Defining Profits

They look every bit like non-profit or-
ganisations – and in one case quite literally sound like one.
They don’t sell commodities. They aren’t fixated on the bottom line. They provide intangibles on the winner’s podium or on the stave – but way outside the ledger lines. Just don’t call them non-profit organisations, at least not within earshot of one of their leaders, Sports Foundation chief executive, Chris Ineson.
“What’s the definition of profit?” he asks.
“At the end of the day it’s results achieved from series of specified activities. Many corporates have these activities which they profit from. Likewise in the culture that I work in – but the whole concept of charitable not-for-profit organisations is demeaning for this culture. I actually think it is factor which has held us back. It’s created the attitude that there’s baggage behind it going back to the Victorian era. The fact is the days when philanthropists gave us money so they could feel good are gone,” says Ineson.
“Today we are talking about business – we are $15 million business which means it’s medium size in the Kiwi context. In the case of the corporates they are measured by dollars and cents. In our case it’s measured by the results we achieve and that means the results our athletes get on the international stage.”
Ineson, 1972 Olympic hockey representative, says the job of the Sports Foundation is to ensure our athletes are as well prepared as they can possibly be to compete against the world. And like any boosterer from the profit sector, he points to sporting achievements and the world championships to show we do exceptionally well internationally.
The Foundation does not get involved in areas of professional sport like rugby or league, but it’s involved in just about every other sport. It does however use professional codes to help lift the game of those not so cash rich.
“When they have world championship taking place for our main team sports like rugby, we work with them in developing high tech equipment. We can then use that for our sports which don’t have revenue streams,” says Ineson.
Athletic achievement is complex mix of talent, training and to some extent, luck. The modern day athlete benefits from variety of sports science and coaching programmes offered through the Foundation. Big names like Danyon Loader, John Walker, Paul MacDonald and Ian Ferguson have all passed through the organisation.
The Foundation gets about $10 million year from the Government and $5 million from the private sector. Like other non-profit organisations it’s never enough and sponsors are necessary though they, like modern sport, have become increasingly demanding. It means that Ineson and his nine staff have to act like their counterparts in the profit-making sector.
They put together five-year strategic plan which identifies public and private sector contributions. Public money pays for core programmes while other contributions add value to these, says Ineson. Money from leading sponsors like Brierleys and Air New Zealand pays the Foundation’s costs of administration, research and development and marketing.
“In short they pay our overheads,” says Ineson.
“That means that every dollar going from the public sector goes where it is meant to be going. It also means the same for every dollar from the private sector.”
The Foundation’s Five Year Plan identifies funding shortfalls in any given year. In addition, Ineson’s team develops an annual plan identifying specific needs. Then they prepare third plan which deals with marketing and fund raising. It breaks out in more detail the funding and marketing requirements, where the money is coming from, and where the Foundation can get more.
“It’s who do we track in the corporate sector? What benefits can we offer and what time frame? Every month we report progress to our board,” says Ineson, who adds that like his counterparts in the profit-making sector he is looking for new ways of doing things.
For all sorts of reasons going back to the ’87 sharemarket crash which weakened the sponsorship market, the going is tough – and not getting any easier.
“There are big changes in the market. You have more New Zealand companies owned by offshore operators so you don’t always share the same sense of culture in sport or the arts that you would have had prior to 1987,” says Ineson.
“Many of these foreign-owned companies have different attitudes towards sport and supporting the arts in their own countries. In the United States for example they set up substantial endowments and they can get tax breaks. Here you don’t have that system – it has to be something that can be justified commercially. It’s much more hard nosed.”
Individual philanthropy still plays part but the Foundation’s research shows its limitations in the era of the sponsor. The top end of these contributions is about $20,000 and they average about $5000 says Ineson. Again it means that the Foundation – like the private sector – has to compete against the likes of Te Papa, the Westpac Stadium and even the new commercially-minded universities.
All of them are jostling for funds in market of diminishing returns as major companies like Brierleys – which contributed $600,000 year over the last four years – and FERNZ have gone overseas. Ineson and his team realised these were facts they simply had to come to grips with and as result they became more focused and creative to meet the new challenges.
Ineson says genuine promise among young athletes is recognised at the Foundation’s High Performance Centres, and by coaches of all codes. Talented newcomers are given card which entitles them to special benefits and training programmes at the Foundation’s three HPC centres.
Those represent some of the external challenges but managing non-pro also brings its own. Ineson, an ardent sports advocate, emphasises the need to have the right people on his staff.
“Get team of passionate, dedicated people and they will move the world for you,” says Ineson. He is proud of his team at the Foundation and is aware they are supported by an army of mums and dads in the community.
“Our sector relies enormously on the support of many thousands of volunteers and this is New Zealand army on the move out there,” he says, adding that it provides huge range of voluntary support to its collective passion, sport. No profit-driven company can match it.
In sports-crazy country, it is easier to raise money for sport than for say the Symphony Orchestra, led by former broadcaster Ian Fraser. Yet both organisations share similar problems and challenges. Both live in the fishbowl of publicity and are forever seeking financial support. Both are led by men who have proven corporate records and are almost evangelical about their work. And both these leaders make it very clear that the way they operate is not that different from the private profit sector.
Says Fraser, “I’ve tried to think of similarities with say profit organisations. Like all managers, I’m fundamentally mediator between the product and the market. The job is to put the product before the public. In doing that we do all the chores that any management routinely does,” he says.
“We develop and work on strategy and I’m heavily involved in lot of aspects of organisation from finance to marketing and administration.” Fraser works with 25 strong team and like Ineson prizes his staff, saying many of them know lot more about the business than he does. So much for the similarities.
“The differences are that it’s not normal consumer sort of retail product that we are involved with. The simple notion in which supplier meets demand does not apply. What we do is offer cultural product. It’s about identity. It’s about spirit. To considerable extent it hangs around set of intangible values and it’s very, very public. What we do excites huge amount of public comment, discu