A review of the financial statements of a sample of 10 leading incorporated sports clubs with a combined annual income of over $2 million, representing 10 different sporting codes in the Wellington region, shows that on average, 25% of their total annual revenue is derived from grant-funding. When combined with membership subscriptions, on average around half of the annual income of the sample is generated from these two income sources alone.
Chart A: Share Of Total Annual Revenue, By Source
(Source: https://is-register.companiesoffice.govt.nz, NZ ASA analysis)
While cash reserves, on average, will cover current liabilities in the short-term, a future income reduction of 50% (or more), will severely curtail the ability of clubs to deliver sport to their communities (and in some cases, threaten their very existence).
While fundraising, sponsorships, merchandise sales and revenue derived from club facilities (e.g. catering, bar and hosting competitions) comprise the other half of income, these revenue sources will only be maintained to the extent that clubs can continue to attract members and wider community support.
Table A : Share Of Total Annual Revenue, By Club
(Source: www.https://is-register.companiesoffice.govt.nz, NZ ASA analysis)
With major grant-funders to community sport throughout the country, including the New Zealand Community Trust, Pub Charity, the Infinity Foundation and Pelorus Trust all suspending consideration of grant-funding applications until further notice, community clubs should budget for at least a 25% reduction in revenue for the foreseeable future.
With clubs unable to currently offer sport to communities, memberships are unlikely to be applied for or renewed, meaning that not only that income, but income derived from club facilities is also in jeopardy. While sponsorships are only a relatively small proportion of the total annual revenue earned by clubs in the sample, it seems unlikely that local community businesses will have the financial resources to maintain their support through sponsorship.
The time is rapidly approaching when Government will need to calculate the true value of community sports clubs to New Zealand society. This Association believes that the value of community sports clubs is inestimable in terms of the social-equity they create in terms of both the mental and physical well-being of all Kiwis, which is deserving of specific and urgent financial support from Government.