following financial strategies is the best way for a sport organisation to mitigate the risks associated with economic downturns?

• Relying primarily on ticket sales revenue

• Diversifying revenue streams (e.g. sponsorships, broadcasting, licensing)

• Increasing player wages to attract top talent

• Reducing corporate partnerships to maintain independence

Sport franchises in closed leagues (e.g. the NFL) generally face higher financial risk than teams in open leagues (e.g. European football leagues) due to lack of promotion/relegation.

• True

• False

Which financial management approach is most effective for long-term sustainability in professional sports?

• Maximizing sponsorship deals while ignoring cost control
  

• Prioritising player transfers as the primary revenue source

• Relying on government subsidies to cover operational costs
  

• Developing community engagement programmes to build a loyal fan base

A professional sports team is facing financial distress due to declining match-day revenue and increasing operational costs. Which of the following strategies is MOST likely to ensure long-term financial sustainability?

• Taking on more debt to invest in high-profile player acquisitions

• Increasing ticket prices to offset declining attendance

• Expanding commercial partnerships and investing in digital fan engagement

• Selling majority ownership to a private equity firm for short-term liquidity

A sport organisation that reports an annual profit on its income statement is always financially sustainable in the long run.

• True

• False