Financing nonprofit sports clubs: Perspectives on core income sources and financial problems

Nonprofit sports clubs build the basis of sports systems in many European and overseas countries, providing a main pillar of mass sports, competitive sports, and health sports offers. To fulfil their mission and goals, nonprofit sports clubs must carefully manage their financial resources to avoid potential financial problems. Despite the importance of nonprofit sports clubs as relevant actors for the welfare of society, research on the finances of nonprofit sports clubs is scarce.
As membership associations, sports clubs rely to a large extent on membership fees. These fees are complemented by further revenue from donations and public subsidies. Together, these three income sources are summed up under the so-called non-material area and can be regarded as the core financial resources of nonprofit sports clubs. To address the research gap regarding the finances of nonprofit sports clubs, the purpose of this dissertation is to examine, first, which factors are related to the reception and amount of nonprofit sports clubs’ key financial revenue sources, and second, how perceived financial problems can be explained based on objective financial measures and in times of crisis.
The two overarching research questions are investigated in five quantitative studies, making use of data from a longitudinal study among nonprofit sports clubs in Germany, the “Sport Development Report”. The studies use different theoretical approaches from nonprofit economics, financial management, and organisational capacity, which can be summed up under the overarching framework of benefits theory for nonprofit finance adapted to the context of nonprofit sports clubs.
The results suggest that various different factors are relevant to the three core revenue sources and perceived financial problems. Some of these factors, e.g., competitive sport, youth promotion, and sports facilities, are relevant elements for all three income sources, whereas other factors, e.g., a commercial orientation, is mainly negatively related to donations. Additionally, it needs to be considered in the financial management of clubs that some factors are related to the income sources and simultaneously to perceived financial problems, e.g., revenue diversification.
The dissertation contributes theoretically and empirically to the nonprofit finance literature of a specific type of nonprofit organisations, namely nonprofit sports clubs. Furthermore, the dissertation has practical relevance for the management of nonprofit sports clubs as the findings help sports clubs manage and optimise their financial resources. Moreover, the dissertation provides valuable implications for stakeholders with a collective interest in sports clubs’ financial health and effective sport programme delivery, such as sports associations, federations, and sports policymakers.