Financial and Safety Concerns Come Into Play as Clubs Grow

Until last year, Carlsbad’s Lightning Soccer Club still ran as though its funding came from passing a hat--though its annual budget had grown to nearly $350,000.

Then the club discovered that former President Joanne Wagner had embezzled $7,809 in 1997, says team treasurer Rich Sylvester, who detailed the loss in the club’s state tax returns.

“I was just a mom,” said Wagner, who acknowledges the embezzlement and is no longer with the club. “Instead of going out and getting a job, I gave that club 60 hours a week and I just got really financially strapped.”

As sports club budgets have soared, reaching $1 million in some cases, some of the troubles of big-time sport have infiltrated the mom-and-pop world of youth athletics.

Some clubs, like the Lightning, have instituted safeguards to protect their money, including oversight by committee. Overall, however, there is little regulation. From club bank accounts to the qualifications of thousands of specialized trainers now plying their trade across Southern California, some say the youth sports boom has produced a prime environment for financial abuse and fiscal fumbling.

Today almost anyone can hang out a shingle as a coach or trainer: Just gather up some kids with parents willing to pay and go into business without background checks or any assurance that you know how to teach your sport without injuring young athletes.

The ballooning number of trainers has prompted a group of youth sports officials to put together guidelines for accrediting private coaches.

“Who do you call if you want to find out if one of these guys [is one of] the bad guys?” asks Villa Park basketball coach Kevin Reynolds. “There has to be a governing body for these guys.”

And officials of some youth sports teams predict that the large amounts of money changing hands--often under the table and off the books--will soon be drawing the scrutiny of tax officials.

“We think the IRS is going to start stepping in when they see how big soccer is and how much money is flowing through it,” predicted Sylvester, who said he files meticulous tax returns.

Sylvester may be right--the explosive rise of youth athletics has clearly placed it on the IRS radar screen.

Though he won’t say if the agency is pursuing any civil or criminal action, IRS spokesman Keith Kimball said it “has discovered some compliance problems among amateur sports organizations” in Southern California.

“Those problems touch on filing and reporting issues, including some employment tax delinquencies,” he said from his Los Angeles office.

A Times review of four dozen youth sports clubs found wild fluctuation in how they account for their finances.

Today many club teams obtain tax-exempt status as educational organizations, requiring them to file nonprofit tax returns if they bring in more than $25,000. Some clubs that filed nonprofit tax returns provided little or no explanation of how they spent hundreds of thousands of dollars--despite a legal requirement to do so.

Other clubs claimed to file nonprofit tax returns each year, but the IRS was unable to locate them. And the North Huntington Beach Futbol Club, despite juggling more than $300,000 a year, hasn’t reported the money in its 22-year history--though a club official said it plans to do so now.

“We decided that we needed to get things cleaned up and structured appropriately,” said club treasurer Ed Engesser.

Unlike investors in other businesses with similar budgets, some parents financing elite clubs remain untroubled by the lack of oversight--as long as their children can shine on a prestigious traveling club team.

One father, who declined to be identified, said he and other parents knew their sons’ basketball coach was pocketing thousands of dollars from the team coffers. But their boys were playing in national tournaments in front of college scouts.

“I figured it was worth it,” the parent said, shrugging. “He did what he said he was going to do.”

Coaches Form Watchdog Group

A growing number of coaches and sports officials now worry that this focus on winning and the lack of oversight may be endangering children and their sports.

More than 25 of the nation’s top softball coaches are forming a nonprofit watchdog group to accredit the thousands of softball and baseball “experts” who work with children, said Ron Lefebvre, a Southern California pitching coach who heads the group.

“These people are earning a living off these parents and these poor little girls,” said Lefebvre, who regularly rehabilitates girls who have been hurt after being taught improper pitching techniques by novice trainers. “Who are these guys? Somebody has to stand up and say ‘Enough of this.’ ”

The accrediting process will include background checks, a test of sports knowledge and a test of whether a coach understands baseball mechanics and their relationship with sports injuries. If coaches don’t participate, “we will publicize that they’re not sanctioned by us,” Lefebvre said.

“It’s as much about naming good coaches as bad,” Lefebvre said. “If you have a history of doing something wrong . . . we’re going to go with it.”

The public will be able to check whether a coach has been accredited on a Web site the group hopes to have in place by the end of May.

Coaches and sports officials say parents should take these precautions before signing up their children:

* Ask a coach for references--names of parents whose children have been on the team or have played for the coach on another team.

* Ask for team policies about playing time. Some teams make sure that all children play, while others focus strictly on winning--and have even been known to drop players, without notice, in favor of better players.

* Ask for a copy of the team’s budget, and ask whether the team has tax-exempt status and regularly files financial documents with the government. Nonprofit teams with budgets of more than $25,000 per year are required to let the public view their tax returns.

* Make sure you understand how much money it will take to keep your child on the team, and what the time commitment is. Will your child be required to see outside specialty trainers, such as conditioning coaches or strength trainers?

* Find out whether the team has a policy about children playing more than one sport, or playing for their school.