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Financial Concepts in Sport Finance

All successful sports activities require effective financial management implemented by a competent officer. Like any other business, sports require revenue flow in that there are inflow and outflow of money. The revenue can be from participating in sports activities or signing contracts with other business brands, which requires adequate budgeting. Therefore, managing the sources of funds is crucial for the growth of a sports entity. Moreover, just as any other business, sports people also become bankrupt. Therefore, to avoid bankruptcy, their managers need to be endowed with good fundamentals of finance to help planning for the future and reduce unnecessary expenditure.

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Important Financial Concepts in Sport Finance

The most important financial concepts needed in sport finance are accounting knowledge, strategic planning, management of risk, and accountability. Accounting helps in the financial analysis of activities and recording all the financial transactions that occur. Strategic planning enables sports activities to achieve both their short- and long-term financial goals (Brigham & Houston, 2021). However, risk management will allow the sports department to identify the associated risk, analyze, and propose measures to reduce the risks. Finally, accountability helps in making individuals liable for their financial actions.

Concepts Applied to a Sports Organization

The accounting concept is used in a sports organization when the entity needs to analyze its cash flows. It helps in the balance sheet where all the expenditures and incomes are monitored. Sports organizations can use strategic planning to help them budget for their future undertakings (Carpenter, 2016). For instance, the Federation Internationale de Football Association (FIFA) uses strategic planning to budget for World Cup Competitions every four years. Risk management, however, is used to anticipate the likely risks that can be experienced; thus, it helps provide mitigation measures that can be used to minimize the impact of risk. Lastly, accountability enables the sports organization to exercise financial discipline, where an individual can be held responsible for any financial mismanagement.


Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management. Cengage Learning.

Carpenter, K. (2016). 3.9 Preventing corruption ahead of major sports events: Learning from the 2012 London Games. Web.

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