Payroll can be a complex area within any business, but the sports arena boasts an added level of intricacy with variables that do not feature on any corporate payroll.
These include different rates of pay for different players depending on performance, event and match attendance, wins or losses, and more.
In addition, payroll governance and legislative compliance remain high on the priority lists of often overtaxed team administrative boards.
Outsourcing the payroll function can minimise this complexity, says Peter Ibbotson, CEO of Praxima Payroll Solutions.
“In professional sports such as rugby, cricket and soccer, players may sign contracts that entitle them to a guaranteed cash component, match fees, substitute fees, prize fees, ‘away’ fees and subsidies, as well as tour fees and other variable payments,” Ibbotson explains. “In addition, the payroll must accommodate administrators, trainers and organisers, all of whom will have different rules applied to their earnings based on outcomes and perhaps negotiated inputs.
“Despite this complexity, many sports bodies and clubs still rely on standard, off-the-shelf payroll solutions and attempt to run their payrolls in-house – with often less than satisfactory results.”
The inflexibility of standard payroll solutions limits the clarity of payslips, leaving administrators, staff, players and their agents in the dark regarding what, exactly, they have received payment for.
A lack of transparency and accessibility creates disgruntled players and staff which can lead to low moral and poor performances on the field – and a souring of relationships with management.
To compound the problem, some sporting entities also make use of a lot of part time staff who may work weekends or nights. Tracking work hours and applying pay rates accurately in these circumstances is no easy task.
Another bugbear, Ibbotson adds, is that less sophisticated payroll solutions limit the format of payslips to “print and post” versions. For players that travel often, payment notification in different formats, such as E-mail, may be important.
“An outsourced solution delivers a detailed, auditable, easily customisable payroll that is rules-based, ensuring not only good relations are maintained, but that governance, tax and legislative requirements are met,” Ibbotson says.
Praxima’s outsourced payroll service also enables organisations to assess payment against performance profiles.
Where players are regularly appraised and given a points rating for meeting objectives such as attending practice, the progress and performance of a player over a certain period can be measured against his/her earnings.
On a larger scale, the performance of the team can be measured against the cost of payroll over a specific period.
“Administration is not high on the list of priorities of sports bodies and an outsourced payroll solution takes care of the finer legislative and governance details that may otherwise be overlooked and result in considerable penalties and loss of credibility,” Ibbotson says. “By outsourcing their payroll function, organisations also enable an increase in information flow between players, administrators, the club, employees and shareholders.”
A rules-based payroll solution allows for fine-tuning of complex payrolls and the elimination of any errors, and issues and queries are quickly resolved via a helpdesk and a dedicated client payroll manager.
“Outsourcing a complex payroll to seasoned professionals has enormous value in terms of not only reducing administrative costs, but also getting payments right first time and keeping players and personnel satisfied,” Ibbotson says. “Nobody wants to be paid late or incorrectly and this is especially important where the performance of staff can affect the success of the event – and the income and rating of the sporting entity.”