Academic journal article International Journal of Sport Finance

Willingness-to-Pay in Non-Profit Sports Clubs

Academic journal article International Journal of Sport Finance

Willingness-to-Pay in Non-Profit Sports Clubs

Article excerpt

Abstract

In Germany, some sports clubs increasingly encounter financial problems due to decreasing public subsidies. A way to compensate for the decrease is to increase membership fees. Therefore, the aim of this study is to analyze members' willingness-to-pay (WTP) for membership fees and to identify determinants of WTP. For this study, active, adult members (n = 10,013) in 21 sports were surveyed. The results show that members paid an average annual membership fee of euro148 and stated an average WTP of euro265. The consumer surplus for all sports amounted to euro113 on average. The results of the regression analysis reveal that WTP is determined significantly by the current membership fee, personal income, level of education, years of participation, and level of performance. The findings of the study suggest that increasing membership fees might be one option for sports clubs experiencing financial problems. Sport-specific differences have to be considered in this regard.

Keywords: leisure economics, non-profit organization, membership fee, consumer surplus

(ProQuest: ... denotes formula omitted.)

Willingness-to-Pay in Non-Profit Sports Clubs

In Germany, non-profit sports clubs play an important role for the sports supply of the population. All in all, there are more than 90,000 sports clubs with over 27 million memberships (German Olympic Sports Confederation, 2010). This implies that about one in three Germans is a member of a sports club-the actual number is most likely lower as some people are members of multiple sports clubs. Despite this popularity, sports clubs face many financial challenges in today's economic environment. The results from a survey of sports clubs in Germany reveal the financial situation is problematic for many clubs, with 3.6% of the clubs experiencing serious financial problems (Breuer & Wicker, 2009).

There are several reasons why German sports clubs might have financial problems. One reason is a decrease in public subsidies. Non-profit sports clubs receive different types of public subsidies, for example, direct subsidies, tax allowances, or the use of public sports facilities for little or no fees (Horch, 1992). In Germany, the voluntary sports sector (e.g., sports confederations and non-profit sports clubs) receives several million Euros annually from public lotteries. However, this public monopoly of gambling funds is uncertain. Recently, federal states and communities have reduced public subsidies for the voluntary sports sector (Federal Statistical Office, 2007a). Additional challenges (e.g., demographic change, changes in sport demand, and increasing competition through for-profit sports providers such as fitness centers) can negatively impact the financial situation of sports clubs as they can lead to decreases in memberships-this can in turn lead to decreasing revenues from membership fees. Besides decreasing revenues, increasing expenditures (e.g., increase in the value added tax in 2007 and increasing energy costs in Germany) also have to be considered. As a consequence of the challenges noted, the question arises whether declining revenues, coupled with increasing expenditures, might be compensated for by increase in revenue from membership fees.

Therefore, the overall objective of the study is to analyze whether members of sports clubs in Germany are willing to pay higher membership fees in order to help in reducing the financial problems of their sports clubs. The paper has three main objectives. The first objective is to determine members' WTP for membership fees. Second, the consumer surplus is calculated based on the current membership fee and the stated WTP. Finally, the third objective is to find out the determinants of WTP for membership fees in German non-profit sports clubs. This analysis was undertaken for 21 different sports to give information about sport-specific differences. For this study, members (n = 10,013) of non-profit sports clubs were surveyed. …

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