ABSTRACT
It is important before we start that we establish some ground rules; put simply, finance is not just about numbers and you do not have to be a skilled mathematician to understand a set of financial statements. Instead you need to understand the guiding rules and principles that help compile and structure a set of accounts. As students or managers who work within the sport and leisure industry it is important that you appreciate the importance of financial management and responsibility and that you can communicate key financial information to both internal and external stakeholders. Sport and leisure is now big business. Indeed the Sport Industry Research Centre (SIRC) (2008) indicates that the sport and leisure sector is worth around £20 billion, which roughly equates to 2.5 per cent of consumer expenditure. By 2011 this is expected to rise to an estimated £24 billion (SIRC, 2008). This proves that sport and leisure is far more serious and less frivolous than people believe. The commodification and professionalisation of sport and leisure has led to vast sums of money being invested at all levels, for example Tom Walkinshaws’ investment in Gloucester Rugby Football Club in 1997, shortly after the sport turned professional; and Malcolm Glazer’s £700 million purchase of Manchester United in 2005. Stewart (2007) also identifies that sport and leisure has established itself as a mechanism for creating personal meaning, cultural identity (the purchase of a replica football shirt, for example) and a lucrative career path for many people all over the world. Deloitte’s Annual Review of Football Finance (Deloitte and Touche, 2008) identifies that ten clubs earned in excess of a200 million a year. In the US, many professional sportsmen earn more than $1 million and in the UK the Leisure Company Blacks Leisure recorded a £14.5 million net profit for the year ended 2006. Unfortunately sport and leisure has lagged behind other business sectors from a financial management point of view. For the most part sport marketing, planning and strategy have dominated sport business management education and led to a growing maturity in such areas. Financial management has often been overlooked, anecdotally because individuals claim to have some sort of fear with numbers. There are still many sport managers and graduates with sport management degrees who struggle to even understand the basics of an
income statement or balance sheet, let alone have the confidence to make informed judgements on the financial health of an organisation. However, as Wilson and Joyce (2008) point out, every organisation, ranging from multi-million-pound operations through to small, local, voluntary sport clubs, needs to produce a set of financial statements every year. Therefore, if organisations have to do it, the chances are that should managers wish to be successful in employment, they will have to understand, communicate and use financial information too.
