Financial management simply refers to the rightful usage of various resources in an organization in order for it to meet its specific set of goals. To achieve these objectives, proper planning, directing and monitoring of monetary resources is a vital practice that is very essential in the aim of attaining economic sustainability. Good financial management practice therefore entails having a continuous stream of income while at the same time, making the most of it throughout the life of your business.
How Does Financial Management Differ in the Sport Industry as Compared To Other Industries?
Just like any other business, generating profit is a round-the-clock preoccupation for all sport management. However, unlike other industries, the sports industry does not prioritize the need to generate profit but rather, the desire to boost sporting performance of their clubs. For any club, greater income predominantly dictates the quality of players, coaches and training facilities at their disposal, a factor that largely influences how competitive the club emerges. In this regard, the practice of good financial management in sports industry is largely influenced by a number of factors such as; how entertaining the sport is perceived, the prominence attached to the sport both culturally and in the formal sport systems and the extent of participation accorded both nationally and internationally.
Additionally, more factors come in to play throwing more contrast between these industries and the sport sector. These factors include; diverse goals of the sport club's owners', revenue sharing among the club partners and other forms of cooperation. Consequently, these components largely influence the financial management tactics a sports club business employs in order to become sustainable. For instance, many sports clubs top management is constituted of various private partnerships to huge financial endorsements and sponsorships, which play a big role in the running of the club. As a result, these elements portray the sports industry as a complex one and various forces come in to action to determine how funds are utilized and all practices employed have to be in harmony to ensure the success of the business.
What Are the Key Economic Factors That Influence the Sport Industry?
Economic factors play a major role in the success of any business and the sports industry is neither an exception. Whether local or global, getting to understand these elements is very essential as it aids in making smart decisions propelling the business to great heights. These factors are directly connected with goods, services and money therefore directly affecting every aspect of this industry. Since all businesses prioritize on achieving sustainability, keen analysis of these factors is vital and cannot be ignored.
The main economic factors that affect the sports industry include; demand and supply, income and employment, recession, inflation and economic growth and development. Correspondingly, most of these factors are interconnected in one way or another and a change in one may influence a change in another. For instance, demand and supply are two factors that influence the economic growth and development of a particular population. The sport industry usually generates its revenues from gate passes in the form of tickets. Therefore, an increase in demand of tickets may influence a sports club to invest on a bigger stadium facility to cater for the growing audience of customers. This therefore calls for well thought financial management strategies to grow the industry to sustainable heights.
Moreover, a significant fall in spending among the target population also known as recession may lead to crumbling of an industry if the appropriate measures are not put in place. Inflation on the other hand causes an upsurge in the cost of raw materials used in the sports industry a scenario which can lead to a fall of the business.
Isaac, L. (n.d.). Sport Industry: Generating Income from Sport. Retrieved from http://www.leoisaac.com/sportman/sportman08.htm
Marketing Tutor, U. F. (2018, March 21). How Economic Factors Affect Business Environment | Marketing Tutor. Retrieved from https://www.marketingtutor.net/economic-factors-affect-business-environment/
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