A Soccer Club In Financial Difficulty
A True Story by Leo Isaac
| In this story, the real name of the soccer club has been replaced with Black Stump Soccer Club, a fictitious club/ |
THE TRAUMA
In April 2003 it became widely known that Black Stump Soccer Club was in very bad financial shape. There were a spate of resignations on the committee, and a virtually new committee took over.
The extent of the financial disaster took everyone by surprise. All concerned were overwhelmed.
- The club was heading for $200,000 projected loss for financial year
- The cash position had plummeted from +$70,000 to -$30,000 in one year
- The club’s debts were over $100,000 including unpaid taxation and superannuation
Needless to say, the internal politicking in the club at this time was very destructive.
Factors that contributed to the club’s financial situation were:
- A lack of simple, easy to understand financial statements presented at committee meetings. The profit and loss statement at this time was 6 pages long.
- A lack of expertise in managing funds by the committee and the manager
- A failure to develop a budget.
- Making major financial decisions in a context of insufficient understanding of the club’s financial performance.
THE FIX
Turning the club’s financial position around took approximately 18 months. Harsh, unpopular, politically difficult decisions had to be made. Internal politicking was rife within the club at this time.
The important actions that were taken include:
| Strategy |
Raised
|
| Commencing a “save the club campaign”. Members were invited to loan money to the club. |
$3,000
|
| Savings by retrenching staff (Manager, Bar Staff, Cleaner) |
$100,000
|
| Payments to players were stopped |
$10,000
|
| Fundraising dinner, successfully organised |
$10,000
|
| Requested a return of the fees paid to the Auditor, and he obliged! |
$4,000
|
| Sponsorship gathered |
$20,000
|
| Total Positives |
$147,000
|
| Actions Having a Negative | |
| Loss of bar and gaming income due to shorter trading hours |
-$22,000
|
| Cost of hiring a Management Consultant |
-$18,000
|
| Total Negatives |
-$40,000
|
| NETT IMPROVEMENT IN FINANCIAL POSITION |
$107,000
|
CREDITORS
The club had two types of creditors:
Trade creditors
Former employees
Making arrangements with trade creditors and former employes (those who had just been retrenched) was extremely important. Generally, creditors will allow extra time to pay if it means they are more likely to get their money back. However, you have to make a point of calling them, explaining the situation, and making an appointment to see them. Provided you keep good communication, creditors will often provide the necessary lifeline.
Leo Isaac