The Cost of the Game? The Cost of a Game (Full Report) Research Completed
The Cost of the Game? The Cost of a Game (Full Report)
Victoria University of Wellington, Faculty of Commerce
Victoria University of Wellington
School of Accounting and Commercial Law
Victoria University of Wellington
Sports clubs form a major part of New Zealand culture. They organize and provide space and facilities for active recreation. They also serve as community centres where people come together and form lifelong connections. This study focused on amateur rugby in the Wellington Rugby Football Union (WRFU). The research examines the financial performance of rugby clubs in the union with a particular focus on the nature of spending at individual club level and the factors which drive that expenditure.
There were a number of objectives to the research. The key objective of the project was to establish the nature and pattern of expenditure occurring at club level over a five year period. Expenditure was categorised according to whether it was playing or non-playing related, and then classified according to whether it was fixed/variable and discretionary/non-discretionary in nature.
The annual reports of all WRFU clubs were analysed for the five years 2008-2012, enabling revenue and expenditure trends to be identified, as well as the composition of assets and liabilities at each club.
In addition to this, semi-structured interviews with a purposive sample of clubs, and one focus group were conducted to gain a deeper understanding of the types of costs faced by various clubs.
Key findings include the following:
1) The costs of playing the game have continued to rise but a number of key revenue streams are diminishing. Only half of the clubs achieve a surplus in any year.
2) 50% of revenue received by clubs is from external sources i.e. gaming trusts and sponsorship, while only 7% was sourced from membership subscriptions.
3) 80% of all expenses on average are considered Non-discretionary by club managers and treasurers. The proportion of discretionary expenditure is greater among large clubs relative to smaller clubs.
4) The two biggest expense items that rugby clubs have to bear are clubroom and facilities related expenditure and match related expenditure. These two categories were a relatively greater burden on smaller clubs than on large clubs.
Across the board, revenue has fallen, whilst costs have increased, resulting in a net loss in dollar terms across the WRFU in 2012 and a number of clubs.
This research produced a practical descriptive (analytical) framework (Expenditure Categorization Guide) and tool for analysing discretionary and non-discretionary expenditure – the cost of the game. This framework allows clubs to quickly focuses in on where the key areas of expenditure and to think about how that expenditure can be managed. This framework could be adapted and used by other sports clubs in other codes to assess their mix of discretionary and non-discretionary expenditure for financial management purposes..
1) Increasing membership fees is an approach some clubs are using to reduce their reliance upon grant funding. Successful clubs actively promote the benefits of being a club member and inform members of the amounts spent on players every year, relative to member contributions.
2) Some clubs have developed a keen awareness of the importance of diverse revenue streams. These clubs have realised the benefits, in terms of financial security, of holding a wider and more diverse array of revenue streams than they previously relied upon.
3) Many clubs have considered their level of discretionary expenditure and whether current levels can be maintained, given the current financial environment and the predicted funding issues on the horizon.
4) There is a growing realisation of the transparency and greater comparability that can be attained via the use of a recognised accounting management software system, (e.g. Xero). Such a system can provide clearer and more consistent financial information, allowing for more informed financial analysis and decision making.
expenditure, discretionary expenditure, non-discretionary expenditure, financial vulnerability, financial sustainability
How to access
Areas of Focus
Provision (delivery type & infrastructure)
Barriers, Benefits, charges, Delivery, Fees, Fees, charges, user pays, Financing / funding, Governance, Impacts - economic, Management, Participation, Planning, Policy, Professionals, Volunteers, Workforce
Sport and Recreation Types
May 31, 2013
May 31, 2013