A Financial Management Tool for Sport Federations

Abstract

Purpose- The purpose of this study is to develop a tool to manage financial performance of sport federations. It stimulates thinking about the necessity for non-profit sport organisations to develop financial performance measures and management to survive and/or to grow. Design/methodology/approach- Adapting the Ritchie and Kolodinsky model of factor analysis through financial ratios in the sport federation context, the paper develops a framework for financial performance measurement of sport federations in Belgium for the years 2001 through 2006. Findings- Based on a principal component analysis, six financial performance-related categories were constructed, i.e.: public funds dependence; financial balance; attraction of resources; financial budget; member services investment and elite services investment. They form the basis of a dynamic strategic management tool where financial categories are related to each other. Research limitations/implications- The financial management tool can be a starting point for further organisational (performance) research. Differences and similarities between countries (e.g., sport policy priorities) and sport organisations (e.g., sport profiles) could be better investigated through this financial performance framework. Practical implications- The tool developed should help strategic volunteers and managers of sport federations to take strategic decision relying on financial information in order to pilot their organisation and to communicate with their stakeholders. Originality/value- Developing financial performance measurement of non-profit sport organisations is challenging and considerably different from for-profit and non-profit organisations. It provides researchers and practitioners with a viable model for analysing financial strategy and performance of sport federations over time.