Centrally Manageable System for Public Sector Sports Grant's

Centrally Manageable System for Public Sector Sports Grant’s Distribution to Children

and Youth Sport Clubs

Abstract

Research questions: What kind of system would be the best for financing children and youth sport (CYS)?

Research methods: As a first step, we identify the most relevant aspects that have or may have influence on the unavoidable costs of sports. Secondly, we investigate less studied aspects like the costs of sports per practitioner and families’ ability to cover these costs, relaying on the data from 947 annual financial reports of CYS clubs from 2012 – 2016 and data about private persons’ annual income by quintiles from Statistics Estonia. Thirdly, by relying on the results of this study and previous studies, we propose a model for CYS financing.

Results and findings: The quality and capacity of trainings for children determine the extent and height of entire sports pyramid. Results of previous research and findings of this study suggest that the centrally manageable system that takes into account impact of resource dependency and population density, costs of sports and sport levels and also income level and structure of families is the best possible solution for CYS financing.

Implications: The proposed model guarantees efficient and targeted distribution of public grants, balanced financing of CYS, and reduces exclusion from sport due to financial and demographic reasons. However, a survey for identifying the needs of sports should be carried out before implementing sych a distribution system. For keeping grants’ distribution fair, the survey is recommended to repeat periodically.

Keywords: Children and youth sport, sport financing, supports’ distribution, Estonia Introduction

Several EU and world level recommendations suggest for children to be physically active at least one hour every day (WHO, 2010; EU, 2008). From state perspective, rising sport participation is beneficial, as wider participation rate guarantees healthier population (EU,

2008) and raise the probability to find talents. It has been found that the skills of various sports acquired in childhood increase likelihood to remain physically active throughout lifetime (Smith, 2006), therefore high quality trainings in sufficient capacity are recommended. Also, the EU reference documents have advised to guarantee the diversity of sports (EU, 2008). In Estonia (Buldas, 2019a) and in other EU states (Pühse & Gerber, 2005) the number of physical education classes is small in schools’ curricula and the overall mobility of children is low (Guinhouya, Samouda, & Beaufort, 2013; Mooses, 2017; Mooses et al., 2017). Unfortunately, it is difficult to increase the number of PA classes in curricula

(Ministry of Education and Research1) and therefore, the best possible solution for increasing the mobility of children is to do it via sports clubs’ system.

The most important stakeholders groups related to this topic are (a) families who are the main financiers of CYS clubs (Andreff & Nys, 2002), (b) public sector who supports CYS mostly from local level (Andreff, 2006; Bergsgard, Houlihan, Mangset, Nodland, & Rommetvedt,

2007; Škoric, Bartolouci, & Ĉustonja, 2012 ; Wicker, Breuer, & Hennings, 2012) and (c) sports clubs who are expected to provide quality trainings using finances that are mostly received from families and local governments. In Estonia, Sports Act states that local governments should support CYS if the resources are available (Spordiseadus § 3 (21)).

Public grants have been seen as the backbone of grassroots clubs (Breuer & Wicker, 2009;

Houlihan, 2005; Lasby & Sperling, 2007; Scheerder et al., 2010; Taylor, Barrett, & Nichols,

1 Interview with Pille Liblik, advisor of Üldharidusosakond [General Education Department].

2009; Young, 2007). In principle, clubs can also earn business revenues and get other income, but these revenue sources are not very common in CYS clubs (Buldas, 2018a).

The delegation of financing CYS from lower power level has lead to the coexistence of numerous micro level financing models (Buldas, 2018a, Wicker & Breuer, 2015) without clear concept in grants’ distribution (Buldas, 2019a). Implemented grants’ distribution principles and even the age of children and young people eligible for grant vary by local authorities and in the worst cases regulations are completely missing (Buldas, 2019a).

Considering these findings, it is hard to believe that grants in different size and without clear distribution pattern are the best possible solution for CYS financing. At the same time, public grants could be a systematic tool for reducing negative effects of resource dependency and for covering unavoidable costs rather than being incidental.

This study focuses on proposing a system for CYS financing that takes into account revenues and costs affirmation in CYS clubs and families’ ability to cover these costs. The proposed model may be suitable for many countries and could therefore be of interest for sports managers and politicians who are responsible for building supports systems and design regulations.

1. Theoretical Background

The Place of CYS in the Sports Pyramid

Usually, the mass sports and grassroots sports are seen as the basis of sports pyramid, top sport forms the tip section of the pyramid, amateur sport the layer between these two levels

(Green, 2005), CYS is mostly positioned as a part of grassroots sports (Bergsgard et al.,

2007). This concept describes the sequence of sport levels, but does not describe their chronological order. We should take into account that all sport levels are outgrown from CYS and top athletes do not usually pass the amateur sport level before reaching the top.

Therefore, in depicting a sport activities’ pyramid following the chronological order of formation of sport levels, it is reasoned to use horizontal section for CYS as the basis of the whole pyramid and vertical sections for adults’ sport levels (Figure 1). The top sport sector raises vertically in the center, adjacents are vertical sectors of amateur sports, and sectors of physical activity (PA). As all sport activities’ sectors grow out from CYS, the participation rate among children and the amount and quality of CYS trainings determines the horizontal extent and also the height of the entire sports pyramid. Practitioners can move from amateur sport to PA and to the opposite direction, but in most cases, amateur sport and PA do not feed the top sport, only CYS does. There is also possible to step out of the sport pyramid from every sector or to step into the sport pyramid, but again, probably it is not possible to step into top sport sector from the inactivity area. Although it is possible that some individuals decide to enter into the activity area in adulthood, the macro level data show that participation rates decline with age (Coalter, 2007; Downward, 2007; Downward & Riordan, 2007).

(Figure 1 near here)

Considering the previous concept and the impact of sport on health and on the development of top sport, CYS is strategically important field for states and sufficient financing of this

4 area helps to guarantee healthier population and higher athletic achievements. For understanding, how to create efficient and suitable model for CYS funding, the functioning of main stakeholders groups should be explained and main aspects highlight that have or may have impact to the costs of sports and stakeholders groups ability to cover these costs.

Public Sector’s Approach

The main interests of the public sector in funding CYS are related to the two objectives of sport: high athletic results and better public health (Council, 1992; Olympic Charter). The prerequisite for both goals is broad participation in CYS because it determines both the width and the height of the sports pyramid. To ensure broad participation rates, researchers have often come to the conclusion that school programs are the best possible way to raise PA among children (Deci & Ryan, 2000; Kirk, 2005; Van Acker et al., 2011). At the same time, the number of physical education hours in curriculum is not sufficient to ensure the required volume of PA (Pühse & Gerber, 2005) and different forms of PA are expected to implement in parallel (Kirk, 2005; WHO, 2010). Such a solution where clubs, sports schools, educational system, and after-school programs complement each other, guarantees a very high participation rate in sports and PA (De Meester, Aelterman, Cardon, Bourdeaudhuij &

Haerens, 2014).

While sports clubs are partly funded by the public sector, partly by the private sector

(Andreff, Bourg & Halba, 1994; Andreff, 1996), school programs and after-school hobby groups are generally fully funded by local governments. As clubs’ system affords to involve private finances (Andreff et al., 1994), the expected grant from state is smaller. It is unclear if the state maximizes the utility for society with this solution. Children from low income families and from families where sport and PA are not valued may stay away from trainings.

Public grants to CYS are not always inevitable. The expected size of public grant is (Buldas,

2016):

S = Co – Pn – B, (Equation 1) where P is the price of training, n is the number of practitioners, B is club’s revenues from business activities and other sources, S is the amount of public sector grant, and Co is the size of club’s unavoidable expenses. If Pn + B = Co, then the public grant is not needed (S = 0). If the average level of households’ income is low and or the level of inequality high, Pn + B cannot cover Co and public grant is needed. (Buldas, 2016) Therefore, in creating grants’ systems, it is reasoned to take income distribution into account. Grants raise the perceived utility from attending trainings compared to other possible choices of spending free time

(Buldas, 2018c, Downward, Dawson, & Dejonghue, 2009),

The study Buldas (2019a) show that the principles for grants division have not been used systematically in Estonia so far. The principles, on which the CYS funding system can be relied upon, are (Buldas, 2018b): (a) several equality and needs sub-principles or (b) the sub- principle of needs that suggests relaying the grants division on the unavoidable costs. It has been suggested to implement the cost-based division (Buldas, 2018b) as the most efficient solution from state perspective and centralized distribution system (Buldas, 2019a) as the solution that helps to reduce the impact of resource dependency. The strong impact of resource dependency on sport participation (Buldas, 2019b; Breuer & Wicker, 2008;

Downward, 2007; Downward & Rasciute, 2010; Downward & Riordan, 2007; Dziubiński,

2014; Farrell & Shields, 2002; Hallmann & Breuer, 2014; Hallmann, Wicker, Breuer, &

Schönher, 2012) is an important indicator on favor of a central supports system.

Families’ approach

Income level and composition of family has significant impact on parents’ ability to cover their children trainings costs and thus has an impact on sport participation among children

(Vella, Cliff, & Okely, 2014). As training fees paid by families is the most important source of revenues for sports clubs, the income distribution and families’ structure are desirable to take into account in the CYS financing system.

The study Downward et al. (2009) explains the participation in sport and PA using the consumption function C = a + bY. Consumption is described as a linear function of income

Y, where the marginal propensity to consume is b and a denotes the hypothetical minimum consumption if the income was zero. The approach by Buldas (2018c) explains that from private persons’ viewpoint, if person’s income in the short period is zero, person should use his savings, should take a loan or should seek a support.

In Buldas (2018c) it is assumed that there exists the size of minimum consumption a like in

Downward et al. 2009, but in this approach, a person must cover the minimum consumption a using his income Y (current income or savings). If a > Y, it means that person’s income is not sufficient even for elementary costs and the person should work some additional hours. If a + p < Y , the person has a possibility to use his income for additional consumption and savings.

Person is trying to maximize his utility U(Y, L) (unknown function that characterizes the preferences of a particular person) i.e. as Y = wW and L = T – W , we have to find (Buldas,

2018c):

𝑚𝑎𝑥 𝑈𝑤𝑊, 𝑇𝑊 . (Equation 2) If government decides to direct sport grants to private persons, then a private person gets a support Sp (note that if Sp > a, then the lower bound of W is still 0), income increases to Y +

Sp and the maximum utility is (Buldas, 2018c):

𝑚𝑎𝑥 𝑈𝑤𝑊 𝑆 , 𝑇𝑊 . (Equation 3) , If revenue earner is also parent, then the relation between income and necessary costs for living and trainings is: (n + 1) (a + p) < Y , where n is the number of children per one parent.

In the families with children, the lower bound in utility maximization takes shape (na - Sp)/w:

𝑚𝑎𝑥 𝑈𝑤𝑊 𝑆 , 𝑇𝑊 . (Equation 4) ,

This indicates that both the income level and structure of family have influence to probability whether children can participate in trainings. The only ones who can alleviate the problems of low income and family composition, are local authorities. At the same time, municipalities’ ability to finance sport clubs depends on the local resource level (Wicker & Breuer, 2015) and thus the clubs and families have not equal opportunity to get financial support without centralized grants’ distribution system.

Sports Clubs’ Approach

Factors that Have Influence to the Size of Revenues

Sport clubs operate mostly in the form of non-profit organizations (NPO) (Nemec & Nemec,

2009). Compared to NPO-s from other areas, sports clubs have rather less resource sources

(Lasby & Sperling, 2007). The choice of a sports’ organizational type may have influence to the tax burden of clubs because of different sets of rules for accounting and taxation (Nemec

& Nemec 2009). Also, it has been found that clubs with more members operate more effectively and are more sustainable (Koski 1995; Stamm & Lamprecht, 1998; Wicker &

Breuer, 2010; Wicker & Breuer, 2013) and public supports there are often higher (Rittner &

Breuer, 2002). This causes geographical differences in clubs’ sustainability (Wicker et al.,

2012) as the location has influence to the size of club (Gumulka, Barr, Lasby & Brownlee,

2005; Lasby & Sperling, 2007; Taylor et al., 2009; Lamprecht, Fisher & Stamm, 2012). It has also found that clubs of more popular sports have greater revenues (Bednarik, Kolar & Jurak,

2010). In recent years, NPO organizations have become more competitive and market- oriented (Young, 2006) and have changed their niches as the response for the changes in environment (Rainey, 2009). Because sports clubs operate in a narrow niche, it is difficult for them to use the lastly mentioned solution.

In Europe, membership fees provide a significant part of revenues in sports clubs (Breuer &

Wicker, 2009; Taylor et al., 2009; Scheerder et al., 2010; Wicker et al., 2012), in Canada, business income from the sale of goods and services (Gumulka et al., 2005). Revenues from sponsorship, gifts, donations and grants are also possible (Lasby & Sperling, 2007, Wicker et al., 2012). Subsidies from public sector are important revenue sources for sport clubs (Young,

2007; Lasby & Sperling, 2007; Breuer & Wicker, 2009; Taylor et al., 2009; Scheerder et al.,

2010) and they come generally from local government budgets (Bergsgard et al., 2007). The size of grants is often not legally defined, and is influenced by resource level in particular local government (Wicker et al., 2012) and by the criteria and conditions stipulated in regulations (Vos et al., 2011). These criteria and conditions may provide requirements related to club’s athletic results (Škoric et al., 2012), personnel hired (Vos et al., 2011), financial results (Rittner & Breuer, 2002; Young, 2007), or other aspects (Edwards, Mason &

Washington, 2009).

The Types of Costs and their Dependence on Revenues Received

Previous research has divided costs into three types in sports clubs (Karic, 2008): constant

(fixed) costs, changing (variable) costs and mixed costs. Fixed costs can be estimated for upcoming period, variable costs depend on several circumstances, for example the number of practitioners, competitions costs etc. (Galic, Baban Bulat & Tolušik, 2019). The size of costs may be different due to the main goal of the sport organization or sub-sector of operating

(Beech & Chadwick, 2010). For example, sport organizations can be divided into four types

(Bartoluci, 2003): a) organizations related to physical education field, b) organizations operating in competitive sports field, c) organizations operating in the grassroots sports field, and d) organizations that offer adaptive sport activities. The type of organization largely determines the revenues’ and costs’ patterns (Bartoluci, 2003). Also, the size and composition of costs depend on labor costs, location and several other aspects (Bartoluci &

Škoric, 2009).

It has been found that sports can be divided into costlier and less expensive sports (Bednarik et al. 2010), that costs of sport organization may vary depending on the sport or the performance level of athletes (Galic et al., 2019). To improve the coping of sports and to mitigate problems related to high costs, the use of solidarity mechanisms have been advised

(Eurostrategies, 2011).

The costs of CYS clubs can be divided into (a) fixed costs, such as the rent for facilities, coaches’ and administrators’ wages, tax expenses, and general expenses (administrative costs); (b) periodic costs such as those related to competitions and sports camps; (c) lump costs, such as equipment and other possible costs. All these costs are necessary for clubs’ operating and the expenses they can make must be (in the long run) covered by the revenues from P, B ja S (Buldas, 2016):

𝑃𝑛 𝐵𝑆𝑊𝑇𝑅𝐸𝑂𝑝𝑂𝑐, (Equation 5) where

P – annual participation fee; n – number of children in the club;

B – club’s revenues from business activities and other sources;

S – public grants;

W – salaries, i.e. coaches` wages;

T – taxes;

R – rental costs of facilities;

E – equipment expenses;

Op – other operating expenses (for example administration’s salaries);

Oc – other expenses (mostly related to competitions’ costs).

Such an annual calculation is done to some extent as a prediction, the exact amounts of public subsidies and ability to earn business revenues are not known in advance and nor is the accurate number of practitioners (Buldas, 2016). Also, some of the fixed costs (salaries, taxes, rent, equipment) may change during the year, or some unexpected expense may occur.

Costs may also depend on the occupancy of training groups and on the level of practitioners

(assuming that practitioners at higher levels cause higher costs) and the age of a practitioner.

Earlier researchers have highlighted 13th lifeyear as the critical age when children should decide whether to finish with sport, continue trainings for health considerations or continue in the achievement sport (Smith, 2006; Thedin Jakobson et al., 2012).

Important Aspects that are Expected to Take into Account in Creating CYS Grants System

Resource dependency is the aspect that directs to prefer a central grants’ distribution system.

Public support is substantial to the extent that clubs are unable to cover their inevitable costs by using their revenues from training fees, business activities and other sources. Therefore, the most efficient solution seems to be grants based on unavoidable costs. Clubs’ ability to receive business revenues and sponsorship is different, also the costs of sports are different.

Differences in unavoidable costs related to sport practiced, sports level and the age of practitioners are the factors that should be taken into account considering clubs’ approach. As the main financier of CYS are families and their solvency also varies, it is suggested to take into account the income distribution and the structure of families.

2. Data and Methodology

Data

Data used in this study derive from Estonian Sport Register, Business Register and Statistics

Estonia. 947 annual reports of the clubs with up to 19 years old practitioners from the period

2012 – 2016 are included into the dataset, alltogether (see in Table 1). The types of costs that were possible to distinguish in Business Register database are the regular operational costs, labour costs, costs related to fixed assets, projects costs, costs of made donations and other costs. These costs are involved into analysis as costs per ractitioner and as the proportion from total costs. Other variables used in this study are the sport practiced (SPORT), revenues per practitioner in sports club (REV_PERPRAC), grants per practitioner in sport club

(SUP_PERPRAC), grants’ proportion from total revenues (SUP_PROP), and summarised costs for operating and projects per practitioner in sports clubs (ACT_PROJ_COSTS). Data about the income of private persons by quintiles derive from Statistics Estonia.

(Table 1 near here)

Research methods

As the first step, less studied aspects like the costs of sports and families’ ability to cover these costs are investigated. The overview of the size and the structure of costs by sports has been given. Secondly, the income of private persons by quintiles is involved into the analysis, the total annual costs of different sports are compared to individuals’ annual income by quintiles. The aim is to demonstrate the ability of private persons to cover the costs of trainings. This in turn indicates the needed amout of public funding. Thirdly, the model that takes into account findings from previous research and analysis from this study is proposed.

3. Results

Costs and Costs Structures of Sports in CYS Clubs

Figure 2 illustrates the annual size of revenues per practitioner in CYS clubs in different

Estonian local governments and the proportion of grant in total revenues. We can see that in the most cases the annual size of revenues remain below 1500 euros, the proportion of grant in total revenues varies from 0 to 100 percent. This indicates to quite similar needs of sport clubs depending on location, at the same time quite different public financing. By sports, the size of costs per practitioner varies widely. Costs remain below 100 euros in handball, table tennis and taekwondo ITF and are over 3000 euros in car sport, motosport and water motosport (Table3). It is not possible to analyze the size of costs related to the age of practitioner, as there are no data available.

The Business Register data allow to distinguish between the six types of costs listed in Table

1. It is unfortunately not possible to distinguish between the costs for equipment, rent of facilities and competitions. The most widespread costs in CYS clubs are operational costs

(49%), projects costs (22%) and labour costs (21%). Costs related to fixed assets form 2%, costs of paid supports also 2% and other costs 4% of the total costs. Costs related to fixed assets are the highest in athletics, moto-sport, and sailing (about 10%) and below 5% or equal to zero in all other sports (Table 2). Other costs form 67% in water motosport and 36% in motosport, 11% in boxing and 5% in karate, and are lower in other sports. Interesting pattern of costs can be seen also in underwater sport where more than 28% of costs are made as expenses for paid donations.

(Table 2 near here)

(Figure 2 near here)

(Figure 3 near here)

In the comparison introduced in Figure 3, three most prevalent types of expenditures are included. The share of operating costs and projects’ costs are summarized, because similar costs may appear on the balance sheets as operating or project costs. These costs are all operational costs and are shown in the vertical axes (ACT_PROJ_COSTS). In the horizontal axis, the share of labour costs is given (WORK_P). Sports that locate at the upper end on left are the sports with high share of operational costs, sports that locate right are sports with high share of labour costs, sports locating in the lower end on the left in Figure 3, have high share of less widespread costs.

A Comparison of the Costs of Sports with the Income of Individuals

In the theoretical part, the explanation was given on how the revenues and costs in the CYS clubs are related and how the expected size of public sector support develops due to the level of costs and individuals’ ability to cover these costs. Clubs can cover some of the costs by revenues from business activities and other sources. In Table 3, the size of total costs per practitioner and the size of revenues per practitioner received from business activities and other income sources are given. These revenues are subtracted from total revenues and received costs as „uncovered costs” are compared to the income of individuals. These costs are expected to be covered by training fees paid by private persons and grants usually payd by public sector.

In Estonia, the average annual income of private persons by quintiles was 3810 € in first,

6685 € in second, 9454 € in third, 12912 € in fourth and 20622 € in fifth quintile (Statistics

Estonia). Assuming that up to 5% of one parent’s income for one child’s trainings is acceptable for the family, parallels are drawn between sports’ uncovered costs and private

14 persons’ ability to cover these costs. As there are no more stakeholders’ groups financing

CYS, remained costs are expected to cover from the public support.

The data shows that sports available for all practitioners without public financing are taekwondo, table tennis, handball, checkers, ice hockey, wrestling and weightlifting. Parents from the first quintile need financial support for all other sports. For the second quintile, also fitness, kickboxing, volleyball, underwater sport, chess, boxing and badminton are available without grant, but persons from second quintile need financial support for more costlier sports. Technical sports, riding, golf, sailing and suprisingly also athletics are the sports with wery high uncovered costs. As it is difficult to stipulate many different grants’ levels in legal acts, usually only 100% and 50% financial supports are used. Based on such calculations, it is possible to take into account private persons’ income in CYS funding systems. This calculation, of course, is indicative, as it does not take into account several circumstances: for example the impact of sport level to the size of costs and the impact of families’ structure.

Therefore, the given example is in large extent simplified. In practice, all these factors should be taken into account when designing a CYS grants system.

Model for Cost-Based Distribution of Grants

General Shape of the Model

The logic on how the cost-based grants system operates is described below. As the first step, survey is needed for identifying the size of unavoidable costs per practitioner by sports and sport levels. As it is not justified to organize trainings in very sparsely populated areas, grant for transport to the nearest city is the best possible solution for these places. Local municipality either organizes transport or pais transport subsidy to the families. Local governments can also solve transport issues in cooperation. In the general model, grant for transport (St) is separated from other components, grants for lower sport levels (𝑆𝑈𝑃 and

15 grant for achievement sport (𝑆𝑈𝑃), because this part of grant is directed to local governments:

𝑆𝑈𝑃 𝑆𝑈𝑃 𝑆𝑈𝑃+ St . (Equation 6)

Grants for Widening the Horizontal Base of the Sports Pyramid

Distinction Between Supports to Different Sports

In the following model, the components 𝑆𝑈𝑃 denote the grants needed for different sports, which here are marked with numbers 1, 2, 3, etc to sport j.

𝑆𝑈𝑃 𝑆𝑈𝑃 𝑆𝑈𝑃 𝑆𝑈𝑃 ⋯𝑆𝑈𝑃 .

(Equation 7)

The support for sport 1 (𝑆𝑈𝑃 takes into account annual costs in two age groups:

𝑆𝑈𝑃 𝐶_ 𝑛_ 𝐶_ 𝑛_ 𝑃_

𝑃_ 𝐶𝑂𝑉𝐸𝑅𝐸𝐷_𝐶𝑂𝑆𝑇𝑆 . (Equation 8)

Sport levels where costs are expected to be different from each other, are: (a) 13 years old not achievement-oriented practitioners; (b) 13 – 19 year old not achievement-oriented practitioners. The costs for up to (13 years old) six grade students’ in sport 1 are denoted by

𝐶_ in the model and per practitioner expressed as 𝐶_ , the number of practitioners in the group is denoted by n1_1. For this age group, four hours of PA classes must be provided per week (as school curriculas cover three hours). The costs for elder (13 –

19 years old) students’ trainings are denoted by 𝐶_ and per practitioner as

𝐶_ , the number of students in this age group in particular sport is n1_2. For this age group, five hours weekly trainings are needed. The need of public grant is reduced by the amount of training fees paid by families 𝑃 and by covered costs from business

16 activities and other revenues (COVERED_COSTS). The size of covered costs is expected to be different by sports and shall be recalculated every three to five years on the basis of statistics. To know the size of the costs per practitioner is neccessary because the need of support due to family structure and income level is calculated on this bases. The size of costs per practitioner also allows to make the comparison of sports and to identify more and less expensive sports.

The total need of costs by sports and costs per practitioner are calculates as follows:

𝐶_ 𝑊_ 𝑇_ 𝑅_ 𝐸_ 𝑂𝑝_ 𝑂𝑐_ 𝐶𝑐_ . (Equation 9)

_______ 𝐶_ . (Equation 10) _

Cpartsport1_1perpr – costs per practitioner in particular sport per annum in first age group;

W1_1 – salaries, i.e. coaches` wages;

T1_1 – labor taxes and ohter taxes;

R1_1 - rental costs of facilities;

E1_1 – equipment expenses;

Op1_1 - other operating expenses (for example administration’s salaries and office expenses);

Oc1_1 - other expenses (mostly related to competitions’ costs and the costs for raising coaches’ qualification);

Cc1_1 – camp costs (for example, 20% of camps costs per practitioner are compensated and the club is entitled to redistribute this sum among practitioners, preferably taking into account the needs of families).

This expense calculation does not include the costs for international competitions and camps, extra personal trainings etc. These costs are included in the list of achievement sports costs.

Only the basic training costs are included in the above calculation. Expected revenues per

17 practitioner from business and other income (COVERED_COSTS) are subtracted from these costs per practitioner.

The Share of Costs that Can Be Covered by Individuals

The share of costs that can be covered by individuals is derived from the remained uncovered costs. The solvency of the population and family structures should be taken into account here.

To find out how big part of neccessary costs individuals are able to cover, the following calculations should be made. Assuming that one parent covers one child’s training fees P, the public sector is expected to cover all training costs for the remaining children. Therefore, the proportion of children who are second, third, fourth etc. per one parent is found and based on this proportion, the respective number of children x in particular sport and age group are found. It is also possible to use general proportion in calculations.

Another aspect that is taken into account is the need due to low income. The maximum total price of trainings is defined. The maximum total price is compared to annual income of persons by deciles and proportions of parents are found who need support. It is expected, that public support is 100% if annual training fee is 10% or more from one parent income and

50% of training fee if training fee is 5 – 10% from one parent income. Based on these proportions, the corresponding numbers of children in the groups are found: the number of children eligible for 100% training allowances is denoted by y and for 50% by z.

Thus, the amount of expenses expected to be covered by parents 𝑃 can not be found only by multiplying the size of training fees with the number of practitioners (Pn), the amount of expected support from families decreases due to the families’ structure and the income distribution. In sport 1 in younger age group the size of the costs expected to cover by parents can be expressed as follows:

𝑃_ 𝑃_𝑛_ 𝑥_ 𝑦_ 0,5𝑧_ . (Equation 11)

Without such additional support, it is not justified to obligate clubs to provide free trainings or half-price trainings, as the cost would then be covered by other families. Thus, in written more detailly, the amount of support needed to maintain and expand the participation rate in sport per one sport in first age group can be written as follows:

𝑆𝑈𝑃 𝑊_ 𝑇_ 𝑅_ 𝐸_ 𝑂𝑝_ 𝑂𝑐_ 𝐶𝑐_𝑊_ 𝑇_

𝑅_ 𝐸_ 𝑂𝑝_ 𝑂𝑐_ 𝐶𝑐_𝑃_𝑛_ 𝑥_ 𝑦_ 0,5𝑧_𝑃_𝑛_

𝑥_ 𝑦_ 0,5𝑧_ . (Equation 12)

The total amount of expected support summarizes from supports for different sports. In the electronical distribution system, it is possible easily to reduce or increase proportionally the size of supports or adjust some categories of expenditure etc.

Grants for Increasing the Height of the Sport Pyramid

Achievement sports grants (𝑆𝑈𝑃) are intended for the young people of age 13 - 21. These supports are not divided into two groups based on the age of students, in achievement sport sport level determines the size of costs. Firstly, grants are differenciated by sports:

𝑆𝑈𝑃ℎ 𝑆𝑈𝑃 𝑆𝑈𝑃ℎ 𝑆𝑈𝑃ℎ ⋯𝑆𝑈𝑃ℎ . (Equation

13)

𝑆𝑈𝑃 denotes support needed for sport i and so on to sport j (for i=1, ..., j). As the level of expenses for youth achievement sport is different depending on whether the practitioner competes in Estonia or in international competitions, these sport levels are differenciated in support system: level 1 (l1) denotes this group of practitioners who are mostly competing in Estonia, level 2 (l2) this group who participate at international level. The simple model is:

𝑆𝑈𝑃 𝑆𝑈𝑃 𝑆𝑈𝑃 . (Equation 14)

As the amount of support is also determined by the costs at achievement sports level, the main cost groups are similar as in the model for calculting the costs of sport participation.

Similarly, these costs must be found per each sport and for both sports levels. The expenditures for sport 1 at level 1 are calculated as follows:

𝐶 𝑊 𝑇 𝑅 𝐸 𝑂𝑐 𝐶𝑐 , (Equation 15) where

Cachsport1l1 – costs per practitioner in particular sport per annum at first sport level;

W1l1 – cost for salaries for coaches for extra hours or for coaches who give consultations;

T1l1 – labor taxes and ohter taxes;

R1l1 - rental costs of facilities;

E1l1 – equipment expenses;

Oc1l1 - other expenses (related to competitions’ costs, expenditure on food and accommodation, and other costs);

Cc1l1 – camp costs.

At the level of achievement sport, one cannot assume that the parent is able to cover these costs, most of the families do not have such opportunities. Nor can a young practitioner be expected to find a sponsor. It is therefore expected that the costs of this sport level are covered by public sector and special funds. The number of grant recipients may also be limited. The grant application system may be similarly organized similarly to the stipendium systems.

It is also possible to set up a fund for youth achievement sports, where companies and private persons can make donations that are not directed to particular athlete or team. During the year, the fund is collecting support F, received support covers athletes’ costs in equal

20 proportion or sum. This support reduces the amount of support expected from public sector.

The expected amount of support from public sector forms thus as follows:

𝑆𝑈𝑃ℎ 𝑆𝑈𝑃 𝑆𝑈𝑃 𝑆𝑈𝑃ℎ 𝑆𝑈𝑃

𝑆𝑈𝑃ℎ 𝑆𝑈𝑃ℎ ⋯𝑆𝑈𝑃ℎ 𝑆𝑈𝑃ℎ 𝐹.

(Equation 16)

In the model:

𝑆𝑈𝑃 - the expected support from public sector to youth achievement sport;

𝑆𝑈𝑃 – the expected support for sport 1 for first level practitioners;

𝑆𝑈𝑃 – the expected support for sport 1 for second level practitioners;

𝑆𝑈𝑃 – the expected support for sport 2 for first level practitioners;

𝑆𝑈𝑃 – the expected support for sport j for first level practitioners;

𝑆𝑈𝑃 – the expected support for sport j for second level practitioners;

F – the annual amounts paid by companies and individuals to the youth achievement sport fund.

If public sector ability to support CYS is lower than real needs, supports can be reduced proportionally or the maximum possible size of support can be established. Both methods have influence to clubs’ coping. The first one causes equally difficulties for all clubs, the second solution favoures cheaper sports. Also the list of sports that are eligible for support is possible to establish. Such a solution would reduce the diversity of sports.

Conclusions and Discussion

While the financing of the whole sports sphere has been thoroughly studied, studies on the financing of CYS are quite rare. Also, the role of CYS is underestimated and current supports systems do not take into account that CYS nourishes all other sport levels and determines the horizontal and vertical extent of the sport pyramid. Therefore, CYS can be considered the underlaying of the whole sports pyramid and therefore also an indispensable factor in improving public health.

Clubs’ revenues depend on the resources circulating in particular areas (Wicker & Breuer,

2015), at the same time clubs’ needs may not clearly follow the possibilities available depending on the local resource level. Their ability to receive revenues determines the size of their costs. Local resource level has clear effect on sport participation (Buldas, 2019b, Breuer

& Wicker, 2008). Previous findings suggest that the centrally manageable grants system is needed for reducing the impact of resource dependency. In very sparsely populated areas, it is difficult to offer trainings in good quality and sufficient capacity and the best possible solution to support sport participation may be to organize transport for children to the nearest city.

Trends show that the share of private financing increases in clubs’ revenues (Andreff & Nys,

1997). At the same time, income level (Downward & Rasciute, 2010) and family structure

(Vella et al., 2014) affect the probability of participating in trainings. Clubs that have financial problems or restricted amount of revenues, are not able to finance the participation of children from low-income families. Therefore, to avoid the problems related to income distribution and family structure, these aspects should be taken into account in CYS supporting systems. The ability of private persons to cover trainings’ costs determines the

22 expected size of public support that can also be equal to zero when private persons are wealthy and inequalities’ level low (Buldas, 2016).

As school programs do not cover the required level of PA (Guinhouya et al., 2013; Mooses,

2017; Mooses et al., 2017), trainings in sports clubs help to raise PA level and to improve public health. Because the diversity of sports raises the probability that persons remain active throughout the life (Smith, 2006), it is suggested to support all sports regardless the different costs of sports that have identified by Bednarik et al. (2010). The empirical analysis of this study identified that also the proportions of expenditure vary by sports and therefore supporting of particular types of costs does not give the result with equal treatment of sports.

These findings suggest that supports should follow the size of unavoidable costs and as these are different by sports, supports also should be differenciated by the sport practiced and the achievement level of the practitioner.

Described findings suggest that a centrally managable system that reduces impact of resource dependency, takes into account the cost of sports and sport levels, and the income distribution and families’ structure is the best possible solution for supporting CYS. Such solution creates stronger foundation for the whole sport pyramide and supports to achievement sport also help to maintain the height of the pyramid.

As it is not clear whether the data in databases show clubs’ ability to earn revenues or the revenues received and costs reflect more the size of unavoidable costs in different sports, the fundamental survey is needed. The survey should be repeated every three to five years as the clubs’ economic capacity and private income level are constantly changing and evolving.

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Table 1. Variables involved into analysis.

Variables Type Explanation 39 different sports practiced in sports clubs, additionally multi SPORT string sports and other sports; used in the analysis as grouping variable LOC string 79 local governments, used as grouping variable REV_PERPRAC numeric, scale Revenues per practitioner (€) SUP_PERPRAC numeric, scale Received supports per practitioner (€) SUP_PROP numeric, scale The proportion of received supports from total revenues (%) The proportion of summarised costs for projects and activities ACT_PROJ_COSTS Numeric, scale from total costs (%) COST_PERPRAC numeric, scale total costs per practitioner (€) ACT_PERPRAC numeric, scale activities’ costs per practitioner (€) LABOR_PERPRAC numeric, scale labour costs per practitioner (€) FIXASS_PERPRAC numeric, scale cost of depreciation of fixed assets per practitioner (€) OTHERCOST_PERPRAC numeric, scale other costs per practitioner (€) PROJ_PERPRAC numeric, scale project costs per practitioner (€) SUPCOST_PERPRAC numeric, scale supports’ costs per practitioner (€) ACT_P numeric, scale the proportion of activities’ costs from total costs (%) WORK_P numeric, scale the proportion of labor costs from total costs (%) FIXASS_P numeric, scale the proportion of costs of depreciation (%) OTHERCOST_P numeric, scale the proportion of other costs from total costs (%) PROJ_P numeric, scale the proportion of project costs from total costs (%) SUPCOST_P numeric, scale the proportion of supports costs from total costs (%) Annual income of private persons by quintiles, in 2016 INCOME BY - accordingly 3810 € in I, 6685 € in II, 9454 € in III, 12912 € QUINTILES in IV and 20622 € in V quintile.

Data sources: Äriregister (Business Register), Spordiregister (Sport Register), Statistikaamet

(Statistics Estonia).

Table 2. Costs’ structure in CYS clubs by sports. The sports are ranked by the proportion of labour costs.

WORK FIXASS OTHER PROJ SUPCOST Sports ACT_P _P _P COST_P _P _P Fencing 45.98% 40.36% 0.00% 0.45% 13.21% 0.00% Sailing 42.73% 34.94% 9.77% 0.32% 12.24% 0.00% Other sports 36.26% 31.52% 0.71% 0.51% 21.47% 9.53% Multi sports 47.15% 30.96% 1.30% 2.19% 16.38% 2.02% Gymnastics 44.47% 29.62% 0.64% 1.36% 19.30% 4.61% Underwater 43.15% 28.54% 0.00% 0.01% 0.00% 28.29% Fitness 70.26% 28.47% 1.26% 0.00% 0.00% 0.00% Badminton 50.82% 25.36% 0.06% 0.00% 23.47% 0.29% Golf 24.87% 25.08% 0.00% 3.74% 46.31% 0.00% Football 44.64% 24.95% 3.08% 7.55% 18.26% 1.52% Tennis 49.48% 24.34% 1.29% 3.61% 21.22% 0.06% Kickboxing 47.01% 23.82% 3.56% 0.46% 25.15% 0.00% Judo 57.88% 23.12% 4.90% 0.03% 13.66% 0.41% Swimming 31.49% 21.84% 1.04% 13.71% 31.64% 0.28% Handball 80.84% 19.16% 0.00% 0.00% 0.00% 0.00% Volleyball 57.23% 18.83% 0.02% 4.11% 19.81% 0.00% Athletics 38.73% 17.85% 11.48% 0.86% 28.99% 2.09% Karate 58.89% 15.06% 3.32% 5.35% 17.38% 0.00% Basketball 56.91% 12.73% 1.46% 2.38% 24.17% 2.35% Boxing 65.28% 12.32% 0.33% 11.24% 10.82% 0.00% Wrestling 54.21% 12.11% 4.58% 3.23% 23.70% 2.17% Figure skating 70.22% 11.99% 0.00% 0.03% 17.26% 0.50% Skiing 37.54% 11.28% 0.00% 2.98% 44.06% 4.14% Chess 85.74% 10.69% 0.01% 0.00% 3.56% 0.00% Checkers 90.21% 9.67% 0.00% 0.12% 0.00% 0.00% Dance sport 63.48% 7.89% 0.34% 2.65% 25.63% 0.00% Synkronized swimming 14.08% 5.34% 0.00% 0.00% 80.58% 0.00% Motosport 45.10% 3.73% 10.51% 36.23% 4.43% 0.00% Water motosport 0.00% 1.81% 0.00% 66.67% 31.52% 0.00% Ice hockey 8.71% 0.47% 0.08% 0.28% 90.46% 0.00% Car sport 62.23% 0.00% 2.21% 0.28% 35.28% 0.00% Table tennis 58.48% 0.00% 0.00% 0.00% 41.52% 0.00% Riding 97.98% 0.00% 0.00% 0.07% 0.00% 1.94% Roller skating 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% Taekwondo ITF 96.10% 0.00% 0.00% 3.90% 0.00% 0.00% Taekwondo WTF 33.33% 0.00% 0.00% 0.00% 66.67% 0.00% Weightlifting 15.13% 0.00% 0.00% 1.01% 83.86% 0.00% Average 49.03% 21.46% 2.08% 3.75% 21.68% 2.00%

Table 3. Costs of sports, expected to cover by supports and training fees paid by families, compared to average income by quintiles. Covered costs Uncovered Costs per per pract. by costs per Uncovered costs Sports Reports pract. business and pract. compared to the other revenues income by quintiles Water moto sport 3 3862 0 3862 Riding 6 2311 950 1361 Sports with very high Athletics 41 1509 150 1359 costs, all practitioners in these sports require 15 3828 2583 1245 Car sport support as the costs Moto sport 7 3974 2967 1007 are too high for all Golf 3 1321 330 991 quintiles Sailing 9 1331 570 761 Gymnastics 125 784 197 587 Football 128 630 52 578 Uncovered costs 13- 15% of I quintile Synk. swimming 2 549 4 545 income, 7-9% of II Judo 35 610 75 535 quintile income, 5-6% Fencing 5 516 0 516 from III quintile income and below 5% 54 640 129 511 Basketball compared to IV and V Figure skating 16 618 109 509 quintiles income Dance sport 53 578 83 496 Skiing 21 528 75 453 Tennis 87 646 214 432 Uncovered costs 9- 12% of I quintile Roller skating 1 425 0 425 income, 5 - 7% of II Swimming 39 411 7 404 quintile income, costs remain below 5% Multi sports 94 547 173 374 compared to III and Other sports 47 492 139 353 higher quintiles Karate 36 422 81 340 Badminton 9 529 202 328 Boxing 5 308 0 308 Uncovered costs Chess 8 382 99 282 remain below 5% from the income of II 3 267 0 267 Underwater quintile and below Volleyball 30 346 118 228 10% compared to the Kickboxing 7 217 5 212 income of I quintile Fitness 4 367 178 188 Taekwondo WTF 3 180 0 180 Weightlifting 2 179 0 179 Wrestling 21 218 49 169 Uncovered cost Ice hockey 10 144 31 113 remain below 5% Checkers 2 147 48 99 compared to income of all quintiles Handball 4 87 0 87 Table tennis 2 82 10 71 Taekwondo ITF 6 68 0 68

Figure 1. Sport pyramid.

SPORTS SPORTS SPORT

TOP PHYSICAL PHYSICAL AMATEUR AMATEUR ACTIVITY ACTIVITY

CHILDREN AND YOUTH SPORT

Figure 2. Annual revenues per practitioner (in 1000 euros) and grants’ proportion in revenues by Estonian local governments.

Figure 3. The proportion of activities’ and projects’ costs (ACT_PROJ_COSTS) and the proportion of labor costs (WORK_P) by different sports.