financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
179 36 (2) 179-197 (2012) * *
* ** 3
Received: August 24, 2011 Received: The authors would like to thank two anonymous referees for their useful comments and suggestions. The authors would like to thank two doi: 10.3326/fintp.36.2. doi: Sanela ŠKORIĆ Mato BARTOLUCI Faculty of Kinesiology, University of Zagreb, Horvaćanski zavoj 15, 10000 Zagreb, Croatia Faculty of Kinesiology, Faculty of Economics and Business, University of Zagreb, Trg J.F.Kennedya 6, 10000 Zagreb, Croatia J.F.Kennedya Trg Faculty of Economics and Business, University of Zagreb, Faculty of Kinesiology, University of Zagreb, Horvaćanski zavoj 15, 10000 Zagreb, Croatia Faculty of Kinesiology, e-mail: [email protected] e-mail: [email protected] e-mail: [email protected] Zrinko ČUSTONJA Preliminary communication Preliminary SANELA ŠKORIĆ, PhD SANELA
UDC: 796 UDC: Croatian sport Croatian Accepted: December 7, 2011 MATO BARTOLUCI, PhD BARTOLUCI, MATO JEL: H41, H76, L83 L83 H76, H41, JEL:
ZRINKO ČUSTONJA, BEd ZRINKO ČUSTONJA, Public financing in in financing Public * **
------will be used. local sources of financing local sources or local units
introduction
Local sources are defined by Sports Act (NN 71/06), as “local and regional self-governing units, and the City City the and units, self-governing regional and “local as 71/06), (NN Act Sports by defined are sources Local in some European Union countries. Then, a more detailed analysis of sport finan Then, a more detailed Union countries. in some European structu the framework, legal as such Questions presented. be will Croatia in cing in the text the term of Zagreb”. However, sis will be conducted, and the correlation of sources with achieved sports results will be examined. Based on everything previously mentioned, the structure of the paper will be as follows. In the first part we will examine the theoretical background to how sport sources financing sport the of structure the of overview brief a give and financed is when talking about private sources of financing and it becomes virtually impossi virtually becomes it and financing of sources private about talking when ble to conduct a detailed and accurate economic analysis. Therefore, the in sources public from coming funds the least” “at analyse to is paper this of goal basic Croatian sport. The analysis is based on the assumption that the share of local sources in the structure of public sources of financing is higher than the share of analy trend detailed sources, local of significance the to Due sport. for funds state racteristics of sport-specific statistics will have to be taken into account. First, the First, account. into taken be to have will statistics sport-specific of racteristics major problem is to address the statistical definition and monitoring of sport acti vities. This area is treated very differently in the official statistical documents of various countries, which means that no comparative analysis can be conducted. Also, official statistics on sports financing is very poor. This is especially true 1 Sport is a complex social activity Andrijašević, 2004; Downward, that, Dawson and due Dejonghe, 2009), to requires public various invol sector public analysing in step first The financing. its in involvement market sector failures (see to considered are sport of segments which identify to is sport financing in vement be of public interest, i.e. to identify the public goods. In this process several cha Based on the analysis, correlation this paper shows that the amount of funds co local ming budgets from with is sporting correlated performance (medals won at domestic competitions). Croatia financing, public and private funds, sport, public goods, Keywords: local budgets. This paper reports on the analysis of public sources of sports finan sports of sources public of analysis the on reports paper This budgets. local cing. confirmedThe theresearch assumption that in theof structure public sour than higher is budgets local from coming money i.e. prevails, budget local the ces that coming from central government. Based on the given data concerning local when applied criteria Finally, conducted. was analysis trend a sports, for budgets distributing local funds to sports organizations and single sports were analysed. Abstract Abstract course, of This, areas. various encompasses that activity social complex a is Sport complicates the matter of its financing since it is financed by private and public conside are activities sporting certain that fact to the mostly due This is sources. to red be public goods which then are financed by publicfunds, i.e. the state and
financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport 36 (2) 179-197 (2012) 180 financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
181 36 (2) 179-197 (2012)
------, the . The use The . is defined as follows (Euro
financing
public
and
sport
More on sport functions in European Commission (2007:7-8). Public goods are goods and services “whose advantages cannot be exhausted for any additional consumer Sport-financing system in Croatia is based on European system. and are accessible to everyone, regardless of costs” (Andrijašević, 2004:46). sport financing is in question the following can appear as non-budget funds: spon funds: non-budget as appear can following the question in is financing sport souvenirs, (raffles, resources other fees, and gifts merchandizing, donations, sors, rights, re-distribution of income within the sports federations, merchandizing, pu merchandizing, federations, sports the within income of re-distribution rights, blic support, etc. In general the sources of financing can be classified intobasic two groups: budget (public) sources and non-budget (specific) means. When In its essence the sport-financing system in Europe pean Commission, 2007:26): sports organizations have many sources of income, including club fees and ticket sales, advertising and sponsorship, TV and media fore, it is quite logical that public sources appear as an integral part of the sport- financing system. only by public This sector support support usually (Europa, appears 2010). in the form of intervention of the state as an agent in sports financing which results in “putting sports participation within everyone’s reach” (Nys, 2006:270). There sports organizations throughout the world is to ensure that everyone has the op portunity to take part in sport and physical recreation (Council of Europe, 1992), equal opportunities and access to sporting activities for everyone can be ensured from sporting successes. If this was not the case, we could be faced with a lack of lack a with faced be could we case, the not was this If successes. sporting from could disciplines sporting popular most the only because sports various in athletes ensure adequate funds for their athletes. Therefore, although the primary goal of 24). For example, the Government of the Republic of Croatia gives rewards for sport the of regardless competitions international various in achieved results sport in question. In the this entire way, population can, in one way or benefit another, (Petak, 1992:103). There are many market failures which imply the need for pu blic policy intervention, i.e. monopoly, question of equity, externalities, public goods, imperfect information (see Downward, Dawson and Dejonghe, 2009:14- the entire community. Investments in public goods cannot be entirely left to private to left entirely be cannot goods public in Investments community. entire the socially a below be would production their that danger real a is there since initiative optimal level (more in Andrijašević, 2004), and market allocation would fail community. This is mostly revealed community. in sports, or at least some segments of sport, functions social and goals their to due goods public as considered being of and individuals the of well-being the to contributes services and goods these of problem of sports financing is “evident in all countries regardless of their level of level their of regardless countries all in “evident is financing sports of problem development (measured by national income per capita or by some other indica entire the of involvement the requires it and 2009:31), Škorić, and (Bartoluci tor)” 2 Because of its complexity and the width of the functions that sport fulfils re of public expenditure for sport, and allocation criteria will be discussed. This part of the paper ends with a trend analysis of local expenditure for sport and re given. remarks will be concluding creation. Finally, ------for the , that is, the various treaties EU countries has not changed much in com in much changed not has countries EU Although 27 countries were involved in the research, only 13 were able to provide all the necessary infor For more details concerning Community Law see Borchardt (2000). In the year 2000 the research was repeated only for France and UK. mation concerning different sources of financing: household spending, local funds, enterprises and central government. Household spending still represents the most important source of financing since it encompasses almost half of all sports finances, the share of local governments 12% to budget central and 14%, to amounted enterprises 24%, of level the at was Dutoya (Andreff, and Montel, 2009:1). In the year 2005 local government provi ded more money for sport than the central government in 11 out of 13 analysed countries. the central government in every country analysed Although except not Hungary. every country analysed in 1990 participated in the study conducted in the year 2005, it can be concluded that the latest indicators from the year 2005 imply that 13 in sport-financing of structure the parison to 1990. Committee for the Development of Sport, Council of Europe, public sources of Fran in 49.1% to Switzerland in sources all of 5.6% from ranged financing sports ce (see table 1). 1 clearly shows that local government provided more Table money for sport than only be guaranteed through strong public involvement. Moreover, public financial public Moreover, involvement. public strong through guaranteed be only support is often vital for sport but must be provided within the limits imposed by i.e. the laws of Community the law, European Union the European Communities”. that are the “founding acts of the EU and According to research conducted in 1990 and then again in the year 2000 a low price, payment for the construction or renovation of sports facilities by the adver of acquisition public facilities, sports private in works public council, local for land of exchange an or donations or sales land facilities, sports in spaces tising ac better considerably have organizations sports some However, facilities. sports cess to resources from business operators than others. Therefore, in amateur and mass-scale sports, equal opportunities and open access to sporting activities can different different forms, such as (European Commission, 2007:27): direct subsidies from public budgets, subsidies from fully or partly state-owned gambling operators, or direct revenues resulting from a licence to provide gambling services, special tax rates, loans with low interest rates, guarantees with low commissions, public fi nancing of sports facilities, acquisition of public municipal facilities by a private at entities public by facilities sports of renting price, low a at institution an or club etc.) (see Šugman, Bednarik and Kolarič, 2002:69-70). However, another very important source of revenue for sport financing is voluntary work. It is estimated that about 700,000 sport clubs in EU countries build on the work of roughly 10 million volunteers (see Arnaut, 2006:19). The value of the work of these volun many take can sport in support public hand, other the On ignored. be cannot teers
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183 36 (2) 179-197 (2012) - 7 7 7 n.a. 1.77 0.80 3.47 1.49 1.70 1.50 1.42 0.21 1.56 1.13 1.56 1.76 0.38 1.64 0.96 1.67 0.63 0.69 0.52 0.56 1.13 1.10 1.28 0.60 1.04 GDP Overall finance/ 6 6 5.6 8.6 6 21.5 22.6 15.9 42.6 12.1 15.9 77.4 19.9 49.7 23.7 39.6 52.6 21.5 33.5 72.3 35.5 17.3 23.4 38.8 29.0 49.1 27.2 46.8 19.2 sector Public 5 5 5 78.5 77.4 94.4 84.1 57.4 87.9 84.1 22.6 80.1 50.3 76.3 60.4 47.4 78.5 66.5 91.4 27.7 64.5 82.7 76.6 61.2 71.0 50.9 72.8 53.2 80.8 sector Private
4 4 4 0.1 7.3 5.2 11.0 11.6 55.7 25.1 13.0 12.1 15.3 42.7 36.4 14.9 30.0 35.1 10.0 27.0 32.5 24.7 37.6 26.6 16.6 20.4 15.1 31.5 17.4 Local government 3 3 3 4.3 0.6 8.7 9.7 6.5 1.3 6.3 4.3 0.6 8.2 9.9 2.2 0.4 0.8 6.0 n.a. 11.5 11.5 11.1 16.7 10.4 34.7 19.8 13.3 17.5 30.2 Central government 2 2 2 8.4 7.6 3.2 1.2 2.9 7.7 3.3 5.6 4.8 8.5 3.8 5.7 7.9 2.8 5.0 7.0 1.8 13.8 46.6 12.1 37.7 10.3 27.1 10.5 42.0 17.1 Enterprises 1 1 1 our analysis only to public sources, the question of whether the 70.8 63.2 80.9 13.8 17.9 70.6 76.5 19.4 78.9 12.6 73.5 50.0 20.3 50.4 79.5 69.0 47.5 72.9 36.5 60.2 91.6 79.1 74.8 55.6 66.2 42.4 Households 1 able Slovenia Sweden Portugal UK Slovakia France Lithuania Netherlands Cyprus Estonia Finland 2005 Country Germany Bulgaria Country France UK Switzerland UK 2000 Italy Portugal Sweden Finland France Germany Hungary Country Czech R. Denmark 1990 Due to unavailability of the data. More concerning this problem later in the text. for sport as the state? This question reflects the main research problem of this pa for sport as the state? So, if we limit same structure of sources also applies to Croatia comes to mind. Is it possible to confirm the hypothesis that local governments give several times as much money Source: Andreff (2006); for the year 2005 authors calculations according to data in Amnyos (2008). n.a. – (data) not available T (in %) countries European in some finance of sports The structure ------Act.”
croatia
in
, the City of Zagreb and the State to help the performance of and encourages universal sports participation, in particular for those for particular in participation, sports universal encourages and financing
that it produces, values it spor the neglecting without disadvantaged, or against discriminated are who decrees, orders), it provides expertise for the sports movement and for the public, through the evaluations that it makes, the accreditation that it grants, and the diplomas that it awards. This function also includes the information and the statistics it exercises a legal role by promulgating rules and imperative standards (laws, standards imperative and rules promulgating by role legal a exercises it from organizing games of luck, and the funds given by local and regional self- regional and local by given funds the and luck, of games organizing from governing units sporting activities. sons that perform sporting activities obtain by performing sporting activities, the membership fees obtained by sports associations, a part of the revenue “The basis of sport financingis the revenue whichthe legal and natural per The Republic of Croatia, the local and regional self-governing units and the City of Zagreb shall determine the public needs in sports and ensure the funds the ensure and sports in needs public the determine shall Zagreb of City in accordance with this for their achievement from their own budgets 3) 2) – 1) – sports
Municipalities, towns/cities and counties. (Nys, 2006:261): ble 2. It is evident that public needs in sport are very similarly defined in these two co lumns but, of course, on different levels. The definition of public needs is con nected with the roles of the state in sport which are fulfilled either directly or by delegation to local government. The roles of the state in sport can be as follows The task of central government is to help the functioning of the entire sports sy stem through determining the public needs in sport and providing the necessary funds to finance those needs. Public needs in sport at state and local level are de Art. 75 and 76) and are summarized in ta Act (NN 71/06, termined by the Sports influences the way in which sporting activities are financed. Theinfluences system the of way sports in which sporting activities are financed. financing in Croatia does not differ from that in Europe. ItArt. 74) in the following way: Act (NN 71/06, isSports regulated by the health education of children and young people in schools and extracurricular and school activities, competitive sports, physical recreation (“Sport for all”), kinesi therapy and sport for people with a disability (for more details see Bartoluci and Škorić, 2009:16-19). Each of the areas embodies activities that deal with indivi dual as well as social interests, i.e. it meets certain needs of two interest levels: individual and social (Andrijašević, 2004). As mentioned earlier, this situation per, and per, the basic aim is to analyse public sources of sports financing in order to this question. answer 3 Sport, being a complex social activity, encompasses several areas: physical and
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185 36 (2) 179-197 (2012) - - mental projects, analysis and studies with the aim of developing sports Hiring persons to do professional work in sports difficulties and persons with disabilities Planning, construction, maintenance and use sports of facilities important to local self-governing units and the City of Zagreb and regional Sports preparations, Croatian and competitions, as international well as the general and health protection of athletes special Activities of sports associations, sports communi ties and federations Performing and funding scientific and develop Local level Promoting sports; Implementing sporting activities young people and students; for children, Sporting recreational activities of citizens; Sporting activities of persons with developmental
ies. 2 international international competitions, the preservation of national teams at a high level of competitiveness and by the election of national leaders in international federations, it fosters international co-operation and grants subsidies to less-developed countr ting elite. This is mostly done through physical education at school, but more more but school, at education physical through done mostly is This elite. ting as well, school outside participation in sports and more by and medicines specialized developing by athletes of health the oversees it drug abuse, in the struggle against participating of organization the through image country’s the of development the ensures it 6) 4) 5) able achievements in sport International sports co-operation and international obligations of the Republic of Croatia in sports Agency; awarding the Franjo Bučar for Sport and state Award State awards for top-level Functioning of the IT system in system in Functioning of the IT sports and the activities of the Work Scientific and developmental programmes in sports Committee, the Croatian Paralympic Committee and the Association Croatian Deaf Sports top-level athletes Activities of national sports federations, the Croatian Olympic construction of sports facilities Looking after the welfare of Promoting the planning and among children, young people, among children, young students and persons with disabilities State level sports Promoting sports, especially T Source: Arranged by authors according to Sports Act, NN 71/06, Art. 75 and 76. Act, NN 71/06, to Sports Arranged by authors according Source: Public needs in sport at state and local level according to Sports Act to Sports at state and local level according Public needs in sport
------(HBS) con -1 (sports associations), ŠPORT-2 11 Household Budget Survey
used mostly in legal documents and laws. However in everyday life as sports
Sport for
. Statistical data concerning sport are collected every 3 years through years 3 every collected are sport concerning data Statistical . 10 is a Croatian word for expenditure
Šport A problem that has been A and present that for has a already while been now, discussed by some authors but
10 not solved (see Bartoluci, 2003; Bartoluci and Škorić, 2009; Stipetić and Bartoluci, 1999). 11 well as scientific papers, more often the word sport is used. For more on the meaning of the two words see (2007). Andrijašević and Štefić Omrčen, gambling (5.9%) (Sever, 1999). It can be seen that spending on equipment (9.1%) equipment on spending that seen be can It 1999). (Sever, (5.9%) gambling and fees (12.9%) is just one (smaller) part of the total household expenditure for sport. This is why the analysis in this paper is limited to public sources of sports finan cing. Data needed for the analysis was obtained from the official documents con possible expenditure for sport. According to the authors’ knowledge, the only de According to the authors’ possible expenditure for sport. tailed research into this topic was done more than 10 years ago (in 1998) in the hou that showed research that of results The Osijek. and Rijeka Zagreb, of towns seholds spent on sport about 3,359 kuna which per was year, about 5.2% of their total income. The majority of that money and (9.1%), equipment (10.5%), tickets entrance (12.9%), fees (27.1%), footwear was spent on clothes (34.4%) and be considered as expenditure for sport. Sixty four kuna was spent on equipment 295 and budget) annual their of (0.08% recreation open-air and camping sport, for (CBS, budget) annual their of (0.39% activities recreational and sporting for kuna insuf are alone recreation and sport for expenditure concerning data These 2010). ficient fora detailed analysis since they encompass just one narrow segment of differentiate between funds coming from state or local budgets. Also, there are no are there Also, budgets. local or state from coming funds between differentiate additional continuous special reports concerning spending households’ on sport. The Croatian Bureau of Statistics annual tains some data on household spending on sport. According to the last available HBS data, in the year 2009 Croatian households spent about 6% of their annual budget on recreation only and two culture. categories However, in this group can ning incomes and expenditure but, according to the Croatian Bureau of Statistics, of Bureau Croatian the to according but, expenditure and incomes ning this data is not published regularly due to the fact that it is unreliable and incom According plete. to the last known data, published in the year 2003, sports asso resources their of 24.6% obtained competition of system the in registered ciations market private, from came 75.4% remaining the and budgets, public various from cannot one funds, public of structure the in However, 2006:476). (Novak, sources It is not possible to identify the origins of funding in sport, i.e. the share of private private of share the i.e. sport, in funding of origins the identify to possible not is It and public This sources. is mostly due to the insufficiency of statistical data con sport cerning official standardized forms called ŠPORT (chess associations and bridge (sports and recreation ŠPORT-4 clubs), centres). These forms contain questions concer ŠPORT-3 (hunting associations) and Therefore, it is clear that only some sporting activities are financed by public sour public by financed are activities sporting some only that clear is it Therefore, ces through public needs. All other activities are financed by incomeexplained. as was previously Act defined by Sports sources, which is from other obtained 3.1
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187 36 (2) 179-197 (2012) % share of TLB of share % - - - - 8 7 6 5 4 3 2 1 0 2010 2009 will be analysed analysed be will 12 2008 TLB 2007 of share 2006 % share of TLB share of
2005 local funds for sport for funds local distributed from 37.6 to 328.5 million
2004 mil. in 2003 (see graph 1). In other words, the absolute amount absolute the words, other In 1). graph (see Expenditure 13
state budget 2002 expenditure 2001 2000 1999 1998 1 1.2 1.0 1.4 0.0 0.4 0.2 0.8 0.6
raph Expenditure in million kuna million in Expenditure The total amount of money coming from town/citymunicipality, and county budgets for sport and recre The exception being year 1999 when this percentage was higher than 7. 12 ation. 13 Garden” in Osijek. The hall was built for the world handball championship and, due to the lack of money to finish the project, the state had to intervene; such a budget. However, the data concerning the year 2008 should be analysed with a certain caution since it was in this year that a rather large amount of money (140 “City called hall sports the building for funds these in included was kuna) million During the same period the kuna for the development of sport, which was about 0.05 to 0.25% of the state TLB – Total local budget. local TLB – Total of the Ministry of Finance (2009). calculation based on the data Authors’ Source: G expen of share the and recreation and sport for expenditure local of amount Total 1998-2010 in total local budget, diture of money is increasing while the relative share is stagnating, which is a conse in the total local budgets. quence of the increase this figure is between 440 million (in 2001) and 1.320 billion kuna (in 2009). Du 2009). (in kuna billion 1.320 and 2001) (in million 440 between is figure this between to amounted and increased slightly have funds these years 7 last the ring budgets local total of 5% and 4 (see appendix 1 and 2). (see appendix If we sum up the amount of money coming from all local units in one then year, cerning cerning state budget and budgets of local units (municipalities, towns/cities sites internet and the on found be can and information public are budgets All counties). First, Finance. of Ministry Croatian the of
- - - - 0.11 0.11 0.05 0.05 0.07 0.13 0.25 0.15 0.10 0.08 0.09 0.06 . In the year 2005 14 Development of Sport a % of the total budget in order to follow the program more a easily, new, independent
37.6 57.7 54.8 47.0 52.1 53.8 70.8 328.5 198.7 147.6 124.4 154.9 (in million kuna) Development of Sport 05 Education and Sport Amount of expenditure Amount of expenditure 3 c b ds in sport, programmes that encourage various form of sporting participation, sporting of form various encourage that programmes sport, in ds able For a more detailed analysis of the differences in the way data was presented throughout the years see Budg see years the throughout presented was data way the in differences the of analysis detailed more a For Until the year 2005 the amounts are planned and the rest is what actually happened. is what actually planned and the rest Until the year 2005 the amounts are As already mentioned, the strongest reason for such a big increase in the year 2008 is due to No official data were published for 2001 (for reasons unknown to the authors). published for 2001 (for reasons No official data were 2006 2007 2008 2009 2010 2000 2002 2003 2004 2005 Year Year 1998 1999 successes, restoration and building of sports facilities, various sport conferences and youth games, the drafting of the sports development programmes study, for 14 et for the year 2003:139-140; Budget for the year 2004:148-149. from the larger heading mes and activities of the heading was formed” (Ministry of Finance, 2004:63). The items included in this heading refer to the stimulation of sport in sport clubs, nee programmes of public financing of the Bjelolasica Olympic Centre, rewards to athletes for outstanding Although the way of presenting the data concerning expenditure for sport in offi cial documents on state budgets has changed throughout the years in question, it Sport, and Education of Ministry the of expenditure the of part a been always has nowadays called Ministry of Science, Education and Sport according to the “proposal to extract the heading P1254 a b c additional expenditure of 140 million kuna for the purpose of finishing the construction of the in Osijek. sports hall called “City Garden” of the Ministry of Finance (2011a). calculations based on the data Authors’ Source: State expenditure for the development of sport, 1998-2010 development of sport, for the State expenditure high amount of money for this purpose is not usual. In other words, it can be con be can it words, other In usual. not is purpose this for money of amount high cluded that the expenditure for sport coming from the state budget amounts (see table 3). of the state budget about 0.1% to T
financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport 36 (2) 179-197 (2012) 188 financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
189 36 (2) 179-197 (2012) - - - - - 37.6 57.7 54.8 47.0 52.1 53.8 70.8 124.4 154.9 328.5 198.7 147.6 development of sport Total amount of state funds for for amount of state funds Total 651.5 453.7 467.8 583.5 709.6 865.1 952.7 449.3 1,208.9 1,002.3 1,094.0 1,320.2 . If we omit from mentioned items and consider only 15 l and state budgets (see table 4). l and state budgets (see for sport and recreation sport for Total amount of local funds amount of local funds Total 4 Development of Sport able For example, in the year 2008 this was the case with 15 million kuna allocated for co-financing the Višnjik Višnjik the co-financing for allocated kuna million 15 with case the was this 2008 year the in example, For 2009 2010 2007 2008 2004 2005 2006 2002 2003 1998 1999 2000 Year T 15 multipurpose sports facility in Zadar. that the state budget primarily finances top-level athletes and top-level sports re simi or same the fund budgets Local levels. world and European national, at sults lar needs but on a much wider basis, i.e. they encompass a greater number of of funds coming from the state budget. This actually confirmsof thefunds hypothesiscoming that from the state budget. local funds prevail in the structure of public Twosources ex of sports financing. planations can be offered for this situation. First, it can be explained by the fact Source: Ministry of Finance (2011 and 2011a). Ministry of Finance (2011 Source: The table clearly shows that the amount of local funds is higher than the amount The comparison of funds for sport from state and local budgets (in million kuna) state and local budgets (in funds for sport from The comparison of ding the state expenditure for sport under the official heading intended for sportspur funds of amount the compare to possible is it text, the in earlier explained as poses loca allocated to sport by Besides that, the building of sport halls in schools and universities is treated as a part of elementary, secondary and university education. In some cases even the building of sports facilities for top-level sport is treated separately from the hea However, it has to be emphasized that other ministries and departments indirectly indirectly departments and ministries other that emphasized be to has it However, and education science, of area the in example, For expenditure. sports for provide areas. three all towards directed are that exist programmes common certain sport, standard standard development when building sports facilities, etc. (for more details see year 2005:105-106). for the Budget ------(Bašić,
Development Programme for the City of Zagreb of City the for Programme Development criteria
. 16 allocation
More on this topic see Barros (2006). of the study, the of expenditure the for study, sport was correlated with the medals won at do mestic competitions, and the following results were obtained (see graph 2). 16 won at domestic competitions for seniors, juniors and cadets in 2008. In words, other the main constraint on this analysis is, again, the unavailability of results sports concerning data. data of unavailability the to refers data of Unavailability at international competitions, and the data regarding other sports results achieved (not only the medals won but other rankings as well), throughout all the years in limitations mentioned the mind in having So, 2008. year the only not and question allocating local funds, in what way, allocating and local how funds, to in determine what these way, criteria, we have to emphasize the need to justify the use of certain criteria. have We tested, with certain limitations, the validity of using the criterion better achieve of that clubs sporting and sports that is assumption basic The mance). sports results (perfor performances at domestic and international competitions tend to attract higher fi nancing. However, we had at our disposal only the data concerning the medals quality of achieved sport results”. On the other hand, criteria such as the number of participants and sports results are not in question due objectivity and measurability. to their exact nature, Without going into any detail concerning which criteria should be applied when cipants and clubs, performance at international and domestic competitions, and objec of issue the encounter primarily criteria mentioned the of Some popularity. the in example, For tivity. sport for criterion objective an be hardly “can popularity that stated is it 2005:60), This is especially true if evaluation. it is considered that media coverage of a cer tain sport is not proportional to its level of organization, activities, or even to the lines or recommendations. Each town, district and even county makes these deci these makes county even and district town, Each recommendations. or lines Bašić, (see criteria used commonly most The goals. set on based individually sions 2005; City of Dubrovnik, 2010; Sport association of Pula, 1999; Sport Associa tion of Split, 2010; Sport Association of Primorje-Gorski Kotar County, 2009; Sport Association of Koprivnica, 2002) refer to tradition, to the fact whether a sporting activity belongs to the set of Olympic sports or not, the number of parti 3.2 As explained earlier in the text, public needs as defined Actby are the the Sports guiding principles for determining towards which programmes the local units di But rect when their deciding money. how much money they will allocate to each sports association or a club, and this is a major expenditure in local government guide common of form the in exist criteria clear no 2006:274), (Andreff, budgets sports associations and clubs, athletes and events. Besides that, local governments governments local that, Besides events. and athletes clubs, and associations sports manage significantlygreater number of sport facilities, as well as decentra towards professionals tendency the of reflection a be can this Also, sport. in employed lization
financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport 36 (2) 179-197 (2012) 190 financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
191 36 (2) 179-197 (2012) - - - - 2,400 total 2,200 2,000 1,800 1,600 . This This . was confirmed by cal 1,400 1,200 1,000 Number of medals won per county 800 the number of medals won 600 and 400 200 2 0 0
50
100 250 200 150 300 raph kuna) (million county per sport for Expenditure However, since the topic of management is However, not the main research problem in this paper we refer readers to the sports management literature. blic and are usually members of boards the of assembly, directors or supervisory boards. Their task should be control of allocated funds based on the activities of operational management in the club. Unfortunately, this is not always the case. 2009:73). The need for the so called social management is emphasized by the fact the by emphasized is management social called so the for need The 2009:73). that certain segments of sport are considered public goods and therefore receive public funding. Spokesmen of social management are representatives of the pu Although, this is quite a topic different and is not of a primary interest in this pa per, let us just briefly refer to this Competitive matter. sports management could be classified associal and operational management (see Bartoluci and Škorić, Finally, a question that could be of interest here is not merely the question of allo of question the merely not is here interest of be could that question a Finally, cation criteria but also the further management of received funds in sport clubs. process, but the results are still indicative and show that it is possible, necessary even, to analyse the justification of the use of each proposed criterion in a similar way. culating the Pearson product-moment correlation coefficient, which was 0.94. culating the Pearson product-moment correlation decision-making the in used criteria other include also should analysis of kind This The graph indicates that there is a positive correlation between the variables the between correlation positive a is there that indicates graph The for sport expenditure G county per won medals and sport for expenditure variables for graph Correlation in 2008 - - - - 3 2010 2 1 2009 1 1 2008
. The coefficient of x 0.0949x 0 1 2007 sport
= 0.8409 0.094 2 R 9 1 2006 y = 374.81e for
World Military Games. Howe World = 0.858), however, the exponential model exponential the however, 0.858), = 2 nd 2005 2004 , i.e. ŷ = 374.8 6 7 8 expenditure 2003
0.094x 2002 local especially if years 1998 and 1999 were excluded from
17
2001 of
3 4 5 2000 . However, since this type of event is tending to become regular, 18 analysis 1999
recreation
ludes all years in question are presented further in the text (graph 3). ludes all years in question are presented 1 2 3 ain aim of this paper was to conduct a trend analysis of local expenditure 1998 trend and = 0.95; variance 1.3%. 2 raph Linear model generated a higher coefficient of determination (r determination of coefficient higher a generated model Linear r 1.0 1.4 1.2 0.0 0.2 0.8 0.4 0.6 G diture for sports was ŷ = 374.8e 17 generated the lower variance of 2.34%, and the variance in linear model was 14.3%. 18 Exponential trend model equation with computed parameters for the local expen local the for parameters computed with equation model trend Exponential Exponential trend model for local expenditure for sport and recreation (in million (in recreation and sport for expenditure local for model trend Exponential kuna), 1998-2010 (almost every year there is at least one large sporting event), funds intended for these events can no longer At be the treated same separately. time the organizers of such events have to apply for these funds in advance, so that a better budget planning can Therefore, be the achieved. results of the exponential trend analysis that inc ver, again, due to inadequate statistical monitoring, these funds were not shown as shown not were funds these monitoring, statistical inadequate to due again, ver, a separate item, so that we cannot state this with certainty although it affects the final results of trend analysis. The tendency of expenditure to increase through time was analysed based on the exponential and linear model. The exponential model proved the best fit the analysis their web page were collected (see appendix 1), systemized and then analysed. The presented secondary data correspond to the total amount of money allocated Croa of Republic the of county each in budgets local from recreation and sport to The year 1999 town/city was tia, and the i.e. county. year from that municipality, created some problems, because in 1999 a significant increase in funds was pre sent which could probably be attributed to the 2 3.3 The m displayed. is time through increase of tendency a if see to recreation and sport for For this purpose the official data of the Ministryof Finance (2011) published on
financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport 36 (2) 179-197 (2012) 192 financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
193 36 (2) 179-197 (2012) , - - - pointed to the average rate of 1 ^ b = 0.84 and showed that the model explained 84% of the of 84% explained model the that showed and 0.84 = 2 r
conclusion
it becomes virtually impossible to conduct a analysis, which detailed represents a serious problem and for scientificWithout researches. accurate a economic this problem. doubt, future research should strive to solve However, However, we have to point to the fact that the main limitation in the conducted research was the unavailability of data. Official statistics on sports financing is especially very when poor, we are talking about private sources of financing. So, budgets is positively highly correlated with the performance of local athletes and clubs. Finally, Finally, although the calculations were done with certain limitations, this paper also showed that the amount of money coming to sport and recreation from local amounts in different counties of Croatia and throughout the observed years, it was it years, observed the throughout and Croatia of counties different in amounts yearly their in displayed trend exponential the of existence the confirm to possible increase. Due to their great significance in sports financing, localsources were analysed in greater detail. Although the funds coming from local sources varied in total firmed. This can be explained by the fact that local sources finance sporting acti events sports athletes, clubs, of number greater a e.g. scale, wider much a on vities facilities, and experts in sport. Based on European experiences, the assumption that the local sources prevail in the structure of public sources of sports financing in Croatia wastested and con which implies that sport is an activity of wider social interest and requires public intervention in its financing. These needs are determined by law and are an inte local budgets. gral part of state and 4 This paper pointed out that sport is a complex social activity that encompasses various areas. Some of these activities come within the category of public needs, that the amount of expenditure in the analysed period of time increased on average average on increased time of period analysed the in expenditure of amount the that 10% each year. by almost determination equalled equalled determination total sums of squares. The estimated parameter change in expenditure in one year and was calculated to be 9.96%, which means 6.6 7.1 54.7 16.7 34.2 40.9 57.3 37.4 10.3 14.7 57.9 19.4 10.2 83.7 17.6 44.6 12.8 16.4 2010 309.7 138.5 218.1 1,208.9 7.9 9.9 9.6 8.2 27.3 38.1 56.9 42.2 61.3 39.8 62.6 14.4 23.7 19.8 16.5 29.5 14.2 2009 114.5 317.1 298.4 108.4 1,320.2 8.2 7.5 11.9 11.8 34.6 46.8 10.4 23.4 28.8 52.5 59.3 14.5 10.0 13.0 20.1 33.3 85.8 14.6 257.2 197.2 152.7 2008 1,094.0 8.9 6.5 8.6 11.0 33.3 18.5 29.5 18.9 25.9 40.1 47.8 14.1 15.9 15.9 40.9 62.1 10.8 12.7 231.5 157.4 191.9 2007 1,002.3 6.4 8.6 5.3 9.4 6.6 8.9 16.2 52.8 30.2 12.2 27.8 29.6 60.9 36.2 13.6 28.9 60.3 10.1 2006 289.5 952.7 103.1 135.9 5.4 6.7 6.5 9.2 7.9 8.3 11.6 31.6 10.8 67.8 87.3 27.5 22.0 10.1 37.7 16.7 19.9 26.8 58.1 2005 865.1 290.4 102.7 9.9 5.1 3.4 9.8 4.4 7.8 3.8 8.7 11.5 34.2 10.2 61.4 66.8 16.0 72.6 20.3 37.7 53.6 21.5 14.4 2004 709.6 236.3 8.0 4.5 5.2 9.8 4.0 6.8 3.1 9.4 9.1 17.8 13.8 12.8 52.7 17.9 16.6 84.9 28.5 36.1 10.8 12.7 2003 583.5 218.9 7.3 9.0 3.9 3.6 7.9 2.6 2.8 7.4 8.6 9.2 7.7 14.2 12.1 14.4 21.1 66.2 14.4 27.9 38.4 10.3 2002 467.8 178.8 7.7 9.8 5.0 3.9 4.1 3.8 7.3 8.8 3.7 7.5 7.9 8.2 6.4 4.1 17.4 12.8 32.1 48.0 23.9 27.9 2001 189.3 439.7 7.4 8.8 3.6 6.6 3.9 4.2 7.9 3.3 2.9 7.8 6.9 4.1 3.8 12.1 29.3 12.4 52.9 17.7 17.2 26.2 2000 453.7 214.4 7.8 4.9 7.1 3.2 7.6 5.0 5.0 2.9 2.6 7.1 5.1 5.5 3.9 12.3 31.9 47.7 12.5 27.2 12.2 24.2 1999 651.5 415.9 6.6 7.7 5.3 6.8 3.2 2.9 6.6 2.8 2.9 9.2 7.4 7.7 5.9 4.4 11.0 12.1 32.3 43.3 22.4 22.4 1998 449.3 226.2 A1
ppendix able City of Zagreb Total Šibenik-Knin Zadar Zagreb Podravina Vukovar- Sirmium Virovitica- Varaždin Sisak- Moslavina Split-Dalmatia Gorski Kotar Primorje- Osijek-Baranja Požega- Slavonia Lika-Senj Međimurje Krapina-Zagorje Karlovac Koprivnica- Križevci Istria Dubrovnik- Neretva Slavonski Brod-Posavina Counties Bjelovar- Bilogora Source: According to data of the Ministry of Finance (2011). According Source: A T kuna) (in million and recreation for sport Local expenditure
financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport 36 (2) 179-197 (2012) 194 financial theory and sanela škorić, mato bartoluci, zrinko čustonja: practice public financing in croatian sport
195 36 (2) 179-197 (2012) 2.53 2.53 4.12 5.10 4.05 5.43 6.08 9.10 1.98 6.63 3.68 4.16 3.50 5.00 3.27 3.50 6.47 5.54 3.62 4.26 2010 10.40 1.98 2.59 3.61 5.00 3.82 5.20 5.30 7.86 2.50 6.28 3.63 3.66 4.77 4.23 2.98 3.00 3.95 6.42 3.40 5.13 2009 11.27 2.10 2.21 3.70 4.74 3.74 6.59 6.66 7.37 3.69 3.31 3.23 1.18 3.02 6.27 3.51 2.64 2.88 4.07 4.95 3.53 2.51 2008 1.90 2.27 4.04 4.50 5.82 6.91 5.92 6.87 4.05 3.25 3.28 3.10 2.48 3.87 3.34 3.28 3.12 5.43 4.31 2.98 3.51 2007 1.87 1.98 3.15 6.42 4.90 7.16 4.99 5.44 5.31 2.56 2.51 6.86 2.73 3.93 4.62 2.70 2.14 4.34 4.70 3.25 8.89 2006 3.12 2.96 5.27 3.57 6.17 4.16 5.16 5.76 2.54 2.82 9.44 4.77 4.54 4.58 4.52 2.50 2.66 3.97 4.28 2.48 2.73 2005 3.80 3.22 4.72 1.92 4.80 4.29 4.56 3.70 2.84 2.70 2.92 4.76 5.60 1.96 1.30 1.93 3.92 4.78 4.12 2.84 2004 10.40 2.25 2.78 4.76 2.78 6.07 3.68 4.06 4.41 2.20 3.29 2.65 3.31 3.75 1.08 1.70 1.17 2.19 4.00 3.94 3.47 3.13 2003 2.25 3.02 4.93 2.55 5.75 3.45 1.84 2.18 2.81 4.09 3.44 3.42 3.57 2.83 2.76 1.25 2.08 4.15 4.66 3.49 3.67 2002 2.91 4.39 5.43 3.99 4.51 4.14 3.35 1.55 4.55 2.28 3.28 3.42 3.68 3.40 4.06 2.39 6.46 5.70 5.48 2.68 3.74 2001 7.11 2.78 5.27 7.63 5.27 5.87 4.67 3.38 1.84 3.98 3.19 3.25 3.41 4.04 3.43 9.83 2.05 3.87 4.34 3.04 2.73 2000 2.25 3.17 2.45 4.97 4.57 3.58 3.63 3.88 7.64 6.73 5.67 7.78 1.58 3.53 4.04 3.73 2.79 4.14 3.40 2.93 1999 13.85 7.28 2.64 3.19 2.41 3.98 4.12 3.80 3.26 3.82 5.83 3.53 5.19 3.96 1.76 3.13 5.52 5.00 3.12 3.95 4.67 2.67 1998 A2
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