Complete the following problem for your final. Be sure to address every item requested in the instructions and write clearly stating your sources. The text should provide most of the information you need but you are encouraged to use other sources as well.

Stadium Building Scenario:

A team owner has threatened to move his professional football team from your city to another city if you do not build a new stadium. As mayor of the city, you need to figure out whether its worth raising the money through public sources (e.g., bonds, taxes) to keep the team or whether its not worth the money to keep the team in the area. Using the information in Chapter 8 on capital budgeting and Chapter 9 on facility financing (Financial Management: In the Sports Industry), write a three- to five-page paper addressing whether or not to try to keep the team. The Chapters Cover: Capital Budgeting; Capital Expenditure; Current Expenditure; Discount Rate; Discounted Payback Period; Incremental Cash Flow; Initial Cost; IRR (Internal Rate of Return); MIRR (Modified Internal Rate of Return); NPV (Net Present Value); Payback Period; Terminal Value; WACC (Weighted Average Cost of Capital); Asset Backed Securities; Benefit Principle; Certificate of Participation; COI (Contractually Obligated Income); Efficiency Principle; Franchise Free Agency; General Obligation Bond; Horizontal Equity; Lease Revenue Bond; Naming Rights; Non-excludable; Non-rival; Opportunity Cost; PILOT (Payments in Lieu of Taxes); Positive Externalities; Price Elasticity of Demand; Private Financing; Psychic Impact; Public Financing; Public Good; Revenue Bond; Securitization; Sin Tax; TIF (Tax Increment Financing); Tourism Tax; Vertical Equity.

Keys to this paper: This is an NFL franchise, not MLB, NBA, or NHL. Does the fact that its an NFL team change your approach to keeping the team? What kinds of things do you know about NFL teams from your studies that might influence your decision? What methods would you use to raise funding for the stadium? Describe a percentage of income you would expect to raise from each source. Be specific with numbers. If you are going to increase sales tax by 0.25%, find some statistics on sales revenue in your city to see how much money would likely be raised by such an increase. It is important that you show the specific amounts of money that could be raised based on data in your community. DO NOT arbitrarily say you are going to raise $5 million from taxes. Back it up with data. Discuss the amount of revenue that such a team likely raises for a community. This will involve research on your part. For example, are NFL teams generating revenue in their communities? What arguments are made against their generation of revenue? Identify your decision to keep the team or let it go, and connect it back to your data.