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A Financial Aspect to Why Leagues/Teams Fail

This article doesn't pertain to scholastic football as much as it does to semi-pro or others hoping to evolve into the professional competition.

This article is due to a question posed by many asking why some teams or leagues succeed and others fail.  It began by getting advice from experienced entrepreneurs in the football industry, GMs, coaches, staff and players.  The main issue that kept coming up in one form or other was finances.

Although I’m better known as a team builder utilizing psychology, talent evaluations, playbook implementation and delegation of staff, I have been involved in different financial phases.  So let’s take a minute to visit the finance area.  As a football league/team there should be financial planning done well before the conception of the organization and continually thereafter.  This planning is meaningless unless the management has the proper financial acumen.  Management needs to understand this or outsource their financial duties.  As an example, a few leagues have tried to embark upon challenging the NFL but could you imagine competing with the NFL and only having a couple million dollars in the bank?

Some thoughts and experiences on this is you can’t compete with the NFL (but I do have concepts that could cause a stir).  Just give fans something to enjoy and be more affordable …. wait, that comes back to finances!  So, that’s the Arena Football League story.  Now there's a football business plan!  In unforeseen territory of professional sports the Arena Football League is a very respectable league that has overcome several issues since holding their first “test” game in April of 1987.

Whether you are starting a league or a team the finances should include the following

· Build a Business Plan.  This is the most important step in the building block of your organization's success.  For further information research what business plan best meets your needs.

· Sponsorship Planning.  No league or team can continue with a high turnover in sponsorship.  It’s a small world and you’re going to run out of sponsors.  Set in place long-term sponsors, have ethical foundations and relay who and what the league/team realistically is.  Chances are this will go further than initially announcing unusually high expectations.  I’m all for going for the championship ring but I would rather introduce a “let’s build this together plan” attitude instead of “we’re going to change the football world now” attitude.  Which would you be more apt to sign on to?

· Credit.  This is a two-way risk.  It’s extremely important to have your own credit policy that is strictly adhered to.  But also understand the credit policies of businesses you deal with.  This includes how much credit both parties are qualified for, guaranteed money is in place, payment terms (lack of payment) and how payments will be managed.

· Pricing.  Pricing is a science.  It includes admission to the game, food/drinks, programs, t-shirts/memorabilia and any half-time entertainment, not to mention any ticket promotion giveaways via radio or news media in which you’re hoping to gain added revenue in food or merchandise.  If prices are too high they deter fans from attending and if too low it decreases profitability.  But you have to remain competitive.  Remember, the strategic importance is to keep profits in line to cover obligations and allow for growth.

· Expenditures and Cash flow.  All expense items should be budgeted for.  As past leagues have shown, starting with high profile people to bring attention to themselves without any positive cash flow (credit isn't cash flow) is failed from the beginning.  When you have start-up money it may make sense to use it on media blitz and popular faces for promotion.  But it can be difficult to curb these expenses (especially those that are salary and wage related) during an economic downturn in the future.  Your team/league cash flow should be scrutinized and adjusted on a monthly basis by all those who are financially involvedJust as on the field, if everyone's not executing the same play its success is unlikely.

In this article I’ve only highlighted a few, but important, issues that need to be managed to decrease the risk of financial failure for your team or league.  If you're considering a start-up in sports I wish you all the success and good fortune.  Just remember,  you will affect many lives.