Whether you want to be a plumber, a hair dresser, a social worker, or a sports manager, it’s important to understand the basics of financial management. In my personal opinion, this is something that should be mandatory in high school. It’s useful, practical knowledge that everyone can benefit from in the real world. Unfortunately, it’s not mandatory study in high school.
The good news is, you can take courses to further your knowledge about financial management on your own, and I suggest it to everyone, regardless of their field of study, but particularly in the area of sports management or sport finance.
What is Financial Management?
In simple terms, financial management is the planning, raising, controlling, and administering of funds within a business. Financial management cannot be summarized in one specific category. Rather, it incorporates a variety of elements including (but not limited to):
- Financial planning (determining how much money is needed to provide goods or services, determining how the money needs to be spent, and so on and so forth)
- Financial budgeting (managing cash flow and making sure a company has the resources to meet its financial obligations on time)
- Financial reporting (creating timely and accurate reports to ensure that educated decisions can be made for the company)
- Maximizing dollars and revenues
Why is Financial Management so important?
As I mentioned earlier, financial management is important regardless of what type of business you go into. Yes, you can succeed without a background in financial management, but will you be as successful? Definitely not.
Financial management is important because it helps you to understand figures, where they come from, how they are comprised, and how to analyze them. Company executives spend a lot of time worrying about caps, maximizing dollars, expenses, budgets, where expenses are going, and number crunching.
As an aspiring professional, it’s important to be able to understand financial terminology and to be able to, at the very least, analyze the numbers when needed.
Does this mean that you need to have a four year educational background in the subject? No, it doesn’t. But you should at least educate yourself enough to be able to understand the basics, and to be able to hold conversations with professionals who are educated in the subject.
What benefits are associated with the study of Financial Management?
Diversity of career opportunities
Should you decide to go all the way in the area of financial management, the number of career opportunities are endless. Studies in financial management can lend hold to careers in the area of investment banking, financial analysis, entrepreneurship, accounting, and strategic management (to name just a few). It’s also extremely important for those who wish to start their own business to have a background in financial management. In terms of other jobs, understanding the basics of financial management always looks great on a resume, and could be extremely beneficial in landing you your ideal job.
Greater job prospects
In the previous decade, the need for financial managers has grown substantially, and has increased by over 14 percent. Workers with a background in financial management are highly sought after in a variety of professional fields, so having that background could definitely benefit you when applying for future positions.
Heightened salary expectations
The financial sector is considered to be a “skilled” role, and therefore holds higher salary benefits. P.S. In my two plus years of teaching financial management in sport, I’ve had 3 students go on to become chartered accountants.
When you know about financial management, it opens up the area of conversation with CEO’s of different companies. Even if you don’t know much about it, understanding the basics can at least allow you to hold a conversation and understand basic terms. And of course, generating conversations with CEO’s creates relationships, which then leads to further opportunity.
Why is Financial Management important for Sport Management Professionals?
So far we’ve discussed the general benefits of having a background in financial management, but how does it relate to the sporting world? Why is it important for sports management professionals to have a background in financial management?
Sports managers can work in a variety of different fields. An individual with a degree in sports management may go on to work in areas of event management, sport marketing, sports partnerships, sports economics, or of course, sport finance (to name just a few). While someone in the area of sports finance clearly needs to have a background in financial management, it can be beneficial for any one of these positions.
Students taking courses in Financial Management of Sporting Organizations will learn:
- How to understand and interpret financial statements of a sporting organization
- How to work with balance sheets, income accounts, and cash flows
- How to develop economic and financial assessments for sporting projects
- About financial resources
- About financial planning and project investment
Why is this knowledge beneficial?
According to a study by Plunkett Research Ltd, the cost of the sports industry (in 2010) reached over $414 billion in the United States alone – that’s a lot of money!
And as we all know, any sound financial program starts with a well planned and operated budget. Sporting programs need financial support, and thereby always need people to raise and manage this support. In return, athletic directors, sports administrators, and other sport oriented professionals all need to know how to derive and manage money.
So when it comes to getting a job, who is the one more likely to be hired? My guess is the one with sound knowledge in financial management!