Ph.D., Associate Professor S.N. Zozulya¹
Dr.Hab., Associate Professor E.V. Kuz'micheva^1
1Russian State University of Physical Culture, Sport, Youth and Tourism (GTSOLIFK), Moscow

Keywords: resource allocation, physical culture and sport development, funding structure, sport facility utilization factor.

It is the Russian Federation Long-term Social and Economic Development Concept for the Period up to 2020 that spells out main objectives of the government in the physical culture and sport sector including provisions for the necessary resources being allocated to encourage healthy living standards in the population, develop mass sport culture and step up the Russian sport competitiveness on the global sport arena. Top priority sectors of the relevant government policies have been set forth by the “Physical Culture and Sport Development” State Program of the Russian Federation composed of the following four sub-programs: “Physical Culture and Mass Sport Development” Sub-program;  “Elite Sport and Sport Reserve Training and Development” Sub-program; “The 2018 FIFA World Cup and the 2017 FIFA Confederations Cup in the Russian Federation” Sub-program; and the “Physical Culture and Sport Sector Management” Sub-program (3).

In the above Program implementation process we expect – in addition to hopefully successful performance of the Russian athletes at the Olympic Games and other important international events and 100% success in organization and management of the 2018 FIFA World Cup and the 2017 FIFA Confederations Cup in the Russian Federation – that the top priority social programs are implemented as substantiated by the relevant performance indicators, including the following: involvement in the physical culture and sports activities of up to 40% of the Russian Federation population (including at least 20% of the people with physical impairments and up to 80% of students) by the year of 2020; at least 48% satisfaction of the public demand for sport facilities by the same date; 100% loaded sport facilities and infrastructure available in the cities of Sochi (host of the 2014 Olympics) and Kazan (host of the XXVII World Summer Universiade in 2013) in the physical culture and sport sector activities in the off-season.

It is a matter of common knowledge that the projects to implement the above initiatives will require financial allocations from the relevant government budgets of different levels (federal, regional, municipal and district government budgets) and extrabudgetary funds. In the period of 2015 to 2020, the consolidated budget of the federal government plus the consolidated budgets of the RF regional governments are expected to total as much as 1.2х10¹² Roubles. For the purposes of the eligible budgetary allocations being implementable, the budget performance is based on budgetary classification systems, i.e. classified incomes and expenditures of every-level government budget within the RF government system; and this classification in fact provides a tool for the government to perform its statutory functions. As things now stand, budgetary expenditures “on the government policy implementation in the physical culture and sport sector” are accounted under a new entry of the Budgetary Expenditure Classifier, namely: 1100 “Physical culture and sport” Entry that includes the following five items: 1101 “Physical culture”; 1102 “Mass sports”; 1103 “Elite sports”; 1104 “Applied research in the physical culture and sport sector”; and 1105 “Other initiatives in the physical culture and sport sector”.

The total amounts of budgetary allocations are increasingly dominated by the target allocations from the areal (provincial) government budgets geared to support investments in the physical culture and sport sector logistics and infrastructure and the relevant asset rehabilitation and expansion projects. The local budgets in this system finance the relevant budgetary institutions and contribute their funds to the sport infrastructure construction and maintenance projects; in addition, they provide finance for the local competitions.

In actual financial practice, the above sources of finance are integrated in a single consolidated budget; and the Budgetary Code of the RF defines it as “consolidated budgets of all-level governments within the relevant area”.

The Program implementation initiatives will be also supported by the traditional government provisions that require the all-Russian sport federations being subsidized for the projects to develop eligible sport disciplines (mostly the ones with low returns on investments) in their areas; regional government budgets of the RF being subsidized for the regional/ municipal sport facilities construction/ modernization projects; and provide for subsidies to the all-Russia sport associations that take efforts to advance physical culture and sports, particularly among people with physical impairments.

It may be pertinent to mention in this context that the budgetary financing of the physical culture and sport sector in the countries of highly developed sport culture accounts for 1.5-3% of the GDP, while the Russian Federation lags behind with its 0.17 to 0.2% of the GDP that is around 10 times lower.

In addition to the mechanism of direct government finance being allocated to cover the eligible costs of the physical culture and sport sector institutions, the governments may make resort to indirect contributions. It means that the government may come up with special legal and regulatory provisions to offer tax exemptions/ privileges; special lending terms and conditions; partial or full exemptions from customs duties etc., to the sport institutions. This form of support cannot be rated with the budgetary funds in the strict sense – for the reason that it implies no direct monetary contributions, although still offers significant economic benefits to the eligible sport institutions by giving them the means to cut down certain operation costs.

The extrabudgetary funds for the physical culture and sport sector are as follows:

• Private business activity of the relevant commercial physical culture and sport asset holders/ operators supported by their own capital resources. These resources are often invested in construction of special sport facilities, fitness clubs and other physical culture and sport assets in many constituent entities of the Russian Federation.
• Business activity of non-commercial state-financed and civic organizations dominated by different overhead (additional to the core business) services, publications of special newspapers and magazines, issues of methodological literature, sales of sport insignia and other sport goods.
• Financial contributions from the Olympic Committee of Russia, the International Olympic Committee, international sport organizations, different extrabudgetary funds for promotion of physical culture and sports in Russia etc. These monetary contributions that may largely differ in their eligibility criteria for support (for instance, the National and International Olympic committees normally support only the Olympic sport disciplines), but on the whole they largely contribute to the financial capacity of the national physical culture and sport sector in Russia. It should be also mentioned that contributions from charity organizations and individual supporters are classified and employed with the same category.

It may be pertinent to emphasize in this context that sponsorship is traditionally rated high among the off-budget funds for the physical culture and sport sector. Being an important source of finance for the physical culture and sport advancement efforts, sponsorship is normally beneficial for the interests of the both parties to the initiatives.

Given in Table 1 hereunder are the historical structure of and development trends in the physical culture and sport sector financing process.

Table 1. Key sources of finance for the physical culture and sport sector

Having analyzed the above structure of finance for the sector and its variations for the period of 2005 through 2013, we would note the following development trends: the total amount of finance grew 8 times for the period; it is dominated by the budgetary funds (that account for 85-93% of the total) which in their turn are dominated by the regional budgets (with the yearly variations within the range of 52-87%); whilst the extrabudgetary funds make up 7-14% of the total amounts.

Please note that incomes of the payable service providers are rated with the extrabudgetary funds for the sector. They may be considered a service reproduction source and (with deduction of the production costs) a taxable base for the income tax and other taxes payable to the budget. The market of payable services covers the physical culture and sport sector/ competitive sport/ and sport entertainment related services. At this junction, people actually involved in physical culture and sport activity are estimated to account for about 25% of the country population, including 11% of the people who pay for the sport services provided on a commercial basis. For the period under report, both the total payable sport service provision indicators and the per-capita service coverage indicators have been on the rise. It should be noted, nevertheless, that total incomes from the health and fitness services are estimated to make up as little as 0.06% of the Russian GDP compared to 2% of the Austrian GDP and 1.8% of the Swiss GDP.

To attain the objectives set forth in the “Physical Culture and Sport Development” State Program of the Russian Federation the relevant agencies plan to develop due infrastructure to meet the demands of the physical culture, mass sport and elite sport sectors (3). Analysis of the progress reports of the sport infrastructure developers across the country gives the reasons to note a few positive trends; and mentioned first should be the stable growth of the numbers of sport facilities (that have increased by 22.87% for the last decade), sport centres (palaces) and swimming pools (that have grown up by 66.4% and 57.4% for the last decade, respectively, see Table 2). However, some types of sport facilities have shown some sags in the overall growth trends for the same period: the sport centres growth rate, for instance, came to 46.7% for the period of 2003-2008 followed by the downfall to 13.4% in the period of 2008-2013; the same applies to sport halls that grew up by 15.7% for the period of 2003-2008 and then their growth was limited by only 2% for the period of 2008-2013 (4, 5, 7). 

We should also note a few negative trends for the last decades in the numbers of 1500+-seat stadiums, skiing sport bases and shooting ranges and facilities for the relevant sport disciplines (the falls being estimated at 13.8%, 11.9% and 24.6%, respectively, for the last decade).

Table 2.  Sport infrastructure development data

The proportion of the physical culture and sport assets in state ownership is estimated at 93.9% as of December 31, 2013 compared to 94.4% as of December 31, 2003. It is the sport assets in the municipal government ownership that dominate in the state ownership structure (to the extent of 85.0%, see Table 3 hereunder).

Table 3. Detailed ownership structure of the state-owned sport assets

The sector development process is being held back by a few problems, mostly by the insufficient supply of the physical culture and sport facilities to meet the demands of the local communities; and low utilization factors of the available sport assets (1, 2). Based on the valid Social Standards of the Physical Culture and Sport Asset Management, the following sport assets had the following supply-to-demand rates (the public demand satisfaction rates) as of December 31, 2013: total supply-to-demand rate: 40,4%; swimming pools:10,4%; and flat-surface sport facilities: 68,8% (4, 7).

As of now, the total national public demand satisfaction rate of the available sport/ physical culture/ recreational assets, with account of the maximum design loading factors of the assets, is estimated at 25.9%. If the above Program is successfully implemented by the year of 2020, the supply-to-demand rates of the sport assets are expected (forecast) to come (assuming that the assets are loaded to the maximum design capacity at a time) to as much as 48%; although we are somewhat sceptical about this figure for the reason that it may be achieved only if the total area of the sport facilities doubles in the next seven years (?!).

The problems are further complicated by the fact that the management efficiency rates for many of the existing sport facilities are very low both in the economical and administrative aspects. This is the reason for the sport assets utilization factors being found poorly balanced over time. We have made some assessments of the sport assets utilization factors by comparing their design capacity rates, design service provision rates and design weekly operation rates with the actual utilization factors (6). Given in Table 4 hereunder, for example, are the service data for the Small Sport Arena of the “Luzhniki” Sport Complex in Moscow.

Table 4. Sport asset utilization factors for the Small Sport Arena of “Luzhniki” Sport Complex, Moscow

Assessments of the actual annual loading factors for two swimming pools operated by the “Luzhniki” Sport Complex (based on the actual attendance reports) showed that they were loaded to 49% to 55% of their design capacity rates.

Actual service rate of the Greco-Roman Wrestling Hall of the Children’s and Youth Sport School #64 in Moscow city was estimated to come to only 73% of the design service capacity; and its sport gym actual service rate was found to average 44.3% to 68.1% of its design service capacity.

We have analyzed the actual loading factors for a few sport halls operated by Russian State University of Physical Culture, Sport, Youth and Tourism, as follows: three gymnastic halls; four sport game halls; five martial arts halls; sport dancing hall; weightlifting hall; two stage direction halls; and arena of the Universal Sport Entertainment Centre. All the sport venues (except for the indoor football field) were found to be loaded to 40% to 97% of their design service capacities. The following sport facilities were found to be the least loaded (as verified by the following loading factors): oriental martial arts hall (54% loaded); weightlifting hall (55% loaded); sport dancing hall (61% loaded); and one of the stage direction halls (40% loaded).  

Overall, operations of the sport assets under control of Russian State University of Physical Culture, Sport, Youth and Tourism may be divided into the education/ training services and the asset rental services, with the relevant sport asset loading factors being estimated at 58% and 42%, respectively. In case of the gymnastics halls, the estimated loading factors come to 37% and 63%, respectively, that means that the hall rental service time is almost twice as high as the education/ training work time; although the situation is quite opposite for the sport game halls, with the relevant loading factors estimated at 65% and 35%, respectively, that means that the training service time in this case is twice as long as the rental service time. The weightlifting hall and the sport dancing hall showed the lowest hall rental service load factors that were slightly in excess of one hour per day in fact.   

Sport asset management improvement initiatives based on the relevant recommendations have helped increase the facility loading factors in case of the Swimming Sport Complex of the CSCA (Central Sport Club of the Army), with the following improvements: the total attendance rate stepped up by 8.9%; the servicemen and the Children’s and Junior Sport School students’ attendance rate increased by 13.6 %; the total revenue of the Sport Complex increased by 15.6%; service profitability rate improved by 4.5%; the capital assets profitability rate was reported to grow by 18.8%; and the staff labour efficiency index showed the rise of 7.5%.

The analysis of the sport asset management efficiency presented herein highlights a few top priority problems of the resource allocation process in the Russian physical culture and sport sector, as follows: low supply of the physical culture and sport facilities that is by far short of the public demand; low asset management efficiency for the available sport assets; efforts to develop the physical culture and sport facilities to meet demand of the low-income population groups are still insufficient; urgent need in the mass public-private partnerships to support the sector initiatives; still insufficient efforts to upgrade and modernize the available sport infrastructure and logistics; and the lists of the currently provided sport services fall short of the demands and needs of the communities.

Recognition of and solutions for the above problems will help attain the strategic objectives of the Russian physical culture and sport system development initiatives.

References

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