Five ways to budget and manage finances in youth sports programs.
Every strong program has strong management of their funds. Depending on your type of organization and your role, you may not have control of the funds once they come in but all administrators can still plan and manage your funds, regardless of your role.
All league administrators should have a budget before ever taking a single registration. Your budget should estimate your revenue and expenses. You should also break down those revenue and expenses in individual line items. Estimate your revenue low and your expenses high to give you some margin of error. Once you set your budget, keep your spending within the budget unless you have additional revenue that would justify additional spending.
Operations Guide: Your budget will dictate how you operate your league based on the anticipated revenues and expenses. It will explain how your organization is organized and operates.
Financial Plan: Sound budgeting will keep your finances in order and be able to identify any areas where you could fine tune spending or save money. It should show sources of revenues and allocated expenses.
Communications Device: Your budget provides an understanding to everyone else in your league or overall organization what your forecasted revenues are and how you plan to allocate funds for expenses. It helps stakeholders understand why only certain funds go to certain expenses.
The purpose of a budget is to allocate your resources to achieve your financial goals and objectives. If your league or organization is large enough to be separated into departments, each department will have their own budget with the total being your organizations annual operating budget.
Your budget should be broken down into line items that reflect every aspect of your operation such as:
Staffing and Referees
Jerseys and Uniforms
Repair and Maintenance
Budget categories are based on your league operation and should be flexible and monitored regularly.
Here are five ways to manage your budget and finances in youth sports:
Breakeven: Find your breakeven point to determine how much revenue you have to bring in to sustain the league. If your only source of revenue is your participant registrations, then you would simply figure out how many participants you need to be able to run the program. If you have significant revenue in sponsorships, concession sales, etc. you can include it as you are not as dependent on just your participation.
Cost Recovery: Similar to your breakeven, cost recovery will take it one step further and show you exactly how much of your expenses you recovered based on the revenue you brought in. To get your cost recovery, breakdown all your revenue and all your expenses. Then divide the total revenue by the total expenses. 100% cost recovery means you broke even. Anything higher than that means your league made money. Anything less means you lost money and would need to subsidize losses with additional revenue sources.
Expense Tracker: Track every league expense you make to the penny. It can be as simple as entering them into a spreadsheet. This will help you keep track of all your funds and ensure you stay within your budget. If you control the leagues bank accounts you can reconcile your expenses to your account. Tracking your expenses will also force you to fine tune your spending and identify places you can save money when needed.
Cash Handling Processes: Have a process in place on what to do when cash comes in. Anytime you are taking cash or managing any finances for that matter, more than one person should be involved for accountability and checks and balances. Make sure you know who is allowed to take cash, how it is counted, and where it goes after. It is recommended you go entirely cash free or work towards it if possible.
Set Up a Contingency: This is more for those who have complete control over their league funds, such as a nonprofit little league or Pop Warner team. A larger organization such as a government agency or larger YMCA association generally will not have control of this at the league level as they will have their own finance departments. If you are a smaller operation, you should always have some sort of contingency or savings fund. Take a small portion of every registration and put in in your contingency. If things go south or you have a major unexpected expense you can handle it without being detrimental to the program. As this fund builds up you can also use it for things like scholarships or capital improvements to your facility.
All youth sports programs should have some level of budgeting and financial management regardless if you are your own organization or just a small part of a larger organization. Have a plan to manage your finances in youth sports and ensure a viable program. Sound budgeting and financial management will keep your league open and thriving for the long run.
For more resources on youth sports, visit the League Source website.
Jason Schaitz is a parks and recreation director with 15 years of experience managing youth sports, camps and recreation programs. He also created and manages League Source and The Summer Camp Source with the goal of providing free, high-quality resources for any type of youth sports or camp program. Take your leagues and camps to the next level by visiting our websites for free resources and education!