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Sports organizations often require capital or money in order to operate, grow, or expand. Borrowing money or issuing debt is one form of financing that is commonly utilized. Alternatively, offering equity (partial ownership) to an investor in exchange for money is also frequently utilized. Both of these forms of financing are discussed in this chapter along with the factors such as risk, expected return, discount rate, inflation, etc. that determine the terms of the financing. The trade-offs between debt and equity financing are examined, including examples from sports. Publicly traded companies that allow investors to buy shares of stock are considered as examples of equity financing that allow for deeper inspection of the financial situation of the companies. |
