Basketball is the world’s second largest sport, and Australia has 15 different national basketball teams. Chief Future Officer was fortunate to interview Greg Hill, CFO of Basketball Australia, about how the business is performing.
Chief Future Officer: Greg, can you tell us about some of the projects you’re working on to help drive business performance?
Greg: One of the main initiatives has been a really inclusive and rigorous budgeting process, which is evolving. Now, everyone within the organisation is responsible for the budget.
The way we’ve approached it this year is to engage with all the managers who report against budget during the budget setting process, so that the budget is theirs, essentially. We want them to focus on their job, but have in the back of their mind there’s a budget that's pretty restrictive, within which we all have to work.
Within our department, and in parallel to the budgeting process, we’ve also completely redistributed accounts to reflect our organisational structure and management reporting. This has been an inclusive project with all department heads involved, which was led by our financial controller.
CFO: What does changing the budget process involve?
Greg: The process was 10 to 12 weeks ahead of last year, which was partly due to having great finance team staff, coupled with also having a relatively new leadership team throughout the business, who were eager to be involved.
Another change was being really transparent with how we want the process to work; we want people to be engaged and we take their contributions seriously. When people normally go through a budget, there's a perception they have to ask for the moon because they know half of it is going to be ripped out. Instead we wanted them to be realistic, and then we were transparent with how feasible their requests were.
So people came to the table with the right spirit and we didn't get any ridiculous requests. Over the course of the last year we’ve been transparent with our internal financial reporting so our team understands the fine line we walk as a not-for-profit. On the back of two financially constrained years for Basketball Australia, there was a need to consolidate and generate profits to put some money back in the bank.
We incurred significant losses over the last two years, reducing our reserves by more than half. We just don’t have much of a buffer if things to go wrong, and we rely on a handful of partners, particularly the federal government. The risk is if their payment is delayed, for whatever reason, it makes cash flow exceptionally tight. So we see building up our buffer as a priority.
CFO: How did the business find itself in that situation?
Greg: There were a lot of one-off adjustments in the last financial year. We essentially went through a housekeeping process to start with a clean slate.
Now we have a clean balance sheet and a great foundation.
CFO: What’s the split between the commercial activities that contribute to your revenue and the funds the government contributes?
Greg: Government funds make up about two-thirds of our revenue and the remaining third comes from commercial arrangements and membership fees. But we are committed to moving to at least 50-50 over the next four years. We are aiming to be less reliant on Federal Government funding.
CFO: What are the plans to ramp up the commercial side of the business?
Greg: We need to be able to commercialise our assets, and some of our main assets are the teams and events.
The new Federation of International Basketball Associations (FIBA) competition system allows Basketball Australia to effectively move into the Asian region where we will play more meaningful matches, more often. The new system will provide great opportunities for Basketball Australia to take partner organisations into the Asian marketplace on a regular basis.
We’re also looking to revitalise our national database so we can talk to the estimated one million people who play and love our sport. Understanding our constituents and being able to have open dialogue with them will generate new commercial opportunities for us across the basketball hierarchy.
CFO: Now you’ve revitalised the budget, are you set for growth?
Greg: This year is the second year of consolidation. We need to make sure the fundamentals are right and that the behaviour change we saw in terms of financial management last year is still part of business. It’s like when you give your kids a bit more rope; you don't want them to go too crazy too soon. We need to make sure those behaviours are embedded. We’re budgeting for a pretty skinny profit this financial year and it would not take a lot to upset the apple cart.
CFO: How do you manage that situation?
Greg: It’s about transparency—being open and accountable for what's happening in the business and finding and explaining the reasons why. Like most organisations, timely and accurate reporting that is meaningful to our managers is critical.
We’d like to give our member associations more funds, but in the short term, the organisation’s immediate need is to build up our reserves to create stability.
There is always strong demand from our coaches and high-performance managers for more camps, tours events and staff. But to their credit, they are exceptionally financially responsible. They know exactly what everything costs and they plan accordingly.
CFO: What’s the most challenging aspect of your role?
Greg: Staffing is always challenging. We’re an $11.5 million business with three finance staff. We also manage IT, HR, risk management and sports integrity, so there’s a raft of things keep us busy. We have many stakeholders from government and sponsors, to state associations, basketball leagues and clubs, so creating and maintaining honest, transparent relationships is critical.
CFO: How does the finance function help the business achieve its aims?
Greg: Our role is to ensure financial resources are available to the parts of the business that need them, when they need them. Our high-performance teams have a four-year plan. Our role is to help build a four-year budget to ensure they have the resources they need during this time, and to help them work out any sacrifices they may need to make. The big project for the second half of this year is to work out what the next four years look like.
- Ongoing process of financial discipline.
- Focus on building the Basketball Australia brand.
- Responsible for finance, IT, risk and sports integrity.