Financing Sports Organisations in New Zealand: the impact of governors’ choices

Carolyn Cordery , Rachel Baskerville

Victoria Universityof Wellington

2009

Carolyn Cordery, PhD, MCA, BBS (Massey), FCA.
Senior Lecturer     School of Accounting and Commercial Law

Victoria University P O Box 600 Wellington 6140 New Zealand

Ph. +64 4 463-5761                        Website www.victoria.ac.nz

Funding and financial management are critical issues for the not-for-profit sector. Funding is limited, competitively sought, and differences in funders’ and organisations’ expectations and needs can cause dysfunction. Sport is an important segment of the not-for-profit sector in New Zealand society. Sports clubs develop infrastructure to provide formal opportunities for teams, pairs or other groupings to play indoor and/or outdoor sport. These clubs offer opportunities for exercise and the building of social capital for healthy and vibrant communities. Yet, there is a lack of local current research about how not-for-profit sports organisations finance the infrastructure which is necessary for their operation.

The objective of this research was to assess the impact of governors’ financing choices on the sustainability of New Zealand’s sports organisations through empirical research into funding practices. This research was also undertaken in an economic downturn heightening awareness of organisational liabilities and the need for ongoing income to meet those liabilities.

Six sporting codes were chosen from which thirty organisations’ annual reports were analysed in terms of income sources, expenditure categories and the composition of liabilities.

In addition, twenty interviews were conducted with selected organisations to inform the preliminary findings of the quantitative analysis.

Findings

This research found that:

1.      Financial health in sports clubs has reduced over the two year period analysed;

2.      Expenditure on property and players consume the majority of sports clubs’ incomes, yet members do not always appreciate the costs of the sports they enjoy;

3.      Gaming and philanthropic trusts are a major source of funding for team sports clubs. However, successful clubs work hard at developing alternative sources of income; and

4.      More than 40% of sports clubs have non-current (i. e. long-term) debt. Generally, smaller clubs have higher ratios of total liabilities: total assets. These debts pose a risk to the clubs’ financial sustainability.

Keywords: financial vlnerability; grass roots sports finances

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Exploratory

National

Sport

Clubs

Organised

Financing / funding

3484

December 19, 2011