Finance

Learning from the Pandemic: Finance

In the first few months of the coronavirus pandemic, Sportsology hosted a number of interactive roundtable discussions with senior leaders from major sports teams and leagues. Featuring 125 participants from 59 organizations, the sessions were an invaluable opportunity to discuss the challenges and opportunities presented by the pandemic.

During the sessions, we learned a huge amount from leaders navigating the crisis in real time. Broadly speaking, those insights fell into five categories:

  • Finance
  • Business
  • People
  • Communication
  • The Future

Over the next few weeks we’ll be presenting selected insights from the roundtables in article form so that others can learn from the experiences shared by those who participated in the sessions.

In this article, we’re looking at the financial learnings that emerged from the discussions.

Financial Models

Sports may need to rest the current financial model which, because of its bias towards player and head coach salaries, means limited cash reserves and limited ‘fat’ in the organization in leaner times. Liquidity is the key to surviving any financial downturn. This is the classic gambler’s dilemma. Do you bet that it won’t happen again soon and empty the reserves to bet on today? Or do you hold something back to ensure winning tomorrow? Are you risk averse or a risk taker?

Salaries

Salaries will come under pressure from all sides; owners, players, and staff. The salary cap will inevitably come down as revenues are projected to plummet.

Contracts will likely need to be extended and then renegotiated, possibly from a lower base. This may lead to longer contracts with lower salaries. Negotiations may well be longer and tougher than usual.

Adding Value

Explore whether there are opportunities to support other businesses associated with your organization (e.g. the owner’s other businesses). How can you add significant value?

Be aware of potential sponsorship difficulties. If small/local sponsors are crippled by the imminent recession, this will create a big gap that needs to be filled in adverse economic conditions.

Focus on education as an organization. Partner with high-performing learning organizations and prioritize the development of your staff.

Chris Mann is Head of Content at Sportsology

Image: Pawel Czerwinski/Unsplash

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