What is a Budget to start?
How is that applicable to Football?

How can a Football Club make sure they’re ready for what’s coming?

Big questions here, but let’s start from the most important – understanding Budgeting as a General Concept.

Budgeting is, in essence, the exercise of simulating how money will work at your Organization – Is the process of creating a plan to spend your money.
The implications of budgeting involves the need to address more complex elements aligning them with the Budgeting, to understand how, who, when, at what stage, and which products will allow money to come in, or how it is earned – the 5W+2h Method.

But that is a different stage, for later discussion!

Back to the theme, if we understand that a Football Club’s budget is essentially the Plan for Allocating Resources across all Areas of Operations, while ensuring Financial Sustainability, we must understand the Key Principles involved, that include:

Revenue Awareness

• Identify all Revenue Streams, as: Transfers of Players Rights, Compensatory Training Fees or Training Fees, Sponsorship, Merchandising, Ticketing & Memberships (if applicable), Broadcasting Rights, Tournaments, Events or Camps, Educational Programs, Podcasts, Social Media, etc.
• Assess Predictability: understanding Consistency in terms of each Revenue Stream, as they will have different intakes periods throughout the Season (ie, monthly Training Fees or Memberships may be more stable, Sponsorships or Events can fluctuate, and Broadcasting Rights might be a bulk sum at once).

Cost Categorization

• Fixed Costs: Salaries for Full-Time Staff, Rentals of Fields or Offices, Insurances, Utilities, Staff Transportation, Accommodation, among others.
• Variable Costs: Match-Day Expenses, Part-Time Coaches, Equipment, Merchandising, Travel, Ads for Social Media or Website.
• Strategic Investments: Infrastructure Upgrades, Website, CRM or similar Platforms, Scouting Technology, Educational Programs, Marketing Campaigns.

Prioritization of Expenditures

• Ensure the Core Operations (Player Training and Salaries, Coaching Education and Salaries, Safety) are fully funded before discretionary or growth-oriented spending.
• Create Well supported Reserve Funds for emergencies (injuries, unexpected facility costs, Covid…).

Scenario Planning

• Develop best-case, moderate-case, and worst-case scenarios for revenue and costs to adjust spending dynamically.
• Start by assume the worst-case scenario will happen ALWAYS, and build on top of that.

Monitoring and Reporting

• Regularly track Expenses vs Budget, or Estimates vs Reality.
• Monthly or quarterly Financial Reviews help detect overspending and opportunities for reallocation.

Once these steps are taken, then a Full Strategy can be developed, taking in consideration what is the starting point (Point A) and the desirable future (Point B), and the challenges ahead. 

Having this a guidance would be essential to formulate Communication and Marketing Strategies, Partnership and Sponsorship efforts, among all the others.

For Football Clubs this is a must, and only a few have it.

Next time, I will delve into more details of Financial Budgeting for Football Clubs.

Hope you enjoyed it!