What Is Sports Accounting? Beyond Tax and Compliance

Sports has become a multi-trillion-pound industry, which increases the value and importance of accountancy in sport. This begs the question of what is sports accounting, and why is it important? While tax and legal compliance are a part of this, it goes far beyond that. Let’s dive into what it is and why it’s actually vital for the sports industry.

What Is Sports Accounting?

So, what is sports accounting? While the name makes it sound like it’s just sorting out the financial side of sports, there’s much more to it than that. It involves keeping an eye on the data and numbers in categories that affect the finances and making sure each significant category is properly managed. Multiple interconnected factors play a role in this, so there’s a lot involved.

It’s not just a matter of making sure there’s more coming in than is going out. Income is one thing but you need to make sure that enough cash is collected in time to pay suppliers, agents, and of course tax bills in the relevant jurisdiction. Beyond cash, suppliers and tax, there are compliance and many other areas to handle using sports accounting. These areas all play a role in the vitality of accountancy in the industry, with several areas standing out.

Key Areas In Sports Accounting

Financial Management For Athletes

Financial management is vital for everyone from high-profile athletes and players, to clubs, competitions, governing bodies, and sponsors though this is one of the more complicated areas to look after. The 2024 court cases between the Premier League and Manchester City, Everton, and Leicester City give a small insight into the stakes and complexity, where the Man City case is reported to include 113 charges. These cases are likely to rumble on into 2025 and be appealed through the court systems of the UK and sport. It includes financial forecasting, budgeting, and managing budget responsibilities, generating revenue and enabling expenditure, and much more.

Without a proper understanding of how accountancy can give you a handle on your money in sports, sporting activity becomes a big gamble. Sports accountants do this with ease while making sure everything’s in order for the compliance requirements such as company and tax filings, among others. Some sports accountants can even analyse contracts  to ensure that anything related to finances is covered by your forecasts, budgets and financial controls - it should be a core part of the role but not all sports accountants have the legal skills and experience that Gibson Alexander possesses.

Cash Flow Insights Off-Season

Cash flow is one of the most important areas that sports accountants focus on. This refers to the amount of money coming in, the amounts of money going out, and what will be left over in surplus after everyone and everything has been taken care of. During any sports season, this can be relatively straightforward, even if it takes work. The off-season is just as important, but there usually isn’t as much coming in as there was from events in season.

Off-season is also the key time for major reorganisation, such as investments in assets such as player transfers, pitch replacement or repairs, stadium improvements. However it can also be a time of high income for clubs selling season tickets or other annual memberships, as well as governing bodies earning affiliation fees and competitions earning entrance fees.

Sports accountants make sure there’s enough coming in to at least cover all of the necessary expenses and investments during the off-season, while providing insights to better manage them.

Dealing With Revenue Streams

Cash flow is not just affected by what and how players, coaches, and others make on the field. Instead, there are multiple revenue streams that could tie into it. Players need to worry about sponsorship deals, TV appearances, merchandise, and more.

These sporadic incomes make accounting much trickier to manage and keep in order. Sports accountants make sure everything matches up in good time and is properly taken care of. They can even help athletes deal with liabilities, contracts, and more, both on- and off-season.

Wrapping Up

It’s natural to wonder, what is sports accounting, why’s it important, and how is it different from accounting in another industry. These are all sensible questions, and they all have clear answers, although the details vary dependent upon who your client is. It’s fundamental to developing cash flow insights, managing revenue streams, and even managing finances for athletes. It’s a fundamental part of the overall industry. Want to find out how we can help you? Get in touch today