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Three models, one goal: Assessing financial vulnerability in New Zealand amateur sports clubs

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  • Carolyn J. Cordery
  • Dalice Sim
  • Rachel F. Baskerville

Abstract

► We model three different theoretical constructs of financial vulnerability and apply these to amateur sports clubs. ► Utilising longitudinal data from golf and football clubs we are able to assess changes in key ratios over time. ► Each model's predictive variables and explanatory strengths differ, due to differences in these sports. ► Variables to monitor include: over-reliance on external (non-member) revenue, increasing debt, and excessive expenditure.Financial vulnerability is a critical issue for nonprofit sports clubs due to clubs’ increasing costs and impediments to generating sufficient income. The first objective of this study is to derive a conceptual understanding of financial vulnerability for sports clubs by assessing three financial vulnerability models, two of which have previously been applied in the nonprofit sector generally. Two models are based on revenue patterns and expenditure, and the third is based on movements in Net Assets over four years. A second objective is to identify determinants of financial vulnerability within amateur sports clubs, focusing specifically on golf and football.The data to test these models were derived from the financial reports of 227 amateur sports clubs in New Zealand (98 football and 129 golf clubs). Each of the three models results in different predictive variables and has different explanatory strengths. For example, football clubs that were financially vulnerable under Model 1: Program Expenditure had declining revenues from members and trading, as well as high administration costs. Conversely, declining reserves are predictive in financially vulnerable golf clubs using Model 2: Net Assets. Model 3: Net Earnings was generalizable to both football and golf clubs. The explanatory variables were different between these sports, due to their different asset base and propensity to employ paid staff. The common variables those with oversight responsibilities should monitor against financial vulnerability are: an undue reliance on external, rather than member-based revenue, increasing debt, and excessive expenditure. Further research could extend this model to other sports and other jurisdictions.

Suggested Citation

  • Carolyn J. Cordery & Dalice Sim & Rachel F. Baskerville, 2013. "Three models, one goal: Assessing financial vulnerability in New Zealand amateur sports clubs," Sport Management Review, Taylor & Francis Journals, vol. 16(2), pages 186-199, April.
    • Handle: RePEc:taf:rsmrxx:v:16:y:2013:i:2:p:186-199
    DOI: 10.1016/j.smr.2012.08.002
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    Citations

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    Cited by:

    1. Svensson, Per G. & Hambrick, Marion E., 2016. "“Pick and choose our battles” – Understanding organizational capacity in a sport for development and peace organization," Sport Management Review, Elsevier, vol. 19(2), pages 120-132.
    2. MUSSO Fabio & RICHELIEU Andre & FRANCIONI Barbara, 2016. "The Management Of Small Sport Clubs Musso," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 68(5), pages 121-138, December.
    3. Poledrini Simone & Searing Elizabeth A. M. & Montrone Alessandro, 2022. "A Model for Directing and Modulating Public Interventions in Social Enterprises," Nonprofit Policy Forum, De Gruyter, vol. 13(4), pages 307-332, October.
    4. Jaroslav Mazanec & Viera Bartosova, 2021. "Prediction Model as Sustainability Tool for Assessing Financial Status of Non-Profit Organizations in the Slovak Republic," Sustainability, MDPI, vol. 13(17), pages 1-22, August.
    5. Orr, Madeleine & Inoue, Yuhei, 2019. "Sport versus climate: Introducing the climate vulnerability of sport organizations framework," Sport Management Review, Elsevier, vol. 22(4), pages 452-463.
    6. Jaroslav Mazanec & Viera Bartosova & Patrik Bohm, 2022. "Logit Model for Estimating Non-Profit Organizations’ Financial Status as a Part of Non-Profit Financial Management," Mathematics, MDPI, vol. 10(13), pages 1-18, June.
    7. Panagiotis E. Dimitropoulos & Konstantinos Koronios, 2018. "Earnings Persistence of European Football Clubs under UEFA’s FFP," IJFS, MDPI, vol. 6(2), pages 1-15, April.
    8. Millar, Patti & Doherty, Alison, 2016. "Capacity building in nonprofit sport organizations: Development of a process model," Sport Management Review, Elsevier, vol. 19(4), pages 365-377.
    9. Szczepan Kosciolek, 2019. "Do sports clubs differ from other non-governmental organizations in terms of revenue sources? The case of Poland," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 18(3), pages 283-294, September.
    10. Juan Alejandro Gallegos Mardones & Jorge Andrés Moraga Palacios, 2023. "Chilean Universities and Universal Gratuity: Suggestions for a Model to Evaluate the Effects on Financial Vulnerability," Sustainability, MDPI, vol. 15(13), pages 1-21, June.
    11. Mickaël Terrien & Loris Terrettaz & Yann Carin, 2023. "How Fear, Exogeneous Shocks and Leadership Impact Change: The Case of Economic Models of the French Men’s Professional Basketball Clubs," Sustainability, MDPI, vol. 15(6), pages 1-17, March.
    12. Pamela Wicker & Svenja Feiler & Christoph Breuer, 2013. "Organizational Mission and Revenue Diversification among Non-profit Sports Clubs," IJFS, MDPI, vol. 1(4), pages 1-18, November.
    13. Elizabeth A. M. Searing, 2021. "Resilience in Vulnerable Small and New Social Enterprises," Sustainability, MDPI, vol. 13(24), pages 1-21, December.

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