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Examining the Financial Condition of Sport Governing Bodies: The Effects of Revenue Diversification and Organizational Success Factors

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Abstract

Sport governing bodies play a critical role in the sport system. The purpose of this study is to analyze their financial condition, a topic that has been largely neglected in previous research. Based on financial portfolio theory, it was suggested that the level of revenue diversification has a positive effect on their financial condition (measured through total revenues, break even, profit, and investments). Also, the influence of sport-related and financial success factors was examined using data from a nationwide online survey of sport governing bodies in Germany (n = 1,080). The results provided evidence of a relatively high level of revenue diversification compared with other industries. Revenue diversification, hosting major sporting events, and cost optimization had a positive effect on the financial condition, while increasing memberships in clubs and organizing competitions had a negative influence. The findings have implications for the management of sport governing bodies.

Résumé

Les organismes de régulation des sports jouent un rôle essentiel dans le système sportif. Le but de cette étude est d’analyser leur état financier, un sujet qui a été largement ignoré par les recherches antérieures. La théorie du portefeuille financier a été utilisée pour suggérer que le niveau de diversification des revenus à un effet positif sur la santé financière (mesurée par le revenu total, l’équilibre des comptes, les profits et les investissements). De plus, l’influence de facteurs relatifs au sport et au succès financier ont été examinés en utilisant les données d’une enquête nationale sur les organismes de régulation des sports en Allemagne (n = 1,080). Les résultats confirment un niveau de diversification des revenus relativement élevé par comparaison à d’autres industries. La diversification des revenus, l’organisation d’événements sportifs majeurs et l’optimisation des coûts ont eu un effet positif sur la santé financière, alors que l’augmentation du nombre d’inscrits dans les clubs et l’organisation de compétitions ont eu un impact négatif. Ces résultats ont des implications pour la gestion des organismes de régulation des sports.

Zusammenfassung

Sportverbände spielen eine entscheidende Rolle in der Organisation des Sports. Zweck dieser Studie ist die Analyse ihrer finanziellen Situation; ein Thema, das in bisherigen Forschungen weitestgehend vernachlässigt worden ist. Basierend auf der finanziellen Portfoliotheorie wird angenommen, dass sich das Ausmaß der Einnahmendiversifizierung positiv auf ihre finanzielle Lage auswirkt (operationalisiert durch Gesamteinnahmen, positive Bilanz, Gewinnhöhe und Investitionen). Des Weiteren wurde der Einfluss sportbezogener und finanzieller Erfolgsfaktoren anhand von Daten einer landesweiten Online-Befragung von Sportverbände in Deutschland untersucht (n = 1.080). Die Ergebnisse wiesen im Vergleich zu anderen Branchen ein relativ hohes Ausmaß der Einnahmendiversifizierung nach. Die Einnahmendiversifizierung, die Durchführung Ausrichtung von Sportgroßveranstaltungen und die Kostenoptimierung wirkten sich positiv auf die finanzielle Situation aus, während das Steigerung der Mitgliederzahlen in den Vereinen und die Wettkampforganisation einen negativen Effekt hatten. Die Ergebnisse haben Auswirkungen auf das Management der Sportverbände im Sportbereich.

Resumen

Los organismos que regulan los deportes desempeñan un papel crítico en el sistema deportivo. El propósito del presente estudio es analizar su condición financiera, un tema que ha sido descuidado ampliamente en investigaciones previas. Basándonos en la teoría de la cartera financiera, se sugirió que el nivel de diversificación de ingresos tiene un efecto positivo sobre su condición financiera (medida mediante ingresos totales, punto de equilibrio, beneficio, e inversiones). Asimismo, se examinó la influencia de los factores de éxito financiero y relacionados con el deporte utilizando una encuesta nacional online de organizaciones reguladoras deportivas en Alemania (m = 1,080). Los resultados proporcionaron pruebas de un nivel de diversificación de ingresos relativamente alto en comparación con otras industrias. La diversificación de ingresos, el patrocinio de eventos deportivos de importancia, y la optimización del coste tenían un efecto positivo en la condición financiera, mientras que el aumento de los miembros en clubes y la organización de competiciones tenían una influencia negativa. Los hallazgos tienen implicaciones para la gestión de los organismos reguladores deportivos.

摘要

体育主管机构在体育系统中扮演关键的角色。本文旨在分析它们的财务状况,先前的研究中在很大程度上忽视了这个主题。根据金融投资组合理论,收入多元化对它们的财务状况能产生积极的影响(通过总收入、收支平衡、利润和投资衡量)。此外,本文运用对德国体育主管机构的全国在线调查数据(n = 1080),评估体育相关和财务成功因素的影响。评估结果表明,与其他行业相比,本行业的收入多元化水平相对较高。收入多元化、主办重大体育赛事和成本优化对财务状况产生了积极影响,而俱乐部成员的增多以及组织赛事拖累了财务状况。调查结果有助于提升体育主管机构的管理。

ملخص

مجالس الرياضة تلعب دورا˝ حاسما˝ في نظام الرياضة. الغرض من هذه الدراسة هو تحليل حالتهم المالية، الموضوع الذي أهمل إلى حد كبير في الأبحاث السابقة. على أساس نظرية الملفات المالية، تم إقتراح أن مستوى تنويع مصادر الدخل له تأثير إيجابي على حالتهم المالية (تقاس من خلال إجمالي الإيرادات، بدون ربح، ربح، والاستثمارات). أيضا˝، تم فحص تأثير عوامل النجاح المتصلة بالرياضة والمالية بإستخدام بيانات من إستطلاع رأي على الإنترنت على الصعيد الوطني لهيئات الرياضة في ألمانيا (ن = ٠٨٠,١). قدمت النتائج دليل على وجود مستوى عالي نسبيا˝ من تنويع مصادر الدخل مقارنة مع الصناعات الأخرى. كان تنويع مصادر الدخل، إستضافة الأحداث الرياضية الكبرى، تحسين التكلفة له تأثير إيجابي على الوضع المالي، في حين أن زيادة عضوية النوادي وتنظيم المسابقات له تأثير سلبي. النتائج لها آثار على إدارة الهيئات الرئاسية الرياضية..

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Notes

  1. Sport confederations and associations represent two different streams of sport governing bodies. Sport confederations comprise sport clubs in one area (i.e., state, region district, or community), while sport associations encompass all clubs of one specific sport.

  2. The concrete wording of the question about organizational success factors was as follows: From your perspective, what are potential success factors for the operations of your sport governing body? Please assess their importance.

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Acknowledgments

The authors would like to thank the German Olympic Sports Confederation (DOSB) for supporting the research into sport governing bodies in Germany.

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Authors and Affiliations

  1. Department of Sport Economics and Sport Management, German Sport University Cologne, Am Sportpark Muengersdorf 6, 50933, Cologne, Germany

    Pamela Wicker & Christoph Breuer

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  1. Pamela Wicker
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  2. Christoph Breuer
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Correspondence to Pamela Wicker.

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Wicker, P., Breuer, C. Examining the Financial Condition of Sport Governing Bodies: The Effects of Revenue Diversification and Organizational Success Factors. Voluntas 25, 929–948 (2014). https://doi.org/10.1007/s11266-013-9387-0

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