One of the best projects I did was looking at all the major sports non-profits, including the professional sports teams, in the Phoenix area to see how they were serving the community. I pulled the 990s and did a comparison by looking at the same time period to see how much was raised and how much was given away or spent on community services. At the time, the Arizona Diamondbacks were the most generous non-profit with little over head and a lot of money going to worthy causes, while the Phoenix Coyotes had numerous questionable expenses, which ended after the story ran.
To examine the finances of a sports non-profit pull at least the three most recent years of the organization’s 990s (tax return forms) and look to see how much money is coming in and how it’s being spent. See if there are high salaries and examine if money being raised really is helping a local community or if it’s being used to give someone a highly paid job with little money going into the community.
Also, look at money being spent on independent contractors and see what the relationship is with officers or board members. In Arizona, all businesses must register with the Arizona Corporation Commission, which posts online all of the basic information of a business such as the names of the owners and where a company is headquartered. This information may show you if there are ties between a business owner and officers and board members of a non-profit.
Also, if a sports non-profit organization or its executives look like they may be in financial trouble look up civil lawsuits at the county or federal courthouse to see if they have been sued. Most of these records are online.
In a community where prep sports are the bread and butter, look to see how much the executive director of the state’s athletic association is making and whether that person has received raises during the past few years at a time when many high schools have been forced to cut back on funding teams, travel, and coaches salaries because of budget problems. Also, if there is a dominant club team in the area or a non-profit booster club for a high school then obtain the 990s to see where the money is going.
GAMES vs. BUSINESS COVERAGEIf a non-profit organization is leery about turning over the information and wants to know why you want the information, it’s probably an early sign that there are questionable expenses. You don’t have to give any reason for wanting to examine these public records, and a non-profit cannot withhold records because they don’t want you to see their 990s. If this occurs, a call to your local IRS office should spur a non-profit to turn over the records. You also can go through guidestar.org to look at 990s.
The biggest difference between a sports game reporter and a sports business reporter is the former is more concerned about who wins and loses on the field, while the latter is more interested in how a team’s business operations affect fans and the future viability of a franchise.
For example, if a team spends heavily on players to win in the short-term, it could produce quick, positive results on the field, which is great for a sports game reporter. Yet, if the owner doesn’t have deep pockets and cannot sustain that type of spending then a sports business reporter could take a more introspective view, while the team is winning, to examine whether the franchise is competitive for the long haul.
Some reporters can do both game coverage and business reporting, but typically a sports business reporter has a better understanding of profit and loss statements and, in the main, communicates better with owners and chief financial officers than players.
FROM THE FANS’ SEATS
For most fans and consumers, it’s always better to have a deep-pocketed owner who can field a competitive team every year.
Fans of the Los Angeles Clippers long have complained about the frugal ways of owner Donald Sterling and the horrible performance on the court by his team. However, as a business operator, Sterling is one of the most profitable owners in the NBA, while other owners who have opened the purse strings to compete now are complaining that they are losing money.