Counting the costs

Sports and Leisure Little Black Book 2006

Andrew Williams outlines the key cost issues behind successful sports and leisure facilities

(Article taken from our customer magazine, Momentum)

“There is one vital ingredient to developing sustainable facilities – recognising that each one is unique.”
Andrew Williams

As demand grows world-wide for leisure amenities, so does the need for ready access to up-to-date bench-marked data. That’s where our latest Little Black Book on sports and leisure facilities steps in. Here Andrew Williams, managing director of our cost consultancy Franklin + Andrews, outlines some of the essential cost issues that need addressing to make a successful project.

Andrew Williams, Managing Director of our cost consultancy Franklin + Andrews“When planning a new stadium or redeveloping an existing facility, understanding the key drivers behind the capital, revenue and operating costs is vital,” explains Andrew. “For example stadia are widely appraised on the internationally recognised cost per seat comparator. But this measure can be very misleading as it gives little indication of the overall success of a develop-ment, with large variations between facilities of similar capacity often driven by different business needs. A stadium that’s been developed incorporating extensive commercial facilities is likely to have a greater cost per seat ratio than one that hasn’t, but it also has the potential to deliver a greater return on investment.”

Generating income is essential for success and requires a real understanding of both the existing and potential marketplace – which Andrew has been able to develop across a wide range of cultures and sports in his role on the executive of the World Leisure Organisation, a UN affiliate promoting economic, social and cultural development. “Research into the use of existing facilities should unravel exactly why people use an amenity. For some it’s the desire to support a club, others just enjoy the occasion,” explains Andrew. “Looking after your existing customers is vital in any industry and sport is no different. But if you are reviewing the offering to attract a new audience as well, you need to ensure that the product mix that you offer meets a demand and is affordable.”

“A few years ago we worked with one of the top football clubs to model options and determine exactly what the market would respond to. From fan feedback and extensive information on both ticket structure and catering options, we helped create a range of products – boxes, suites, ‘club’ areas, catering and franchising – which matched the demands in the marketplace. In carrying out this exercise we identified the different margins each product offer would generate to ensure that the high value opportunities were given an appropriate priority,” says Andrew. “But at the same time it was important to recognise that the stadium could not be filled solely with the highest margin product. The result of the exercise was a focus on the capital investment programme and a real understanding by the customer of its value.”

Investing time and money in the early business planning stage of a development will help avoid expensive mistakes which can have repercussions for many years. “There is one vital ingredient to developing sustainable facilities – recognising that each one is unique. By understanding the customer’s requirements through market research combined with an appraisal of the capital, revenue and operating costs we can optimise the value of the investment,” concludes Andrew.