Public subsidies for sports clubs in Germany: funding regulations vs. empirical evidence

ABSTRACT

Research question: The purpose of this study is to examine if the funding principles set by sport policies at different governmental levels in Germany are associated with the actual receipt of subsidies by voluntary sports clubs. Put differently, this study analyses whether the engagement of sports clubs in different areas promoted by the government is financially rewarded.

Research methods: This paper is based on a three-wave balanced panel dataset obtained from an online sports club survey in Germany (n = 1275). Three Heckman selection models were applied to identify if fulfilling different funding principles affected the receipt of subsidies from sports organisations, states, and communities.

Results and Findings: The results show that the fulfilment of funding conditions is rewarded in different ways: while some policy regulations are reflected in the receipt of subsidies, others are not. Specifically, competitive sport and youth promotion activities, which are traditional focuses of clubs and public funding, are financially supported, while health sport, a newer funding area, is not, despite governmental policies proposing support for health-enhancing sport offers.

Implications: This study adds to existing knowledge on financing voluntary sports clubs by empirically testing whether and to what extent funding conditions based on sport policies translate into clubs actually receiving subsidies. From a managerial perspective, developing programmes for youth seems promising since such programmes are financially supported at different governmental levels. Moreover, clubs should apply for subsidies to cover any costs related to core sport needs (equipment and travel) and for basic funds.

KEYWORDS:

• Financing sports clubs
• public funding
• sport policies
• non-profit sports organisations

Introduction

Voluntary sports clubs (VSCs) are the basis for mass sport participation in many European (Lamprecht, Fischer, & Stamm, 2012; Vos et al., 2011) and overseas countries, such as Canada (Misener & Doherty, 2014) and Australia (Sotiriadou & Wicker, 2013). In Europe, sport is traditionally organised along a pyramid structure, with VSCs providing the foundation of the whole system (European Commission, 1999). Consequently, VSCs enable different populations to take part in affordable sport programmes and thereby implement the idea of promoting ‘sport for all’, a policy goal throughout Europe (Enjolras, 2002; Nagel et al., 2015; Skille, 2008). Moreover, VSCs provide competitive sport and promote young talent through being the basis for elite sport.

However, VSC programmes and activities have changed in recent decades due to external influences and changing consumer preferences. For example, their focus has shifted from competitive and elite sports to health sports, opportunities for target groups, and collaborations with educational institutions (Koski, 2012; Nagel et al., 2015). VSCs provide important functions, including social integration (Ulseth, 2004), health promotion (Breuer & Feiler, 2015), and education (Felfe, Lechner, & Steinmayr, 2016). Thus, VSCs play a strong role in contributing to the welfare of society (Heinemann, 2005), have become a part of the political agenda (Schüttoff, Pawlowski, Downward, & Lechner, 2018) and are eligible for public funding. Consequently, VSCs in several countries, e.g. Flanders (Vos et al., 2011), Norway (Skille, 2015), and Sweden (Fahlén, 2015), receive government subsidies.

The research context of this study is Germany, where VSCs can receive direct subsidies from states, communities, and sports confederations (Haring, 2010). In European countries with a federal or similar structure like Austria, Switzerland, Belgium, the Netherlands, and Spain, the governance and funding of sport are, like in Germany, mainly left to the regional and municipal level (Ibsen, Nichols, & Elmose-Østerlund, 2016; Ternes & Jesse, 2004). In Switzerland, for example, clubs receive subsidies from communities, cantons, and the state (Lamprecht, Bürgi, Gebert, & Stamm, 2017). However, funding schemes are not all exactly the same as in Germany (cf., Bayle, 2017; Llopis-Goig, 2017). For example, in Flanders, clubs receive subsidies mainly from municipalities (van Poppel, Claes, & Scheerder, 2018), which is the case in most European countries (Eurostrategies, 2011).

In Germany, funding practices have changed over time. Historically, public sport policy and funding were characterised by untargeted subsidies aimed at promoting competitive sport. With governmental budgets becoming tighter due to the economic crisis (Parnell, Spracklen, & Millward, 2017), the distribution of subsidies has become increasingly based on fulfilling certain requirements, such as providing programmes for target groups and thereby addressing pressing societal issues. Thus, nowadays, funding can be requested by clubs for traditional purposes like elite sport, but also for new policy areas like health sports and integration (Nagel et al., 2015).

Many VSCs in Germany receive no direct public subsidies (Breuer & Feiler, 2017), leading to financial problems. Research indicates that without subsidies, more than half of the clubs would not break even (Breuer & Wicker, 2009). However, subsidies have been found to crowd-in other revenues, such as donations and sponsorship income (Wicker, Breuer, & Hennigs, 2012), which can stabilise clubs’ financial situation. A diversified income portfolio is typical for VSCs (Lamprecht et al., 2012) but leads to lower shares of each revenue source within the portfolio. Thus, the share of subsidies within the revenue portfolio of VSCs is rather low, particularly compared to other sectors (Horch, 1994; Priemer, Labigne, & Krimmer, 2016). Nevertheless, revenue diversification is important for decreasing financial vulnerability (Cordery, Sim, & Baskerville, 2013) and revenue volatility (Wicker, Longley, & Breuer, 2015). Consequently, subsidies are an important component of the revenue portfolio of VSCs. In Germany, subsidies from the community are the fourth largest income category for VSCs (Breuer & Feiler, 2017).

Cutting public support for sport organisations is a phenomenon across Europe that has recently received scientific attention, with studies investigating the consequences of austerity measures in sports organisations. In this regard, Parnell et al. (2017) call for further research in the context of third-sector sporting opportunities and participation sport. The present study responds to this call by investigating whether VSCs in Germany complying with public policies receive subsidies. Reasons to suspect that VSCs would not receive public funding despite fulfilling the proposed conditions are diverse. VSCs might not be well informed about opportunities to receive public support (Harris, Mori, & Collins, 2009) and about the processes for grant application (Sotiriadou & Wicker, 2013). Consequently, volunteers may have difficulty with this complex topic (Nichols et al., 2003). Moreover, public budgets have become tight. If yearly financial resources are exhausted, VSCs submitting late applications for funding will not receive any money. Overall, the relationship between public institutions and VSCs in Germany in terms of public funding can be regarded as a mirror of the general relationship between the state and sports organisations. This study shows how this relationship is actually implemented in the German sport system and whether it works as it is supposed to work, taking into account the general principles of German sport policy.

Thus, the purpose of this study is to examine whether and to what extent VSCs that fulfil proposed subsidy conditions are financially rewarded from different governmental levels. The main research question reads: Are the funding principles of German sport policy associated with the actual receipt of public subsidies for VSCs? From a managerial point of view, knowing which factors are associated with receiving public funds is essential for the clubs’ financial management. Moreover, the results might indicate dysfunction in the relationship between public institutions and VSCs. Overall, this study adds to the body of research regarding financing VSCs and sports policy.

Political environment and funding regulations of VSCs in Germany

The structure of sport in Germany

Similar to the political structure of Germany, which consists of 16 states and a large number of communities, the sport system is divided into organisations at the national, state, and local levels (Petry & Hallmann, 2013). The German Olympic Sports Confederation (DOSB) is the national umbrella organisation for organised sport in Germany (Breuer, Feiler, & Wicker, 2015). At the state level, 16 state sports confederations represent the interests of local sports confederations at the community level and approximately 90,000 VSCs (DOSB, 2017). The policy framework for sport funding is closely connected to the federal structure of Germany.

German sport policy

German sport policy is based on three main principles: autonomy of sport, subsidiarity of sport funding, and cooperative partnership between public institutions and sports organisations. Autonomy means that sport is independent of the state and responsible for organising its own matters. Following the principle of subsidiarity, sports organisations must first exhaust their own financial resources before claiming public support, meaning that public funding is intended to be supplementary (Federal Ministry of the Interior [BMI], 2016). Other countries, e.g. Flanders and Switzerland, also follow this principle (Stamm, Fischer, Nagel, & Lamprecht, 2015; Vos et al., 2011). Cooperative partnership means that sports organisations can fulfil public tasks and are in return supported by public institutions. For example, sports confederations pass on public money from the states to VSCs based on the subsidy conditions proposed by the government (Haring, 2010). Because sports confederations, i.e. sports organisations, distribute public money to sports clubs, subsidies from sports organisations are considered public subsidies in this study. Also in other countries, as for example in Sweden, sports confederations distribute public money to VSCs (Skille, 2011).

Different governmental levels fund different aspects of sport. The national government funds sport activities that are of national interest, such as the representation of Germany by elite athletes at international competitions. The state-level supports competitive sport and athletes who belong to the respective state-level squads (Haring, 2010). While the state and community levels are responsible for supporting amateur and recreational sport (BMI, 2016), most funding for grassroots sports and VSCs comes from local communities (Langer, 2006), as in most European countries (Eurostrategies, 2011). The support for sport is included in the constitutions of all states except Hamburg (Haring, 2010). Half of German states have established specific sport laws, while the other half relies on policy regulations regarding sport funding. At the community level, sport funding is regulated by local sport policies, i.e. municipalities can individually decide how to support VSCs. However, sport funding on all levels depends on the yearly public budget and is not a legal obligation (Voigt, 2006). Although the German federal structure provides for heterogeneous sport policy regulations, common underlying principles for subsidising VSCs at different governmental levels exist (Kemper, 1999).

Principles of public funding for VSCs

To be eligible for public funding, German VSCs must fulfil two general requirements. First, they must be a non-profit organisation that is a registered association under German law (Deutscher Bundestag, 2014) – a requirement fulfilled by 97.6% of clubs (Breuer & Feiler, 2015). Second, clubs must be a member of a sports confederation (at either the local or state level) and association (e.g. the German Football Association).

Generally, sport funding in Germany can be divided into basic funding and funding for certain activities, projects, sports facilities, sports-related matters, elite sport, target groups, health sports offerings, and collaborations (e.g. Bavarian State Ministry of the Interior [BSIBV], 2016; Sports Confederation of North Rhine-Westphalia [LSB NRW], 2017). To receive subsidies, VSCs must go through an application procedure in which they explain the funding target and, in accordance with the principle of subsidiarity, how much money they can contribute themselves.

Basic funding

Basic funding is awarded to clubs in the form of a club-fixed rate calculated based on the number of members, the number or proportion of young members (children and adolescents), and the number of licenced coaches (e.g. BSIBV, 2016; Sports Confederation of Saxony [LSB Sachsen], 2017; MBI NRW, 2017). Subsidies increase as the numbers in these groups increase. This funding principle also exists in other countries. In Denmark, the receipt of subsidies depends on the number of members younger than 25 (Ibsen, Østerlund, & Laub, 2015). Similar regulations exist in Norway, where municipalities support clubs financially per member (Ibsen & Seippel, 2010). Since the organised sport sectors in Germany and other countries, e.g. England (Garrett, 2004), accommodate large numbers of members, they are considered an important source of social capital by policymakers. In this regard, mass sport participation is a policy goal in many countries, e.g. Sweden (Fahlén & Stenling, 2016), England (Nichols & James, 2008), and Austria (Weiss & Norden, 2015). Although scholars have criticised the scarcity of empirical evidence related to the development of social capital in VSCs (Coalter, 2007), recent empirical studies have supported social capital development in VSCs (Darcy, Maxwell, Edwards, Onyx, & Sherker, 2014; Schüttoff et al., 2018). Moreover, research shows that sport activities can increase cooperative behaviour among people and thereby increase collective welfare (Di Bartolomeo & Papa, 2017).

In Germany, nearly every third citizen is a member of a club. Among children and adolescents between 7 and 14 years, more than 80% of boys and more than 60% of girls are club members (DOSB, 2017). The potential for social integration is particularly high within this population, which is supported by studies showing that social capital formation is positively influenced by sport participation among adolescents (Schüttoff et al., 2018) and that sport participation has positive effects on children’s social behaviour (Felfe et al., 2016). Both studies stress that the positive effects of sport participation are predominantly evident in VSCs.

Sports facilities

Many sports policies encompass public support for providing, building, and renovating sports facilities, particularly at the community level. Funding is mainly provided in the form of investment subsidies as a share of total investment costs (e.g. LSB NRW, 2017; Sport Confederation of Lower-Saxony [LSB NDS], 2018; Stadt Köln, 2014). Public support for facility construction is also provided to clubs in Norway, where grants cover up to one-third of costs (Ibsen & Seippel, 2010). By supporting clubs financially, governmental institutions are able to delegate responsibilities for facilities, a situation also found in other countries, e.g. Sweden (Fahlén & Stenling, 2016).

In addition to direct public support for club-owned facilities, VSCs can use public sports facilities for free or a small fee (Heinemann, 2005). The maintenance and provision of public sports facilities are core tasks of municipalities (Deutscher Bundestag, 2014), a situation similar to that in other European countries (Ibsen et al., 2016). However, if VSCs take over maintenance tasks for public facilities, they can be supported financially by states or communities (Langer, 2006). Spending money to use public facilities could therefore also lead to subsidies, although the relevant regulations are less clear than those regarding club-owned facilities.

Sports-related matters and elite sport

VSCs can receive public support for expenses related to core sports matters, such as sports equipment, travel to competitions and training camps, and hosting competitions and events (Eckl & Wetterich, 2007). For example, in Baden, VSCs can request subsidies for sports equipment from the sports confederation (cf., Badischer Sportbund Nord [BSB Nord], 2018). Moreover, public subsidies are granted for the development of elite sport, e.g. to promote young talent and squad athletes (Kemper, 1999). The state supports elite sport either through direct financial support or by supporting sports confederations, which forward the money to clubs (Haring, 2010). Likewise, national sporting success is a policy goal in many other countries. VSCs are indispensable for achieving national sporting success because they represent the basis for elite sport development via the identification and development of talent (Nichols & Taylor, 2015). In England, for example, VSCs receive funding from Sport England to ‘increase the chances of international success’ (Garrett, 2004, p. 13).

Target groups and health sport programmes

Following the policy goal of providing ‘sport for all’ (BMI, 2017), public funding is given to VSCs that offer sports programmes targeted to different populations, e.g. youth, the elderly, migrants, and the disabled. For example, the state sport confederations of North Rhine-Westphalia and Schleswig-Holstein (LSV SH) have set up programmes for children, youth, and the elderly in addition to health sports, which VSCs can adapt and receive financial support for (LSB NRW, 2017; LSV SH, 2018). Comparable subsidy conditions exist in Flanders (Vos et al., 2011) and the Netherlands (Ibsen et al., 2016). Similarly, Canadian VSCs can apply for funds for disability sport (Millar, 2015) as Canadian sport policies aim to increase the sport participation of underrepresented groups (Doherty & Clutterbuck, 2013). Across Europe, VSCs are seen as valuable actors in reaching policy goals connected to societal benefits (Skille, 2015; Ulseth, 2004). Empirically, social integration was found to be higher in VSCs than in commercial fitness centres (Ulseth, 2004). Consequently, without VSCs, the government would have to consider alternative means of providing these positive outcomes; therefore, governmental institutions support such outcomes with subsidies (BMI, 2005, 2016). The same applies to health sport programmes offered by VSCs (Deutscher Bundestag, 2008). This condition is also present in the UK (Berry & Manoli, 2018).

Collaborations

Changes in the educational system of Germany with the implementation of all-day schools have augmented problems regarding the time available for training (Breuer & Feiler, 2015). Collaborations with schools represent a way to overcome these challenges. To foster the membership of children in VSCs to thereby build social capital (Schüttoff et al., 2018), collaborations with schools are promoted by public policies. Similarly, collaborations between VSCs and schools are publicly funded in other countries, such as England (Garrett, 2004), Hungary, and Denmark (Ibsen et al., 2016).

State of research

Empirical research in the field of public funding for VSCs is scarce. Studies have mainly investigated public funding in the context of austerity (Parnell et al., 2017; Parnell, Millward, Widdop, King, & May, 2018), sport governing bodies (e.g. Berry & Manoli, 2018; Edwards, Mason, & Washington, 2009), and as a measure of policy implementation (e.g. Garrett, 2004; Nichols, Padmore, Taylor, & Barrett, 2012; Skille, 2008, 2015; Vos et al., 2011). For example, Harris et al. (2009) investigated the role of VSCs in delivering national sport policy in England. They found that most VSCs were not aware of current sport policies or their expected role in delivering sport opportunities that reach government targets. Moreover, clubs reported not having the resources and capacity to deliver policy goals. The authors concluded that there was a lack of communication between national sport organisations and VSCs with regard to policy goals.

In earlier English case studies, Garrett (2004) found that funding conditions for clubs attached to the receipt of support do not necessarily lead clubs to conform to such conditions. Some clubs were not willing or able to fulfil funding conditions and pursue policy goals. Skille (2010) reported similar results, suggesting that governments should not expect too much from VSCs in terms of the realisation of policies, in this case regarding health objectives. In Scandinavian countries, a reluctance of VSCs to pursue top-down governmental initiatives with goals differing excessively from the clubs’ activities has been observed (Skille, 2009). Vos et al. (2011) investigated whether governments use conditional subsidies to Flemish VSCs to achieve policy goals and found a relationship between the revenue share of subsidies and the adoption of subsidy conditions. In a study on VSCs in Australia, Sotiriadou and Wicker (2013) investigated the application process for government grants from the perspective of clubs. They found that clubs lacked awareness about funding opportunities. Moreover, clubs were uncertain about the application processes, lacked human or technological resources to complete the complex application forms, and were, consequently, reluctant to apply for funds. Canadian VSCs are challenged by the increased bureaucracy associated with government funding (Doherty & Clutterbuck, 2013).

A study on VSCs in Europe (Breuer, Feiler, Llopis-Goig, & Elmose-Østerlund, 2017) reported the share of direct public subsidies to VSCs in 10 countries. The share ranged from 5% in the Netherlands and 6% in England to 15% in Denmark and 17% in Norway. In two Eastern European countries, Poland (41%) and Hungary (28%), the share of public subsidies was higher. In Canada, governmental subsidies amounted to 7% of the revenue received by sports and recreation organisations (Lasby & Sperling, 2007). In Germany, a few studies have dealt with public funding practices at the community (e.g. Eckl & Wetterich, 2007; Voigt, 2006) and city levels (e.g. Kamann, 2011), but there is a lack of research on the receipt of public funding from the clubs’ perspective. Whether and to what extent the proposed subsidy conditions are associated with the actual receipt of public subsidies by clubs has not yet been studied empirically. The present study aims to address this shortcoming.

Methods

Data source

This study used primary data obtained from an online sports club panel, the Sport Development Report, which started in 2005. Six waves have been completed, and data from different waves have previously been used in scientific studies (e.g. Wicker & Breuer, 2014, 2015). The 16 state sports confederations provided the email addresses of clubs. In each of the waves, clubs received an invitation email containing a personalised link to the online questionnaire, making it possible to interrupt the survey and start again later. This procedure allowed clubs to search for information that was not available immediately, e.g. financial data.

Dataset

Data from three of the six waves, namely, the third (2009), fourth (2011), and fifth waves (2013), were used because the relevant questions were asked only in these waves. The sample sizes of these three waves were n = 19,345 clubs in the third wave, n = 21,998 in the fourth wave, and n = 20,846 in the fifth wave. Based on these waves, a balanced panel data set was constructed that contained only clubs that took part in all three waves and gave full information on the club’s finances. Altogether, 425 VSCs fulfilled these criteria, resulting in a dataset of n = 1275 observations. The advantage of using a panel structure with three measuring points was that it made it possible to investigate variations in subsidies across years for the same clubs. However, with the use of a three-wave panel data set, not all funding principles could be tested as information on collaborations and coaches was not available for 2011.

To improve the representativeness of the sample, weights were calculated based on club size (members), split into five groups of clubs: <100, 101–300, 301–1000, 1001–2500, and >2500 members. Weights were calculated for each state (except Bremen because no clubs from Bremen remained in the panel) since club size differed among states. The empirical analysis is based on the weighted sample.

Statistical analyses

First, descriptive statistics were calculated. The empirical analysis distinguished between the receipt of public subsidies and the amount of public subsidies. To consider possible selectivity issues and sample selection, the two-step estimation procedure proposed by Heckman (1979) was applied. A sample-selection model is appropriate when zero observations occur due to non-observable responses (Jones, 2000), which was the case in this study when clubs did not receive subsidies during the observed time periods.

Three models were estimated with the three dependent variables reflecting the main providers of public subsidies to VSCs in Germany: subsidies from sports organisations, subsidies from the state, and subsidies from the community. The first step of the Heckman procedure estimated the receipt of subsidies, and the second step estimated the amount of subsidies. The two steps were calculated simultaneously using maximum likelihood estimation (MLE). This procedure was preferred over a two-step estimation strategy because weighting of data is possible with MLE.

For the models to converge, an exclusion restriction was required, meaning that the first step, i.e. the selection model, should contain at least one variable that is not included in the second step (Wooldridge, 2013). The variable measuring whether the club had expenses for administrative staff, meaning that the club employed paid staff for administrative tasks (exp_admin), was chosen as an exclusion restriction because subsidies for VSCs are not simply given to the clubs but, rather, clubs must actively apply. The high management effort of applying for subsidies has been explained by Horch (1994) and Sotiriadou and Wicker (2013) as a problem for VSCs. Having paid staff might help to overcome the burdens of application, i.e. impacting the receipt of public subsidies, but not the amount of subsidies. Therefore, paid staff was used as an exclusion restriction.

Multicollinearity of the independent variables was checked using variance inflation factors (VIFs). This check revealed VIFs larger than 10 for the number of children and youth per club because this variable was highly correlated with club size. To address potential multicollinearity, the variable share youth was used instead. Since all other VIFs were below the suggested threshold of 10 (Hair, Black, & Babin, 2006), there were no further collinearity issues.

To address endogeneity, variables with a one-period time lag were computed for the independent variables. This step revealed whether changes in club variables reflecting the funding principles had an impact on the receipt of public subsidies in the subsequent period, i.e. two years later. Standard errors were clustered by club to account for unobserved club heterogeneity.

Another set of linear regression models was estimated with the data organised as a horizontal panel. These models estimated the influence of changes in club variables representing the funding conditions between 2009 and 2011 on changes in subsidies between 2011 and 2013. However, these models were not statistically significant and are, therefore, not presented in the results section¹.

Measures and variables

Table 1 displays the variables used for the analyses. VSCs were asked to state whether they received subsidies from sports organisations (sub_sportorga), the state (sub_state), or the community (sub_community). Moreover, clubs reported the amount of money they received from public funding in each of these categories. For all three types of subsidies, the natural logarithm instead of the total value was used, i.e. ln_subsportorga, ln_substate, and ln_subcommunity. Using the natural logarithm is a common procedure in financial studies and has been applied in prior organisational studies (Carroll & Stater, 2009) to ensure that the distribution of the variable is closer to a normal distribution. The three dummy variables sub_sportorga, sub_state, and sub_community were used as selection variables in the first-step probit models, while the variables ln_subsportorga, ln_substate, and ln_subcommunity served as dependent variables in the second estimation step.

Table 1. Overview of variables.

Variable	Description	Scale
Dependent variables
sub_sportorga	Club receives public subsidies from sports organisations (1 = yes)	Dummy
ln_subsportorga	Logged revenues from subsidies from sports organisations	Metric
sub_state	Club receives public subsidies from the state (1 = yes)	Dummy
ln_substate	Logged revenues from subsidies from the state	Metric
sub_community	Club receives public subsidies from the community (1 = yes)	Dummy
ln_subcommunity	Logged revenues from subsidies from the community	Metric
Independent variables
members_total t-1	Total number of members	Metric
share_youth t-1	Share of youth relative to all members (aged ≤ 18; in %)	Metric
own_fac t-1	Possession of own sports facilities (1 = yes)	Dummy
exp_fac t-1	Expenses for the usage of not-club-owned facilities (1 = yes)	Dummy
exp_equipment t-1	Expenses for sports equipment (1 = yes)	Dummy
exp_travel t-1	Expenses for travel to take part in training/competitions (1 = yes)	Dummy
exp_events t-1	Expenses for hosting sport events/competitions (1 = yes)	Dummy
squad_athlete t-1	Squad athletes (1 = yes)	Dummy
phil_talent t-1	Our club is highly engaged in the promotion of young talent (1 = agree/totally agree)	Dummy
phil_youth t-1	Our club is highly engaged in youth work (1 = agree/totally agree)	Dummy
phil_migrant t-1	Our club offers migrants the possibility to practice sports (1 = agree/totally agree)	Dummy
share_female t-1	Share of females relative to all members (in%)	Metric
share_elderly t-1	Share of seniors relative to all members (aged > 60; in %)	Metric
offers_disabled t-1	Club provides programmes for disabled (1 = yes)	Dummy
offers_health t-1	Club provides health sport (1 = yes)	Dummy
Controls
exp_admin t-1	Expenses for administrative staff (1 = yes)	Dummy
year	Survey year (reference = 2009)	Dummy
fed_state	State (reference = Bavaria)	Dummy
type of sport t-1	20 most often practised sports	Dummy

Several lagged independent variables (denoted with _t-1) were integrated into the models to empirically test the relationship between funding principles and the actual receipt of subsidies by clubs in the subsequent period. Basic funding is awarded to clubs in relation to the number of members (members_total_t-1) and young members (share_youth_t-1). Two variables measuring whether the club possessed its own facilities (own_fac_t-1) and whether the club had expenses for the usage of non-club-owned facilities (exp_fac_t-1) reflected facility funding. The funding conditions of sports-related matters were captured with three dummy variables measuring whether the club had expenses for purchasing sports equipment (exp_equipment_t-1), travelling to take part in training sessions or competitions (exp_travel_t-1), and hosting sport events or competitions (exp_events_t-1).

The provision of competitive and elite sport was covered by two variables, with the first measuring whether the club had squad athletes (squad_athlete_t-1) and the second covering the level of talent promotion (phil_talent_t-1). The latter is one item of the club philosophy, which was assessed using a five-point Likert scale (from 1 = do not agree at all to 5 = totally agree). For this study, the club philosophy items were recoded to dummy variables, with categories 4 and 5 indicating agreement with the philosophy statement.

The integration of target groups and the provision of health sport were covered with six variables. The first two were items from the club philosophy and stated that the club is highly engaged in youth work (phil_youth_t-1) and offers migrants the opportunity to practice sports (phil_migrant_t-1). Moreover, the proportion of female club members (share_female_t-1) and the proportion of members older than 60 (share_elderly_t-1) were included. Another variable measured whether the club offered sport programmes for the disabled (offers_disabled_t-1). The variable offers_health_t-1 measured whether health sport programmes were provided.

Additional variables were added to control for the year of the survey, the state of the club, and the 20 most often practised sports in the sample to account for sport-specific effects. Controlling for states was important due to heterogeneous funding regulations and potential differences in financial capacity among states, i.e. on the supply side.

Results and discussion

The summary statistics are displayed in Table 2. Altogether, 49.0% of clubs receive subsidies from sports organisations, while the proportion of clubs receiving funding from the states is lower (22.4%). More than half of the clubs (55.3%) receive subsidies from the community. For those clubs receiving funding, the respective annual mean values for subsidies are €2224 from sports organisations, €2746 from the state, and €3195 from the community. Together, the three types of subsidies amount to 9.0% of total club revenues. This proportion is similar to those recorded in previous sports club studies in Flanders (8.6%; Vos et al., 2011) and Spain (11%; Breuer et al., 2017). Differentiated by sources of subsidy, 3.3% come from sports organisations, 1.4% from states, and 4.3% from communities.

Table 2. Summary statistics.

Variable	Mean	SD
sub_sportorganisation	0.490
ln_subsportorga	6.755	1.347
sub_state	0.224
ln_substate	6.750	1.430
sub_community	0.553
ln_subcommunity	6.838	1.568
members_total	243.450	413.504
share_youth	24.191	19.925
own_fac	0.420
exp_fac	0.421
exp_equipment	0.712
exp_travel	0.395
exp_events	0.501
squad_athlete	0.105
phil_talent	0.221
phil_youth	0.658
phil_migrant	0.836
share_female	36.349	23.362
share_elderly	20.403	18.292
offers_disabled	0.045
offers_health	0.330
exp_admin	0.085

The average club size is 243 members, including children and adolescents (24.2%); 42.0% of clubs possess own facilities, and 42.1% have expenses associated with the usage of public facilities. Expenses for sport equipment were reported by 71.2%, and 39.5% had expenses related to travelling to sporting competitions or training camps. Expenses for hosting sport events and competitions incurred by 50.1%. Squad athletes are present in 10.5% of clubs, and 22.1% are engaged in talent promotion. Almost two-thirds are highly engaged in youth work, and 83.6% offer sport opportunities for migrants. More than one-third (36.3%) of members are female, and 20.4% are older than 60. One-third of clubs offer health sports, and 4.5% have offers for disabled people. Only 8.5% have paid employees.

Table 3 displays the results of the three Heckman selection models. Regarding basic funding, the number of members and the share of children and adolescents show positive and significant effects in model 1 (subsidies from sports organisations) and model 3 (subsidies from communities), while in model 2 (subsidies from states), only the number of members is significant. In model 1, both variables are positively associated with the receipt of subsidies from sports organisations. The total number of members positively influences the amount of subsidies in all three models, although the coefficients are small. Model 3 shows that clubs with higher shares of young members are more likely to receive subsidies from the community.

Table 3. Results of Heckman selection models.

Model	1: Subsidies sports organisations		2: Subsidies state		3: Subsidies community
Variables	sub_sportorganisation	ln_subsportorga	sub_state	ln_substate	sub_community	ln_subcommunity
members_totalt-1	.0016 (4.74)***	.0007 (2.95)***	.0001 (0.41)	.0007 (2.27)**	.0008 (1.51)	.0007 (2.33)**
share_youth t-1	.0127 (2.60)***	−.0019 (−0.39)	.0049 (1.05)	−.0030 (−0.36)	.0102 (2.09)**	.0091 (1.32)
own_fact-1	.0516 (0.36)	.1897 (1.25)	.0146 (0.10)	.1584 (0.65)	.0426 (0.28)	.3987 (2.53)**
exp_fact-1	.1577 (1.33)	.1134 (0.78)	.1149 (0.88)	.0267 (0.16)	.2793 (2.29)**	.4727 (2.77)***
exp_equipmentt-1	.3351 (2.61)***	−.0536 (−0.33)	.0999 (0.71)	.0993 (0.46)	.3051 (2.30)**	−.0240 (−0.11)
exp_travelt-1	−.1431 (−1.12)	.3924 (3.03)***	.0348 (0.26)	.4773 (2.68)***	.1292 (1.01)	.4047 (2.67)***
exp_eventst-1	−.0597 (−0.52)	.1553 (1.19)	.1833 (1.44)	−.0874 (−0.46)	.0535 (0.45)	.2474 (1.89)*
squad_athletet-1	.2822 (1.28)	.3475 (1.66)*	.2265 (1.06)	.0944 (0.34)	.1607 (0.69)	.2875 (1.71)*
phil_talentt-1	−.0097 (−0.07)	−.1795 (−1.09)	.1761 (0.98)	−.5238 (−2.50)**	.1113 (0.65)	−.1879 (−1.36)
phil_youtht-1	.3679 (2.10)**	.2750 (1.47)	.0431 (0.25)	.7247 (2.12)**	.2671 (1.59)	.3234 (1.24)
phil_migrantt-1	−.1053 (−0.67)	−.2029 (−1.25)	.1420 (0.78)	−.0025 (−0.01)	.0763 (0.47)	−.1760 (−1.14)
share_femalet-1	.0011 (0.27)	.0040 (0.83)	.0100 (2.53)**	.0090 (2.08)**	.0029 (0.70)	.0017 (0.33)
share_elderlyt-1	.0086 (2.03)**	−.0009 (−0.14)	.0045 (0.93)	−.0150 (−2.22)**	−.0022 (−0.47)	.0007 (0.10)
offers_disabledt-1	.2125 (0.74)	.3267 (1.33)	−.0301 (−0.11)	.8486 (2.51)**	.0572 (0.17)	−.3796 (−1.25)
offers_healtht-1	−.0413 (−0.21)	.1616 (0.88)	−.0813 (−0.42)	.3287 (1.17)	.2069 (1.02)	.3500 (1.43)
exp_admint-1	.3673 (1.64)	−	.2281 (1.02)	−	−.6195 (−2.40)**	−
constant	−2.0160 (−5.62)***	7.1798 (10.84)***	−1.9160 (−6.02)***	6.3154 (8.35)***	−1.3800 (−4.43)***	5.2427 (4.71)***
rho	−.7295		−.3016		−.0271
lambda	−.8070		−.2796		−.0303
Wald chi²	283.48		581.76		351.06
p	<.001***		<.001***		<.001***
Observations	811	436	811	178	811	467

Note: z-values in parentheses;*p < .1;**p < .05;***p < .01; state and sport dummies included; standard errors clustered by club.

Overall, the three models confirm the basic funding conditions set by public policies with regard to the number of members. This means that clubs with more members are rewarded higher amounts of subsidies from the community, the state, and sports organisations. Thereby, public institutions value the social capital formation through VSCs (Darcy et al., 2014). Basic funding with regard to the share of youth members is provided to clubs from sports organisations and the community but not from the state. It is plausible that the responsibility for awarding basic funding lies with sports organisations, which take over the role of governmental institutions (Haring, 2010). Additionally, supporting clubs with basic funds is a task fulfilled by the communities representing their responsibility for grassroots sports (BMI, 2017), which also applies to other European countries, e.g. Norway (Ibsen & Seippel, 2010).

Pertaining to subsidies for sports facilities, significant results are found only in model 3: the parameter estimate for club-owned facilities has a positive and significant effect on the amount of subsidies from the community but no significant effect on whether the club receives subsidies. A main task of communities is to support VSCs with subsidies for building or renovating facilities. Funding is in such cases related to the actual investment costs. Thus, with higher construction or renovation costs, more subsidies can be requested. This finding is in line with community-level regulations in Germany (e.g. Stadt Köln, 2014) and other countries like Norway (Ibsen & Seippel, 2010) and underlines the key role of communities as supporters of VSCs in relation to investing in facilities. Thus, funding mechanisms with regard to facilities work well on the municipal level.

For clubs with expenses for the usage of non-club-owned facilities, the likelihood of receiving public funds from the community increases. Moreover, the amount of subsidies significantly increases in the period after the club incurred such expenses by 60.4%. This finding shows that by spending money for the usage of public facilities, e.g. for maintenance tasks, clubs can request support from communities, in line with funding regulations (Haring, 2010). A reason for the support through communities is the relief of public institutions from managing sports facilities, as these tasks are transferred to VSCs and subsequently financially supported. Such situations are common in other countries, e.g. Sweden (Fahlén & Stenling, 2016).

With respect to funding sports-related matters, the results of the three estimation models were different regarding subsidies for purchasing sports equipment, travelling, and hosting sporting events. Clubs that had expenses for sports equipment are more likely to receive subsidies from sports organisations and communities, but there are no significant effects in model 2, suggesting that subsidies for sports equipment from states are less relevant. Furthermore, all three models reveal that clubs that had expenses for travelling to competitions receive more subsidies from sports organisations, the state, and the community. This finding can be regarded as indirect support for competitive sport and shows that traditional areas of public support are still important. Lastly, clubs that incurred expenses for hosting sporting competitions receive higher amounts of public subsidies from the community. Overall, model 3 shows positive and significant effects for all three sport-related variables, in accordance with sport policies that propose that public support for sports-related matters is mainly the responsibility of communities (Eckl & Wetterich, 2007).

Interesting results are revealed with regard for public funding for elite sports. Clubs that have squad athletes receive higher amounts of public funding from sports organisations and communities. When a club has squad athletes, the expected increase in subsidies from sports organisations amounts to 41.6%. A slightly smaller effect is observed for the parameter estimate for squad athletes in model 3: having squad athletes increases the amount of funding from the community by 33.3%. In contrast, there are no significant effects in model 2, indicating that sports organisations, in this case, take over public tasks. Moreover, as described above, the state indirectly subsidises competitive sport through subsidies for travel to sporting competitions. However, being engaged in the promotion of young talent has no significant impact on the receipt of subsidies or on the amount of subsidies in models 1 and 3 and has a negative and significant effect on the amount of funding received from the state. Thus, being engaged in the development of talented athletes is not sufficient to receive financial support as funding for elite sports is granted to VSCs only when the club has developed athletes that qualified for a squad.

With regard to public funding for specific target groups, the results of the three estimation models are diverse. The variable phil_youth_t-1 shows positive and significant effects in models 1 and 2: being highly engaged in youth work has a positive and significant effect on the receipt of subsidies from sports organisations. At the state level, the parameter estimate is positive and significant for the amount of public subsidies: in clubs that are highly engaged in youth work, the expected increase in subsidies from the state amounts to 106%. These results confirm that youth promotion is strongly valued at different governmental levels and is consequently financially rewarded, as proposed in sport policies in Germany (Kemper, 1999; LSB NRW, 2017) and other countries, e.g. the Netherlands (Hoekman, Breedveld, & Kraaykamp, 2017) and Flanders (Vos et al., 2011).

With regard to clubs that focus on females, significant effects are detected only in model 2: clubs with high proportions of female members are more likely to receive funding from the state and higher amounts of subsidies. Offering sport programmes for disabled people has a positive and significant effect only on the level of subsidies from the state: clubs with offerings for the disabled will experience an increase in funding by 134%. Thus, clubs that focus on women and the disabled fulfil funding conditions from the states and are in a good position to receive public support from this governmental level, a result that is interesting for other countries where similar subsidy conditions exist, e.g. Flanders (Vos et al., 2011).

Clubs consisting of high proportions of the elderly are more likely to receive subsidies from sports organisations. In contrast, high shares of older members have a negative effect on the amount of subsidies received from the state. Based on the results of Harris et al. (2009) and Sotiriadou and Wicker (2013), who found that clubs are often not up to date or aware of current policies, clubs with high shares of the elderly may be even less broadly informed about different funding possibilities. Such clubs might apply for funds from sports organisations but may not be aware that they would also be eligible to request subsidies from the state.

Facilitating sport participation among migrants is not significant in all three models. This was rather unexpected since the integration of people with a migration background is a policy goal on all governmental levels. However, it is likely that the situation has changed today due to the large immigration of refugees to Germany since 2015. This immigration wave and new funding programmes are not covered within the time period of this study.

Similar results are observed for offering health sports: there are no significant effects in any of the three models, and in model 3, no significant effects are found for any of the population groups. This finding is surprising as sport policies for supporting different populations and offering health sports also exist at the community level. A logical reason can be that financial budgets of communities were tight because money had already been given to clubs to cover sports facilities, events and competitions, as the results of our study show. Moreover, some clubs might not be willing or able to adopt policies that are not in line with their club goals and traditions (Garrett, 2004) or if the effort is too high to apply for funds. Offering health sport calls for certain prerequisites (qualified coaches and equipment) and clubs might not have the human and financial resources to fulfil this. In this regard, Sotiriadou and Wicker (2013) found that clubs were reluctant to apply for subsidies if the application process was too challenging or if experienced staff and technology were scarce. Thus, clubs might choose to decline conditional governmental support (Nichols & James, 2008).

Conclusion

This study empirically investigated relationships between the fulfilment of funding conditions set by sport policies and the actual receipt of subsidies by VSCs in Germany. Apart from Germany, the results are interesting for VSCs and policymakers in countries which have a similar political structure, like Austria, Switzerland, and Belgium. Moreover, since funding of VSCs is mainly the responsibility of communities throughout Europe (Eurostrategies, 2011), other countries might also find interest in the results of the third regression model.

The results show that public funding is awarded to clubs that fulfil the funding conditions in several areas. These areas include public support for core sport aspects related to competitive and elite sport, i.e. the traditional funding areas. In line with this finding is that youth promotion, also a core function of VSCs, is publicly funded. Thus, the traditional competence of VSCs with regard to the development of young athletes, competitive sport, and squad athletes is still a large focus of public support. Since this situation is similar in other countries, e.g. in the Netherlands (Hoekman et al., 2017) and Finland (Makinen, Aarresola, Lamsa, Lehtonen, & Nieminen, 2016), these findings are also relevant in other contexts.

However, there are also fields that are not financially rewarded despite the fulfilment of policy regulations, including health sport programmes. This finding is interesting since clubs are encouraged to develop new programmes, e.g. with a health sport focus, but public funding is still mainly offered for the traditional competitive focus and youth promotion. Thus, clubs seem to apply more for funds related to core sport offers than to those related to health sports. A Norwegian study reported similar results, revealing that competitiveness was more important to VSCs than were health issues (Skille, 2010). Overall, the results suggest that new funding possibilities for target groups and health sports, compared to traditional funding for elite sport, are not yet well established.

Based on the findings, managerial implications for VSCs and recommendations for sports organisations and public institutions can be derived. First, since basic funding is open to all VSCs that fulfil the general requirements, clubs should apply for basic funding sources. It seems that not all clubs are aware of this funding opportunity since not all clubs receive public funding and therefore forego support that they are eligible to receive. A lack of awareness of funding possibilities was previously detected for Australian VSCs (Sotiriadou & Wicker, 2013). Similarly, an English study found that many clubs are not familiar with current sports policies, indicating a lack of communication between governmental institutions and VSCs (Harris et al., 2009). Therefore, despite the high management effort required for the application of subsidies by VSCs (Sotiriadou & Wicker, 2013), becoming familiar with existing funding options and recent developments, e.g. by studying policy documents or guidelines of sports confederations and subsequently applying, seem worthwhile as subsidies can help stabilise a club’s financial situation. For sports organisations, it seems advisable to check whether the information provided for clubs is easily accessible and understandable.

Second, VSCs that possess sports facilities can access funding from the community. Since the possession of sports facilities was the second highest expenditure among all costs of clubs (Breuer & Feiler, 2017), the possibility of receiving support in this area is particularly important. Subsidies are awarded to clubs either as a fixed rate or as a proportion of the investment costs and can help clubs to renovate facilities. The need for modernisation of facilities is well documented (Breuer & Feiler, 2013). Moreover, clubs that use public facilities and spend money for the usage or taking over of maintenance tasks should apply for support from the community or, as in Sweden, take over such facilities to receive public support (Fahlén & Stenling, 2016), particularly when clubs are in need of additional facilities to provide their sport programmes to members (Nagel et al., 2015). However, costs connected to such take-overs need to be considered by the clubs.

Third, access to subsidies from all governmental levels is related to clubs’ expenses for core sports matters. Since more than 70% of clubs spend money on sports equipment but only approximately half of clubs receive subsidies from sports organisations or the community, clubs that have not applied for subsidies for equipment could use this opportunity to increase their revenue portfolio, which is an effective way to minimise financial risk (Cordery et al., 2013).

Fourth, with regard to elite sport, clubs need to consider that public funding is awarded solely when they have squad athletes. Simply promoting young talents is not financially rewarded. Nevertheless, since subsidies are also given to clubs that have high shares of children and adolescents and that are engaged in youth work, promoting young athletes might still be a worthwhile investment, particularly when these talents reach the status of a squad athlete. This is also applicable in other countries since youth sport promotion is a key policy goal across Europe (Ibsen et al., 2016; Nichols & Taylor, 2015) and VSCs are publicly supported for developing successful athletes since they increase the likelihood of national sporting success, for example in England (Garrett, 2004).

Fifth, a clear recommendation with regard to different populations groups is difficult since the results vary. One possibility would be to focus on the youth since subsidies are awarded for this group from more than one governmental level. Another possibility is to develop programmes for the elderly and apply for subsidies from sports organisations. Taking into account that the share of the elderly in the German population will constantly increase (Federal Statistical Office, 2015), this population represents a large group of potential members. Recruiting new members from this group can help clubs to secure their long-term existence and at the same time receive subsidies. This suggestion is also applicable to other European countries since population ageing affects the entire EU and is expected to continue in the coming decades (European Commission, 2015).

This study has limitations that can guide future research. Although the statistical analysis attempted to allow causal interpretations by using lagged variables, the models could be further improved in terms of estimating causal effects. However, this was not possible due to data restrictions and difficulties associated with the use of a horizontal panel data set. Therefore, causal interpretations should be made with caution. Additionally, due to data restrictions, it was not possible to test whether the number of coaches and cooperative activities with schools, which are subjects of public policies, are rewarded with public funds. Moreover, the data used for this study stem from the years 2009, 2011, and 2013. Thus, recent developments, such as the immigration wave of refugees that started in 2015, are not covered in these data. This recent trend might explain why offering sports to migrants did not show a significant effect. Therefore, this result should be treated cautiously.

Apart from fulfilling funding conditions, there might be other factors related to the receipt of subsidies that were not covered in this study, such as individual factors of members and their relation to local authorities (e.g. lobbying). Sotiriadou and Wicker (2013) found that clubs in regular contact with public institutions felt more informed about funding possibilities. Additionally, external factors like the financial situation of communities, i.e. whether public budgets are exhausted, might be relevant and would be interesting to investigate in future research by applying multi-level analyses. As the data of this study is limited to Germany, investigating the fulfilment of funding conditions and its impact on receiving subsidies should be examined in other countries with similar sport policy structures to understand whether the results of this study are specific to Germany or can be generalised to other countries. As this study focused on revenues in the form of subsidies, future research should take into account costs related to the application for subsidies and for running additional sports programmes by conducting a cost–benefit analysis.

Acknowledgements

The authors would like to thank the Federal Institute for Sports Sciences (BISp), the German Olympic Sports Confederation (DOSB), and the 16 federal state sports confederations (LSBs) for supporting the research into sports clubs in Germany (Sport Development Report).

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Bundesinstitut für Sportwissenschaft, the Deutscher Olympischer Sportbund (DOSB), and the 16 Landessportbünde (LSB) [grant number IIAI-081801/11-17].

Notes

1 The insignificance of these models might imply that absolute changes in club variables have no impact on absolute changes in subsidies. The models are available upon request.