The perceived financial situation of nonprofit sports clubs explained by objective financial measures

Svenja Feiler*, Dennis Coates, Pamela Wicker, Christoph Breuer

*Corresponding author for this work

Publication: Contribution to journalJournal articlesResearchpeer-review

Abstract

In surveys across countries, nonprofit sports clubs report their perceived financial situation using some form of Likert scale; however, it is unclear what this subjectively reported rating reflects. The purpose of this study is to examine the link between objective financial measures and club officials’ perceptions of the financial situation. The main research question is: What objective financial measures best reflect the level and changes in the perceived financial situation of nonprofit sports clubs? The study used panel data from four consecutive waves of a German sports club’s panel (n = 2,859). The clubs’ financial situation was assessed on a 6-point scale (1 = no problem; 6 = existential problem). This subjective measure was juxtaposed with several objective financial measures drawn from the literature and financial theories. These measures include general financial measures like interest coverage, margin, and revenue diversification, but also measures specifically developed for the nonprofit sports clubs’ context. The results of regression analyses show that operating margin, revenue diversity, the share of facility expenses relative to total expenses, and administrative expenses relative to total revenue significantly explained the subjectively rated financial situation. The findings suggest that objective financial measures are required to better understand the financial situation of sports clubs and design more targeted support programmes.
Original languageEnglish
JournalSport Management Review
Volume26
Issue number4
Pages (from-to)607-627
Number of pages21
DOIs
Publication statusPublished - 2023

Research areas and keywords

  • Nonprofit finance
  • financial ratios
  • financial vulnerability
  • financial health
  • revenue diversification
  • voluntary sports organisations

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