Budgeting In Football Clubs

Budgeting In Football Clubs

Budgeting In Football Clubs is a very important aspect of managing a football club. Most football clubs which ignore this aspect of management struggle because they find it hard to record of how much money they make and how much money they spend.

Budgeting is one of the first steps to take towards making a football club financially stable. This is why,
in this article, we’ll be looking at what budgeting is, its various components, its benefits and the process
of preparing it.

What is budgeting?

Budgeting basically has to do with making plans. Contrary to the notion that it is all about putting
restrictions on how and when you spend, budgeting simply involves making plans on how and when you
spend. When you make a budget for a month, you are simply making plans on how you spend for that
month. When you make a budget for a year, you are simply making plans on how you spend for that
year.

A budget can also be about revenues, cash flows, sales volumes, assets, liabilities, resources quantities
like expenses, time, costs, to mention a few.
In the context of this article, budgeting in football clubs is centered around plans made by football clubs
on how they spend their money.

Components of budgeting in football

Budgeting has to do with making plans and every football club needs
Every football club needs a budget to progress and succeed. Infact, without proper budgeting, a football
club might have no idea of how they are performing business-wise.
Now that you’ve known the benefits of budgeting, what then are some of the things a proper football
club budget should contain?

1. Revenue
   Revenue is the total amount of money a football club makes. This include money made from sales of
   players, sponsorships, tickets sales, merchandise sales, etc.
2. Fixed costs
   These are recurring costs a football club makes that do not change according to their performance.
   Examples include cost of maintenance, insurance, players and staff salaries, accounting services, etc.
3. Variable costs
   Unlike fixed costs, variable costs are costs a football club makes that change according to their
   performance. A good example of variable costs is the cost it takes to run a football on a match day i.e.
   cost of stewards, catering, etc.
4. One-off expenses
   As the name implies, these are expenses that are usually paid for once in a long time. For example,
   expenses for renovating a stadium.
5. Cash flow
   Cash flow has to do with the amount of money that goes into the football club and the amount of
   money that comes our from it. It can be calculated by subtracting the a amount of money a club has at
   the start of particular period and and what it has at the end of a particular period.
   When the amount of money coming in is more than the amount going out, a football club can be said to
   have a positive cash flow
6. Profit
   Probably the most important of all, a proper football club budget should contain the profit. Profit can be
   determined by deducting the club’s expenses from its revenue.

Benefits of budgeting in football

As a result of the amount of revenue generated in football, budgeting has become an aspect of financial
lesson that can’t be overemphasized among clubs.

Here are some benefits football clubs can derive from budgeting:

1. Long term goals
   Budgeting helps football clubs to find out what they want to achieve in the long term and work towards
   it.
   For instance, if the goal of a football club is to renovate its stadium and increase its capacity from 30,000
   to 100,000 in 3 years time, budgeting can help its management to what to spend money on and what
   not to spend money on in order to save up or generate enough revenue to meet that goal. This decision

can be based on reducing the amount of money they spend on signing players at the start of each
season or based on increasing price of tickets for fans coming in to watch matches.

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2. Avoid overspending
   Budgeting also helps football clubs to avoid spending more than what they should spend. Gone are the
   days when football clubs spend within their means and keep track of their spending at the end of every
   month or every year. These days, football clubs spend without monitoring the rate at which they spend
   only to find out they’ve gotten themselves into debt. Budgeting can help avoid all of these.
   By budgeting, football clubs can monitor the amount of money they earn, the amount of money they
   can afford to spend from their earnings and the amount of money they can afford to save from that
   earnings.
3. Prioritize your project
   With budgeting, a football club can decide on which projects are more important and need immediate
   attention, and the ones that are less important and can be carried out later. This would make for
   efficient management and productive result as the club would be more focused on projects or initiatives
   that are more valuable to it.

How to prepare a budget for a football club

If you have a football club or you wish to start one but you don’t know how to go about it budgeting,
here a few steps to preparing a budget that can be of help to you:

1. Set your goals
   The first step to preparing a budget for your football clubs is to set your goals. What do you want the
   club to achieve in the next 3-5 years? What kind of players and staff members do you wish to bring into
   the club? What kind of partnership do you wish to establish with top organizations? What kind of
   infrastructures do wish to have in place? All these are questions you can ask yourself in setting a goal for
   your football club.
   When setting your goals, ensure they are things that are measurable, achievable and relevant
2. Determine your income
   Once you’ve set goals for the club, determine your sources of income. Sources of Income can be ticket
   sales for gamedays,. sponsorships with brands, merchandise sales, in-stadium advertisements, to
   mention a few..
3. Identify your expenses

Once you’ve determined your income, start identifying your expenses. What are those things you are
likely to spend your income on?
You can even go ahead and categorize your expenses into fixed needs, variable needs and wants. i.e
expenses that are fixed, expenses that change from time to time, and expenses that are not important
to the club.

4. Adjust your budget
   With your expenses placed into different categories, you’ll get a good idea on how they can be
   managed. Once this can be achieved, you can now adjust your budget.
   You can adjust your budget by comparing the amount of money you make to the amount of money you spend, reducing expenses where necessary, applying surplus money towards the goals you’ve set already, and monitoring everything closely.

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Conclusion

In conclusion, budgeting is all about making plans on how you and when you spend. Most football clubs
struggle today because they do not make plans for budgeting. With budgeting, you can set long term
goals for your club, avoid overspending and give priority to more valuable projects in order to achieve
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