College Athletics Financial Dynamics

Questions and Answers

Who was Sherwood Blount?

Guy in charge of paying players under the table

Who was the first player to talk to the media and why?

Sean Stopperich. Was not happy with the way he was being treated.

Who was the second guy to talk to the media and why?

Bill Clements. Wanted to get the program going in the right direction.

What was the death penalty for SMU?

Football program terminated for one season (No games, No scholarships). Allowed to play 7 games second season, but no home games. Signup and view all the answers

What penalties did the university impose on the football program?

Cancel the whole second season during death penalty. Signup and view all the answers

What connection was there between business success and sports salaries?

Bigger the success of the business, the more money athletes could make. Signup and view all the answers

What was the first thing almost all the interviewed athletes did upon getting paid?

Vehicles, Houses, Earrings. Signup and view all the answers

In the section of the documentary, titled 'Bling Bling' what is the main point the director is trying to make?

Athletes would go on spending sprees. Signup and view all the answers

In your own words, what does keeping up with the Joneses mean?

Wanting to match, or outdo, someone else. Signup and view all the answers

What point is the director making about having multiple cars or huge entourages?

You don't need it. Signup and view all the answers

What does a guaranteed contract in the NBA or MLB mean?

Signing bonus. Signup and view all the answers

How does being competitive actually hurt athletes off the playing field?

They see everything as a competition. Signup and view all the answers

Who are the hustlers that the documentary 'Broke' is referring to?

The investors. Signup and view all the answers

What are at least two examples of things the players are asked to invest in?

Car washes and diamond mine. Signup and view all the answers

What happens when the investments don't work out?

Start looking for a deal. Signup and view all the answers

What is the only thing agents should be worried about for their players?

Contracts. Signup and view all the answers

What four people should players hire?

a. Agent, b. Accountant, c. Financial advisor, d. Attorney. Signup and view all the answers

What type of people are the biggest thieves according to the documentary?

White collar criminals. Signup and view all the answers

What is the divorce rate for professional athletes?

60% after three years. Signup and view all the answers

Why do you think the divorce rate is so high for professional athletes?

Ego gets too big. Signup and view all the answers

What is the length of the average NFL career?

3.5 years. Signup and view all the answers

Why do some of the players say they aren't surprised when former players get addicted to drugs?

They self-medicated their past. Signup and view all the answers

At what age do most former athletes go flat broke?

40-45. Signup and view all the answers

What is the main idea of the 'Game Over' section?

It isn't uncommon for professional athletes to go broke. They aren't good at saving. Signup and view all the answers

How is the accumulation of wealth different for professional athletes than for regular people?

Athletes don't go through steps of accumulation; they go from extremes to extremes. Signup and view all the answers

What should be done differently to prevent the athletes from having financial difficulties?

Offer financial literacy programs. Signup and view all the answers

What is the difference between a strike and a lockout?

Strike is done by workers, lockout is done by teams. Signup and view all the answers

What is the difference between a restricted free agent and an unrestricted free agent?

a. Restricted- player's original team has the right of first refusal, b. Unrestricted- player can sign with any team. Signup and view all the answers

What is the difference between an arbitrator and a mediator?

Arbitrator can put input on decision, mediator cannot. Signup and view all the answers

What are the two forms of arbitration?

Binding and non-binding. Signup and view all the answers

Explain how 'final offer arbitration' works. Why does FOA restore the incentive to compromise?

Both sides present 2 offers and arbitrator picks one. Neither team wants to have to create such an offer. Signup and view all the answers

For sports franchises, where does the monopsony power come from? (Three parts)

a. No competition, b. Structure of free agency, c. Reserve clause. Signup and view all the answers

Study Notes

Sherwood Blount

Oversaw illicit payments to players in college athletics.

Sean Stopperich

First athlete to speak to the media, expressing dissatisfaction with treatment.

Bill Clements

Second athlete to address the media, aiming to steer the program positively.

SMU Death Penalty

Football program faced a one-season termination, impacting scholarships and gameplay.

University-imposed Penalties

Entire second season canceled during the death penalty.

Business Success and Sports Salaries

Increased business profits allowed for higher athlete salaries.

Initial Spending of Paid Athletes

Common purchases included vehicles, homes, and luxury items.

"Bling Bling" Section

Highlights athletes' tendencies toward extravagant spending.

Keeping Up with the Joneses

Desires to match or surpass peers financially.

Multiple Cars and Entourages

Criticizes the unnecessary obsession with wealth and status symbols.

Guaranteed Contracts in NBA/MLB

Includes signing bonuses, ensuring a secure financial future.

Competitiveness Off the Field

Athletes view all aspects of life as competitive, potentially harmful.

"Hustlers" Reference

Refers to investors who exploit athletes financially.

Investment Examples

Athletes are often asked to invest in ventures like car washes and diamond mines.

Failed Investments

Results in desperate searches for new opportunities and deals.

Agent Responsibilities

Agents should primarily focus on securing favorable contracts for players.

Necessary Personnel for Athletes

Important hires include an agent, accountant, financial advisor, and attorney.

Biggest Thieves in Finance

White-collar criminals are identified as significant threats to athletes' finances.

Divorce Rate Among Athletes

Stands at approximately 60% within three years of marriage.

High Divorce Rate Causes

Driven by inflated egos and lifestyle pressures.

Average NFL Career Length

Athletes typically have careers averaging 3.5 years.

Addiction Risks for Former Players

Many exhibit tendencies towards substance abuse due to past trauma.

Age of Financial Ruin

Most athletes go broke between the ages of 40 and 45.

"Game Over" Section Insight

Highlights the prevalence of financial collapse among professional athletes.

Wealth Accumulation for Athletes

Distinct from regular individuals as they experience rapid wealth changes.

Financial Difficulty Prevention

Advocates for financial literacy programs tailored for athletes.

Strike vs. Lockout

Strikes are initiated by workers, while lockouts are enforced by teams.

Free Agent Types

Restricted free agents have original teams’ rights; unrestricted can sign with anyone.

Arbitrator vs. Mediator

Arbitrators influence decisions; mediators facilitate without imposing opinions.

Types of Arbitration

Includes binding (mandatory) and non-binding (optional) arbitration.

Final Offer Arbitration (FOA)

Both sides submit offers; the arbitrator selects one, incentivizing compromise.

Monopsony Power in Sports Franchises

Arises from lack of competition, structures of free agency, and the reserve clause.

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Description

Explore the complex financial landscape of college athletics with a focus on illicit payments, athlete responses, and the consequences of the SMU Death Penalty. This quiz delves into the impact of business profits on athlete salaries and the culture of luxury spending among players.