SBJ/Aug. 25-31, 2014/Opinion

How major sporting events can take guesswork out of costs

Most major sporting events have become extremely expensive, leading the event owners to seek ways to control the skyrocketing cost of staging these games. So, if you were an event owner and you learned it was possible to save your organization and the cities that will organize your events a substantial amount of money without sacrificing the quality of the event, what would you say?  

Olympic Games costs have spiraled out of control in the past 12 to 15 years, jumping from $2 billion to $6 billion (1996-2002) to $10 billion to $18 billion (2004-2012) and well beyond in the case of Beijing in 2008 (more than $40 billion) and Sochi this year (more than $50 billion). Other major sporting events like the Pan Am Games, Asian Games and Summer Universiade, which cost in the $150 million to $250 million range just over a decade ago, cost recent organizers four to 12 times more.  

Games inflation is out of control, and one undeniably negative impact is that many viable potential Games hosts are dropping out of bid races citing high costs as a primary reason. Even cities awarded bids are reneging.  

A lack of credible information about resources, such as parking space, actually used at an event can lead to overplanning by event organizers.
Photo by: ALAN SHAW

So, what can event owners do to help ensure their brand stays healthy, that plenty of viable bid cities are in the pipeline, and that high costs don’t damage or even destroy their franchise? 

Even though event owners have little ability to control costs when their event is used for political, economic or image reasons, they do have control over at least one practical way to reduce costs and remain healthy: improve and quality-assure the information that passes between organizers. 

It took working on several major sporting events to make two important realizations:

1. Future organizers face an unfathomable amount of guesswork, such as, How much do I need? When is it needed? Who will use it? 

2. As a result, resources are significantly over-scoped for both larger cost drivers (e.g., space, equipment, people) and smaller line items (e.g., meals, training, signage). Organizers egregiously overplan, commonly adding multiple buffers to even worst-case scenario requirements.

The root cause for all the guesswork and over-scoping is the lack of credible, accurate data/information passing between organizers. And, squarely at the heart of the issue is the fact that rarely does anyone capture, let alone transfer, usage data, which is what future organizers need most to plan well. That means, not what space was planned/allocated, but what space was actually used; not what vehicles were in service, but which were actually used. The context or rationale is also crucial, but it all starts with usage. Two examples:

1. One organizer passes on to the next that it provided a 145-space permit parking lot at a given venue for a given client (e.g., broadcaster). What might not get passed on is that, during peak times on the days the venue operated, no more than 20 vehicles used the lot.  

2. An organizer may pass on that it planned 20,000 volunteers. What may not get passed on is that 5,000 of these volunteers were merely cheering competitors from the stands, 2,500 didn’t accept their assignments, and 1,500 never collected a uniform/badge — meaning that 11,000 volunteers (45 percent fewer than planned) were actually used. 

Such examples are almost endless and, unfortunately, the norm with major sporting events.  

It takes some work to get the correct data, but usage is reality and, if properly contextualized, is one of the most powerful tools event owners have at their disposal to assist future organizers in controlling costs.

Over the past few years, a few event owners (e.g., the International Olympic Committee) have wisely invested in improving knowledge transfer between organizers. But many event owners have done little, and even those with more robust programs have room for improvement. There has been more of a focus on the process (cataloging/indexing information to create a knowledge library) than the content or quality of information collected. And, with the exception of a couple of recent projects that uncovered major event usage reality, collection of actual usage has been woefully absent. Information transfer is growing, but information quality is lacking.

To improve the current situation, to reduce guesswork, overscoping and waste, here are a few practical strategies for event owners to consider:

1. Agree as the event franchisor and as the organization ultimately responsible for long-term success to take the responsibility to improve the transfer of information between organizers.

2. For each event, target, capture, filter and validate specific data/information, especially usage data for cost-driving resources. 

3. Don’t underestimate the importance of using experts with relevant experience to assure knowledge content: to determine what data/info to target/filter, to validate and contextualize it, and to ensure organizers are applying the improved knowledge to more accurately forecast requirements.

4. Provide future organizers with a more comprehensive games-time learning experience, enhancing observer programs with shadowing opportunities and expert-facilitated discussions. 

5. Ensure benchmarks are based on usage from prior events.

6. Critically, don’t assume current organizers can or will provide adequate and accurate information.

The real beauty of employing these strategies is that the significant savings realized are invisible to client groups, such as athletes and media. The event will be just as amazing — there is no downside to event quality — but, the impact of the savings will be visible. One example: more legacy funding, but the possibilities really are endless. Less truly is more. 

These ideas alone won’t resolve all the cost-related issues facing event owners, but they are a practical way to dramatically reduce guesswork ensuring future organizers are able to make better decisions, simplify operations and reduce costs … and to ensure the event owner franchise remains healthy.

Alan Shaw (ashaw@epic-usa.com) is managing director of Epic, an Atlanta-based consultancy providing strategic planning/operations services for major sporting events.

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