Platform Specifics
By Mike Hurdle
Wednesday, July 21, 2004
Quick Links: Communication | Fund Raising | Membership | Asset Management | National Teams
I view communication as a conduit of information in a spherical model. In order for it to be effective, it not only has to flow freely between the federation and the general member, but also throughout all of the general membership and clubs; transparency is the ideal objective. In today’s era of the information age, the Internet is a fantastic medium to accomplish this goal.
Things we will do better:
- Initiate Chat boxes, Forums, & Polls:
The USATH website will be revamped to facilitate fluid communication throughout the membership. Currently, numerous club websites have chat boxes, forums, and polls to facilitate communication. There is no reason why these tools could not be immediately implemented on the USATH website.
- Initiate Weekly Live Web chat:
Web chat is a cost effective easy way to initiate discussions throughout the general membership. We will create weekly web chats where a specific topic will be discussed followed by a general answer and question period with myself – President of USATH. This would be an open forum for people to discuss, critique, complain, etc. The specific topics can range from anything from “How to start a youth development program in your area” to virtual guest speakers from top-level players from around the world. I have developed several European contacts that would eagerly assist the development of handball in the United States through this fashion.
- Initiate Actual On-line Store:
Shopping cart software is abundant and usually free. Having a true online store is simple to implement and the cost savings are usually dramatic. Our current online store is really nothing more than an online catalog; one still has to call-in, mail or fax payment information. Also, it is easier to track sales through an online ordering system.
We would also offer the opportunity for clubs to market their individual merchandise through the USATH online store with a small commission being earned by USATH for each transaction.
- Transparency will be the ideal:
Transparency will be initiated for all official USATH board and executive meetings. All of these meetings will be transcribed verbatim and posted to the USATH webpage. Everyone should have the opportunity to research the discussions and the true individual viewpoints of their representatives on the Board of Directors. It appears that we have some individuals that will say certain things publicly, but behind closed doors will say and vote differently. I will put an end to this – similar to the standard that exists in our own U.S. Congress.
Also, the quarterly financial statements (Balance Sheet, Income Statement, & Cash Flows) will be posted on the USATH website for all of the members to view. An honest organization should welcome constructive criticism from its members. It is this process that will help monitor fiscal responsibility of USATH. All members should have easy access to the information of how and from where is our revenue generated, and how are the funds allocated (i.e. to which programs – National teams, Overhead, Development, etc.).
As with normal corporations, Financial Statements will be prepared monthly and include budget analysis. This is critical to assess the effectiveness of the organization’s fiscal management. Currently, financial statements are only prepared once per year. In my opinion, that is woefully inadequate.
Tony Fontenot, who is running for Secretary of USATH, owns his own web based company and has the knowledge and expertise to implement all of the above.
Raising funds is the single greatest challenge facing this organization. There are numerous philanthropic individuals within this great nation. However, there are also numerous non-profit companies vying for those same funds. How do other non-profit organizations, such as the March of Dimes, exist and flourish? They offer a substantial service that these philanthropic individuals view as a worthy cause. We need to create a worthy atmosphere that we can market to these individuals. For example, my wife introduced me to one of these philanthropic minded individuals; subsequently, I exposed him to the sport of handball. He is genuinely excited about the sport. However, his interest does not lie with donating $1 million dollars to USATH so that it can be spent arbitrarily. He is interested in implementing the sport within his current mission work. He is in the process of building a church and wants the sport included within his program. These individuals exist throughout the country. How do we find them?
Currently, USATH is without a chair for the Resource Development Committee (i.e. fund raising) and has been for the past 3 years. Is it any wonder why USATH has not been able to raise any substantial funds? The President of USATH is responsible for filling that vacancy and has not done so. I will fill it immediately (see below).
Things we will do better:
- Hire professionals to raise funds:
Many successful non-profit organizations have entire departments devoted to raising money. For example, the Atlanta Opera has many donors that donate hundreds of thousands of dollars. However, most of these individuals are contacted and “sold” on the value of their donation to the organization and the community. We need professionals that understand this dynamic and will work to secure these funds for our organization. These individuals can be hired initially as commission based fund-raisers. Many organizations provide “finders fees” to individuals that raise money. We will do the same.
- Generate Revenue from Services:
This is intricately linked with increasing the membership base (see membership). USATH and we as clubs have something unique; we have the expertise of handball knowledge. We must sell our service in this realm. However, there is no demand in our economy for handball knowledge. Hence, no real market. The solution: We need to create our own demand.
This past summer, I spent between $500 - $1,000 for my daughter to attend Volleyball camps, which ranged from everything from general skills to specific setting skills. My daughter is excited about volleyball and, as a sometimes-loving parent, I am willing to spend some of my discretionary dollars to see her succeed. There are numerous youth sports camps across this country that generate significant revenue. We will do the same.
By focusing on a specific school district, we can invest $60k ($30k salaries, $30k equipment) to educate and expose students from kindergarten to high school to the sport of handball. We will implement these programs within the school district free of charge. We can easily expose 3000 students over the course of an academic school year. Come summer time, if we convince only 20% of those exposed to enroll in a one-week handball camp at a nominal rate of $200 – will we generate $120,000 of revenue. Granted, there will be some additional costs with running a summer sports camp, but the above estimates are low and will easily cover any incremental costs. Imagine if we have a 25% turnout and each student attends 2 one-week camps – the revenue increases to $300,000.
It is time we operate this business as a business.
- Secure Sponsors:
Securing sponsorships is a task that is much more difficult than most realize. Corporate sponsors view this expenditure as another form of advertising. Most could really care less about how good the team is that they are sponsoring; what they care about is how many consumers will see their advertising and purchase their product as a result of their sponsorship. Hence, who cares if the U.S. National Team is #1 in the world? Certainly, a purely domestic corporation with no international sales will benefit negligibly by sponsoring this team, whereas a European company may benefit greatly. Why? Because the only place the advertisement will be seen is in Europe; there are only 500+ members in the U.S. that would have the potential of seeing the advertising here in the U.S., whereas there are millions in Europe that will see it. However, if USATH has 30,000 members that watched handball on ESPN2 or the Game Network, then there is potential viewer ship.
The basic tenet to securing a corporate sponsor is the membership base. The larger the membership base, the more likely we will be able to secure corporate sponsors. Similar to corporations that purchase advertising in magazines or newspapers – there first question is, “What is your circulation?” The same question will be asked of USATH – “What is you membership base (i.e. circulation)?”
In order to secure corporate sponsorship, the membership base needs to increase dramatically quickly. We will focus on rapid exponential membership growth. Our goal is to double our membership base each year. In four years, we will have 10,000 members.
Membership is the one critical ingredient that all other programs rely upon, either directly or indirectly. Directly by being the basis for securing sponsorships and generating camp revenue. Indirectly by eventually supplying the pool of athletes for the National Teams. But there are some difficult questions to answer. Our membership is basically comprised of those individuals that compete at Nationals. Why is it that when a player ceases to play, they no longer renew their membership? When I tore my ACL and was unable to compete in the 2002 Nationals, I did not renew my membership that year. Why? I think the dreadful truth is that there is no benefit to being a member of USATH other than the opportunity to compete/participate at Nationals.
We have to do much better than this. We need to be able to provide membership benefits that will continue to keep people involved with our sport long after they have finished competing.
Things we will do better:
- Initiate Quality Satisfaction Market Surveys:
First step is to initiate market research to determine precisely why people do not renew their membership and what would intrigue them enough to renew.
- Initiate Sports Package Raffle:
At the most recent Nationals, a $20k sports vacation package was raffled off. This was one of the most fantastic ideas of quite some time. However, why not do it every year and include it as a general benefit to being a member? Each year we will select a vacation package associated with specific handball event to be raffled off (i.e. World Championships, Euro Championships, etc.). The value of the package will be determined by the event.
- Reduce Membership Fee:
The first question to ask is, “How was the pricing point of our current membership fee determined?” I am not sure, but it seems high. I know of numerous junior players that don't enter tournaments due to high costs. A new team wanting to enter a tournament may have to pay up to $500 to participate ($300 entry fee, $200 for 10 memberships). There are numerous benefits to reducing the membership fee.
We will analyze the pricing point, but the overall goal is to increase our membership base to be attractive to sponsors and donors. Would it not be better to have a family package at a discounted rate?
- Aggressive Membership Recruiting:
Our membership number has remained relatively flat for the past 20 years, possibly longer. In 1986, Nationals had 17 teams attend in 1 division. In 2004, we had 26 teams attend in 3 divisions. A 34% increase, but wait….that is only 2% annual growth. Not something to write home about.
As mentioned above under fund raising, we need to create our own demand. That begins with increasing our potential market. Through exposing kids in school districts, we need to market the benefits of our organization to every kid that attends the summer camp and their parents. Assuming the same numbers as above (3000 total kids with 20% attending camp = 600 kids), if we are successful in securing memberships for the 600 kids and one parent – the additional revenue increase (based on current fees) would be $22,500. But more importantly, we would have added 900 new members to our organization, more than doubling our current base. This is the methodology that will use to drive rapid, exponential membership growth. 10,000 members by 2008 – absolutely achievable!
Asset management, and the associated debt management, is one of the more complicated issues involved with any corporation. What is the proper debt-to-equity ratio? What is our Return-on-Assets (ROA)? These are common financial ratios that aid in financial analysis of asset management. There is more to financial analysis and ratio comparisons than just mentioning that we have reduced our debt to $50k or cut costs by 40%. What if revenue had decreased by 50%, would the corresponding decrease in costs seem so good then? Financial analysis involves analyzing the complete set of financial statements.
Debt is not necessarily a bad thing. Most corporations have some type of debt. For example, a corporation that has $250k of debt with revenue of $2.5M is in much better financial position than and organization that has $50k debt on $250k of revenue. The first company has a 10% debt ratio whereas the later has a 25% debt ratio.
Most companies issue debt to acquire assets with specific expectation that those assets generate revenue. Having an equity position in real estate is beneficial if it is somehow increasing revenue. If it is not, then it is a wasted asset. So, the question becomes, “Why do we have an equity position in an office building? How much revenue is being generated from that asset?”
Things we will do better:
- Actively Manage Existing Assets:
There is an entire vacant sports complex available for sale here in Atlanta for about $3M. It has everything that could be desired in a sports complex, including an Olympic size swimming pool and diving pool, offices, restaurant, multiple gyms, etc. Is it feasible to purchase this facility and run the complex for profit generating positive cash flow to USATH? I think yes. The USATH foundation has over $700k of liquid assets (i.e. cash) earmarked for investments. $250k of fundraising drive coupled with $1M debt borrowing, selling the equity in the office building and securing a private 33% investor and we could own the entire complex outright. Assuming each investor class is expecting a 20% ROA, we would need to generate $400k of profit per year after paying the interest on the debt (assuming 10% interest rate for simplicity) of $100k.
Achievable? Absolutely! There are numerous revenue streams that will exist from owing a sports complex. A few examples would be event hosting (i.e. renting the facility to an organization that puts on the tournament, etc.), cost savings (i.e. not having to pay for gyms for any of our nationals or national teams), membership dues (charge dues similar to fitness centers), rent office space, lease restaurant, etc. This facility has the potential to generate a positive cash flow of $50k per month. Properly marketed and managed, this could be a gold mine and the cash cow that will support USATH and generate revenue for generations to come.
This facility will be on the top of our list to acquire.
Everyone’s favorite topic. I was lucky enough to a part of the National team programs during the late ‘80s and early ‘90s when the team was properly funded. It is rumored that those programs cost USATH over $1 million per year. I think that is about accurate and what is going to be required for any future success on the international scene.
The National Teams are the representation of the U.S. in the international realm and a way by which we have judged our success. However, recently the medals have been few and far between. Our current President boasts that we won our first international medal in 8 years – therefore, things must be headed in the right direction. Whereas this is technically true, the reality of the fact is that 3 of top 6 teams in the Western Hemisphere did not attend that tournament: Cuba, Greenland, and Canada. The team is currently competing in the Pan Am Championships in Chile; we will see how they perform.
However, the real issue has nothing to do with the actual team but the lack of funding and preparation given to the team. Why is it that after our first international medal in 8 years (something the current Presidents boasts about), that the Men’s national team program was shut down for 9 months? Why did we not build on our great momentum and catapult us to further victory? Who knows. What is more disturbing to me is that the Women’s National Team came within 1 goal of qualifying for the World Championships outright – losing in overtime in the semi-final match. They ended up finishing 4th. However, when Uruguay declined the invitation to World Championships, and the IHF extended the invitation to USATH – we declined! I guess the next question is. “If we are not going to send our National Teams to world events when invited, then why do we have them?”
National Team players need to play EVERYDAY. It is a fact that the U.S. is far behind the world in handball development. It is also true that the top players from other countries compete year round, practically everyday. If we ever want to regain any sense of competitiveness, our National Team must once again train year round.
Things we will do better:
- Reinstitute National Team Residency Programs:
The National Team must once again rise to prominence and national Team players must be committed to make the sacrifices necessary to become World class handball players. Without this commitment, all else is moot. How do you fund it?
- Funding National Team Program by Overseas Investment:
The National Team Residency Program does not need to occur in the United States or with all of the players in the same geographic locality. The most important factor hindering American Handball is a lack of game experience.
We will take our top U.S. National Team hopefuls, and with the help of our European contacts, we will secure playing contracts for them throughout Europe (ranging anywhere from 5th to 1st division). Our top players will be spread out throughout Europe. USATH will act as an agent for each player retaining 5% fee per contract. This 5% is funneled back into the National Team program. Before international competitions, the players will converge for a national team training camp somewhere in Europe (most likely Nymburk, Czech Republic) for preparation. With the entire athlete pool already competing in Europe, the cost of international competition will decrease drastically. What about domestic players in the U.S. with careers?
- National Handball League:
Creation of the first national handball league will provide playing opportunities for all players that are stateside with careers or those that were not able to secure European contracts. The national handball league will be initially funded by USATH. We will provide a business model to each club as to how to develop and sustain the financing necessary to remain in the league – primarily, summer camps.
The summer camp program will not only provide a fantastic revenue stream for any club willing to do the legwork, but it provides an incredible fan base and youth development upon which to base the continued success of the club.
Using the numbers from above, assuming 900 new members joined in a specific locality (600 kids, 300 parents) of a league team. Assume double that number attends the league games (i.e. friends, family, etc) and the club charges a mere $3 per ticket. The club has just generated $5,400 in revenue per game. Not too mention any revenue generated from merchandise or concession sales.
The national handball league will spill over to all areas of our sport. It will initially create more playing opportunities. But as the youth development marches on in each local community, the local clubs will develop (per the business plan provided by us) youth leagues. These youth leagues will generate multiple coaching and officiating opportunities that didn’t exist. The end result is more opportunities for players of all ages, officials, and coaches.
Heaven on Earth you say? No, just a handball vision that can be achieved by electing the right people committed to success. The right people are on the American Slate.
