An astounding growth in popularity of spectator sports is occurring across the global industry’s rich ecosystem, according to Deloitte’s 2020 Sports Industry Outlook. The report identifies five trends that will dominate in the near term:
- Growth of women’s sports
- Rise of esports
- Expansion of legal sports betting
- Opportunities for college athletes to monetize their celebrity
- Faster 5G wireless to enhance the on-site experience
These trends are expected to drive the growth of the global sports market, which includes spectator and participatory/recreational activities as well. The market was valued at more than $488 billion in 2018, according to a Business Wire release, and is expected to top $614 billion by 2022. North America is the largest market, accounting for more than 30% of the global value, the report says.
With sports-related businesses and values trending, demand for sports management professionals also should increase.
What Is Sport Management?
The many business functions required to run a sports organization comprise the field known as sport management.
The profession encompasses the wide range of business skills and knowledge that other industries also require, including capabilities in accounting, property management, event management, marketing and public relations, human resources, customer service, retail and finance.
Why Is It Important for Sports Managers to Know Finance?
Financial management is considered one of the most important managerial responsibilities for businesses in every industry.
Sports managers need to be familiar with finance so they can make sound decisions in at least five areas:
- Budgeting
- Cash flow
- Revenue
- Profits
- Operational expenditures
What Do Sports Managers Need to Know About Finance?
Budgeting involves planning for usual as well as unexpected expenses. A budget quantifies what a department or team needs to support its objectives for an upcoming period, be it a year or a season.
Cash flow management helps ensure that a company has enough money in the bank to make payroll or even take advantage of an opportunity with growth potential. Cash flow management involves keeping accurate accounts of regular expenses and income, plus having resources on hand for emergencies.
Familiarity with financial statements is important because managers need to communicate with finance and accounting. The three most common documents:
- Income statement. Because it presents the operating results of the period reported, the income statement is usually considered the most important of the basic financial reports. It shows the revenues and expenses, profits and losses of the enterprise.
- Balance sheet. Usually considered second most important, the balance sheet presents data that shows liquidity and capitalization. The balance sheet is a snapshot at an exact moment structured around the “accounting equation,” a calculation that shows assets as the sum of liabilities plus equity.
- Statement of cash flows. This report can provide a useful comparison to the income statement, particularly when the profit or loss reported does not reflect the business’s cash flow. It shows the inflows and outflows of cash during the reporting period.
Where Can Sports Managers Learn More About Finance?
The Financial Management for Sports Organizations course in the University of Wisconsin-Parkside’s online M.S. in Sport Management program covers these topics in depth. Students learn about budgeting and financial reporting for sports organizations through case studies, projects, presentations and hands-on negotiation exercises.
Learn more about the University of Wisconsin-Parkside’s Master of Science in Sport Management online program.
Sources:
Deloitte: 2020 Sports Industry Outlook
Chron: Why Is Financial Management So Important in Business?
Accounting Tools: The Four Basic Financial Statements
European Centre of Technology: Five Things All Professionals Need to Know About Finance