Managing Sports Team Finances

Managing Sports Team Finances

Managing Sports Team Finances the effective management of a sports team finances involves the opening of a team bank account, the
creation of a financial handbook, the creation of a team budget, the monitoring and management of
cash flow, and an accurate reportage of team’s spending. Despite the fact the fact that the success of a
sports team lies partially on its finances, most team still struggle in this area.
Managing the finances of your sports team can be a huge task or a challenge, especially when the
amount of money coming in for the team is low or when those handling these finances have little or no
experience in financial management. Other factors that can lead to the poor management of your sports
team finances vary from poor banking practices to fraud, mismanagement of funds, corruption, and to
mention a few.
What then are the best ways to manage the finances of your sports team? Read through this article to
find out.

Why Do Sports Teams Face Financial Issues

Before talking about how to best manage a sports team finances, we first have to consider why they
face financial difficulties in the first place.
There are many factors that can contribute to a sports team facing financial challenges or difficulties.
They include;

1. Mismanagement of funds

A sports team that mismanages its funds is likely to face financial difficulties. Mismanagement of funds
can come in form of spending money on things it usually shouldn’t spend money on or spending money
without keeping track of the amount spent or drafting out plans on how to make up for the money
spent.

2. Private accounts

Another factor that can lead to a team facing financial issues is when it makes use of accounts of private
individuals for its transactions. These individuals might end up using some of the team’s revenue for
their own selfish interest, thus, putting it in a state of financial difficulty.

3. Corruption

In a situation where the finances of a sports team is managed by a corrupt individual or group of
individuals, there is a high chance that team will face financial issues.

How to Manage your Sports Team Finances

Here are some of the best ways you can manage the finances of your sports team:

1. Open a bank account for the sports team

Most sports teams face financial difficulties because they don’t have a bank account and rely on peer-to-
peer payment services or receiving money through personal bank accounts.

One of the first steps to take in managing the finances of your sports team is opening a bank account for
the team. This allows the team to be collectively responsible for the funds that come in, and keep track
of other financial transactions it is involved in.

It also helps to avoid the risk of losing funds to private
individuals whose accounts are being used tonnage the teams finances.

2. Create a financial handbook containing rules for the sports team

Once you have a bank account set up and running for the team, the next thing you should do is to create
a financial handbook containing rules that should be followed.

What a financial handbook containing rules does is to guide the team on how funds will be received, managed and spent.
For instance, the financial handbook can contain rules guiding expenses and how they would be made
when teams travel to play games or partake in tournaments.

It can also contain rules on how match bonuses would be shared among members of the sports team or the percentage of donations from sponsors that would be shared among members of the team and the one that would be used to cater for the teams expenses.

3. Create a budget for the team

With the teams bank account in place and a financial handbook containing rules on how expenses
would be made, the next thing is to create a budget for the team. This budget will help the team plan,
organizae, maintain and control expenses.

When creating a budget for the team, ensure to put into consideration factors like registration fees for
tournaments, trips expenses, travel expenses, and other situations that will require the team to make
payments. Also, ensure the teams budget is compared to its actual spending. This will allow for the
accountability of its finance.

4. Monitor and manage the flow of cash

Once the team budget has been created, you can now start monitoring and managing the flow of cash in
and out of the team. There are different ways you can do this;

i. Breakeven point:- Find the teams breakeven point to determine how much you have to bring in
inorder to cover its expenses.

If the current amount of revenue the team is generating is not enough to
cover its expenses, you can consider other options. For instance, rather than relying on match bonuses
alone you can choose to generate funds from merchandise or sponsorships.

ii. Cost recovery:- Keep tabs on your cost recovery by finding out how much of the revenue
generated by the team was able to cover its expenses. You can get your cost recovery by dividing the
teams total revenue by its total expenses.

A cost recovery higher than 100% means the team made
more money while a cost recovery lower than 100% means the team lost more money. This latter
implies that the team has to look for more sources of revenue.

iii. Savings:- You can also set up a separate savings account for the team where a particular amount
of revenue that comes in will be deposited for future use or unforseen circumstances. A good example
of an unforseen circumstance in this case is the team facing a major unexpected expenses it can
handle.

5. Accurately report the teams spending

In all, you have to provide accurate reports of the team’s spending and transactions in order to
effectively manage its finances. You should also keep track of the team’s expenses and the revenue it
generates. This will help to closely monitor the team’s cost recovery, and decide if it is making or losing
more money.

Conclusion

In conclusion, there are many factors that can lead to a sports team facing financial challenges like
corruption on the part of persons handling the teams account or mismanagement of funds by the team.
A sports teams finance can however be managed by following some of the tips explained in this article
which include opening a bank account for the sports team, creating a financial handbook containing
rules, creating a budget for the team, monitoring and managing the flow of cash, and accurately
reporting the teams spending.