Understanding the interactions among revenue categories using elasticity measures—Evidence from a longitudinal sample of non-profit sport clubs in Germany

Pamela Wicker, Christoph Breuer and Ben Hennigs

Sport Management Review, 2012, vol. 15, issue 3, 318-329

Abstract: ► The interactions among revenue categories of non-profit sport clubs are examined. ► Revenue elasticities are estimated. ► Donations crowd in revenues from sport supply (e.g., membership and service fees). ► Revenues from economic activities crowd out revenues from other supply. ► Public subsidies crowd in revenues from economic activities and donations.The revenue composition of for-profit and non-profit organisations is fundamentally different. Non-profit organisations have diversified revenues and must therefore manage an income portfolio. For the management of the income portfolio of a non-profit sport club it is not only important that sufficient revenues are available, but also where they come from as complex interactions exist among different revenue sources. These interactions are referred to as crowd-out effects (increases in one revenue source lead to decreases in another source) and crowd-in effects, respectively. The interactions among revenue categories of non-profit sport clubs were analysed using a longitudinal dataset from a nationwide sport club survey in Germany (n = 5026). Elasticity measures were calculated within a regression framework which provided information about the nature and significance of interactions. The results revealed a significant positive interaction between revenues from donations and sport supply (e.g., membership and service fees) pointing towards a crowd-in effect, i.e., increased revenues from donations have crowded in revenues from sport supply. Moreover, increased revenues from subsidies were found to crowd in revenues from donations and economic activities (e.g., sponsorship). Significant negative interactions were observed for revenues from economic activities and other supply suggesting that increased revenues from economic activities have crowded out revenues from other supply. The findings indicated an increased level of commercialisation supporting a modernisation of German clubs. Furthermore, the uncertainties have increased and therefore sport clubs have to consider the level of uncertainty of their revenue sources when they manage their income portfolio.

Date: 2012
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DOI: 10.1016/j.smr.2011.12.004

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