Budgeting and Financial Management of Sport Programs Steir – Chapter 7 Class Reminders Weekly article #6 due today – budget/finance WebCT this weekend – chaps 6 & 7 (Fri-Sun) Resume notes available online Start working on Portfolio – collect resources
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Steir – Chapter 7
What’s the purpose?
What is a budget?
Essential Elements of a Budget?
Anticipated Income and Anticipated Expenses
Create a line-item for each general income and expense in your monthly budget
Justify the need for each expense
What steps can you take to increase income?
What steps can you take to reduce expenses?
Different types of budgets can be used for different components of the organization: - examples…
Costs of managing physical education, fitness and sport programs are always increasing
Inflationary effects on supplies, equipment, insurance, technology, travel, transportation, salaries, security, food, utilities, etc.
What revenue streams are providing big $ to professional sport budgets?
What are the main revenue sources?
What are the main expenses?
With a partner, outline EIU Athletics
Largest 5 Revenue sources?
Sources where there is room for growth?
Largest 5 Expense sources:
What revenue streams are providing big $ to the NCAA’s Budget?
What revenue streams are providing big $ to high school sport programs?
In 2004 Glenbard High School District 87 set a goal of a balanced budget by 2006
The school district proposed an elimination of extracurricular activities and half the sports programs starting in 2004
After parent outcries to restore the sports and extracurricular activities, the programs were re-instated and the per-sport fee was raised from $40 to $140, and registration fees were increased from $55 to $180
Survey distributed to Ohio public high schools
Sylvania, Ohio Schools
(see other example on p. 168-170, 183-188 of Steir)
Scholarships and Salaries + benefits for coaches, AD, & staff
Line-Item Budgeting– each class or type of expense and income is categorized on a different line of the balance sheet
Incremental Budgeting – adding to or taking from the previous year’s budget by increments or %
(i.e. – 2.5% increase for all line-items next year)
Zero-based Budgeting – based on the requirement that organizations and their programs must propose and justify their total need for resources, not just request an auto-increase (Princeton Athletics)
Formula Budgeting – using a formula to determine how much to allocate to cover individual program expenses (i.e. = away-game travel expenses – mileage, per diem, hotel, etc.)
- advanced policies need to be established to determine appropriate “formulas” – State of Illinois
PPBS – (Plan, Program, Budget, System)
- involves establishing programs and activities to coincide with organization goals and objectives, then budgeting and allocating resources to meet the needs of these programs – evaluating program results on an annual basis – government approach
What is a financial audit?
Purpose of Accounting?
An orderly system of keeping track of expenses and income to keep your budget balanced
Provides a “snapshot” of the financial status of the organization, or department within organization
Makes it possible to track and determine whether purchases were made for the purpose they were intended
Helps determine whether expect income was indeed received and deposited to the correct account
Step 1 – Begin preparation in advance (even a year before the beginning of new fiscal year)
Step 2 – Examine your organization’s objectives, goals, and mission
Step 3 – Collect data relevant to past, present, and anticipated income and expenses
Step 4 – Solicit the input of financial experts inside and outside the organization
Step 5 – Follow organization’s standard operating procedures (SOPs) in the construction, development, and presentation of the budget
Step 6 – Submit the completed budget documents to a select few for analysis prior to making the formal presentation
Step 7 – When making the formal presentation – anticipate questions, be prepared with accurate and timely responses
Step 8 – Edit/revise budget where necessary
Step 9 – Implement new budget at the beginning of the new fiscal year
Step 10 – Following the end of the fiscal year, conduct a financial audit to ensure accuracy
Purchasing and Receiving (174) – ordering
Petty Cash Accounts (175) – for small purchases
Bids and Quotes (175) – ↑ vendor competition
Bidding Process (176) – solicitation for service
Local vs. Distant Vendors (179)
With expenses and costs escalating, cost-reducing and accountability have become vital in managing and financing sport organizations – NCAA article
* Biggest Challenge: Cost control or reduction without reducing quality of program or service