You have worked hard to establish a viable volleyball club consisting of eight teams. You are not yet large enough to benefit from all the advantages of (large) scale, however you have earned a loyal following and your emphasis on training is paying dividends as your kids are really improving. In fact, you are a big proponent of the importance of superior training and you drill your kids assiduously. Rigorous training has become the hallmark of your club and, through word of mouth, many kids have left other clubs to join yours. Here’s a financial plan for an eight team club to guide you toward continued business success.
RULE # 1
Provide the most rigorous training of any club in your area.
Next you have to find an economical place to practice with the emphasis on economical. Because you do not have twenty-five teams, yet, you must make every penny count. I have known of many clubs in your situation try to take advantage of a relationship that the club director and / or a number of players have with a school. Oftentimes, a club can negotiate a sweetheart deal with a school that supplies a lot of players and / or coaches to your club.
I have heard of situations where a school will even let a club use it’s gym space for free. For our purposes, let’s assume that the school rents space to your club for $50.00 per hour which includes four courts. With eight teams you can practice each one three times a week by renting the school for twelve hours (3 nights x 4 hours a night x 4 courts) a week. At $50.00 an hour, your weekly court cost would be $600.00. Many peer clubs only practice twice a week but, because of your club’s emphasis on training, you provide your kids with three practices (six hours) of training per week.
Rule # 2
Find an economical safe convenient place to practice.
Too many clubs are seduced by the idea of owning their own facility. This can be a tragic mistake for all but the largest and most influential clubs. The monthly bill on a twenty year $3,000,000.00 5% loan would be $19,799.00. On top of that you would have insurance, taxes, utilities, maintenance and other costs. Compare that with the modest $50.00 per hour charge you negotiated for the entire club season. No brainer! I have never seen a player get better because of the building where she was practicing.
Even a small club, and maybe, especially a small club can offer many of the same ancillary services it’s larger counterparts can. Remember, you have hung your hat on your superior training regimen and kids will pay for it. This means that you should aggressively promote individual and group lessons as well as off season camps. Camps serve the dual purpose of promoting your club to kids who might not belong to your club now but are prospects to join in the future.
With regard to lessons, if you aggressively promote them, you could add another 10% of your overall club revenue to your total. Your kids become better players, too.
Rule # 3
Take advantage of ancillary revenue opportunities like camps and lessons.
Getting a child into your club at a young age, say, ten years old gives you nine years of membership revenue. That’s huge. The lesson is to market your club aggressively to the youth (14 and under) market. One idea would be to offer low cost ten week leagues for the 8 – 14 year old age group. You might charge $150.00 – $200.00 in a camp type format which includes two practices a week and a game each weekend. This is a great marketing tool for ensuring the future of your club.
Rule # 4
Market your club to the very young and offer both a full season membership as well as two or three lower cost ten week camp style memberships.
Do not think that, because you are a small club, that you cannot negotiate an apparel deal with one of the large national brand apparel companies. With just eight teams you might be eligible for $500.00 of free goods and 10% more on your apparel purchases above the standard player package. This could help allay the cost of outfitting your coaches.
In running your club there are some costs you can scrimp on and others that you must not scrimp on. As we discussed, finding an economical place to practice is just smart business. QuickBooks is a very economical way to account for your club. Find a Quickbooks savvy service to farm out this task. Many of these firms will do your payroll, too, which would take care of all your payroll tax issues.
Look at paying your coaches as 1099 contracted employees instead of W-2 employees. The IRS has strict rules for this so make sure you know and follow them.
You should not scrimp on legal and insurance services. Find a corporate attorney who can walk you through the documents you need including your company form which is oftentimes a Limited Liability Company (LLC). Insurance agents run the gamut.
Find a competent property and casualty agent who can guide you on the following coverages:
General Liability Insurance
Covers physical injury, mental anguish and damage to property for which you are culpable. Protects against physical abuse and sexual molestation.
Property Coverage
Even if you do not own a building you will need to insure any equipment and inventory you own.
Umbrella Liability Coverage
Excess liability protection for when your underlying coverages are exceeded.
Directors and Officers Coverage
Covers directors and officers for claims made against them while serving on the board or as an officer.
Employment Practices Liability
Protects your business against allegations that an employee’s rights have been violated. Includes defense costs.
Business Interruption Insurance
Provides coverage for foregone profit when operations are interrupted.
Worker’s Compensation
Provides employees’ coverage for medical expense and lost wages while injured
Having inadequate or non-existent coverage can have dire consequences for the club owner.
Rule # 5
Charge participation fees sufficient to cover all your expenses. If you cannot, you would be better off letting someone else take the risk of owning a club.
To be a bona fide club, you must not be afraid to charge enough to cover all your expenses, and make a profit. Profit is not a dirty word. In fact, it is a cost of doing business. Do not strive to be the cheapest club but, rather, the best club where kids improve and excel on their school teams and, maybe, even play in college.
Rule # 6
Do not sell on price; sell on quality.
So let’s mow break this down your club by the numbers starting with overhead which is defined as those support services that are not directly tied to your revenue activities.
Club Overhead
| CATEGORY | ANNUAL EXPENSE |
| Salaries & Wages | $30,000.00 |
| Office Supplies | $ 1,200.00 |
| Volleyball Supplies | $ 1,500.00 |
| Facility Rentals | $13,200.00 |
| Professional Fees | $ 2,000.00 |
| Website | $ 2,000.00 |
| Credit Card Fees | $ 1,500.00 |
| Insurance | $ 5,000.00 |
| Taxes | $ 2,000.00 |
| Postage & Shipping | $ 200.00 |
| Advertising | $ 300.00 |
| Computer Maintenance | $ 1,000.00 |
| Miscellaneous | $ 1,800.00 |
| Total | $61,700.00 |
Lesson Income Statement
| Lesson Revenue | $15,000 | |
| Coaching Expenses | $7,500.00 | |
| Court Rental | $1,500.00 | |
| Total Expenses | $ 9,000.00 | |
| Profit | $ 6,000.00 |
Camp Income Statement
| Skills Camp Revenue | $12,000.00 | |
| Coaches Expenses | $4,000.00 | |
| Tee Shirts | $ 500.00 | |
| Court Rentals | $ 500.00 | |
| Total Expenses | $ 5,000.00 | |
| Profit | $ 7,000.00 |
Eight Team Club Participation Fee Spreadsheet
| Participation | JVA | Coaches | Coaches | ||
| Team | Fee | Uniforms | Registration | Pay | Gear |
| 18-1 | $18,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 17-1 | $18,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 16-1 | $18,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 15-1 | $18,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 15-2 | $16,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 14-1 | $18,000.00 | $2,000.00 | $115.00 | $5,000.00 | $150.00 |
| 13-1 | $18,000.00 | $1,800.00 | $115.00 | $5,000.00 | $150.00 |
| 12-1 | $16,000.00 | $1,800.00 | $115.00 | $5,000.00 | $150.00 |
| $138,000.00 | $15,600.00 | $920.00 | $40,000.00 | $1,200.00 | |
| Gross Profit | $80,280.00 |
Summary
Now let’s pull all the various parts of our club together and see how our club did.
| Category | Gross Profit | |
| Club | $80,280.00 | |
| Lessons | $ 6,000.00 | |
| Camps | $ 7,000.00 | |
| Total Gross Profit | $93,280.00 | |
| Overhead | $61,700.00 | |
| Total Net Profit | $31,580.00 |
A club directorship can be a very demanding position but also very rewarding. How do you put a value on impacting and shaping young people doing an activity they love that brings families together. Beats working for a living!
For related reading for Club Directors click here. For more education on Accounting and Budgeting go to the JVA Members Education. Login is required.
About the Author
The author, Tim Kuzma, is an entrepreneur and registered Certified Financial Planner. He is a graduate of The University of Michigan, where he played basketball, and is, also, a part owner of The Munciana Volleyball Club.
