While most right holders and event organisers fight through the COVID-19 disruptions, many are already looking toward a sustainable and lasting future beyond the crisis, writes Ronnie Hansen, director of sports culture and entertainment at Geelmuyden Kiese.
Rights holders with continuous and formalised host city agreements are in better shape for recovery as they are benefiting from support provided by authorities in structural, economic, and practical ways.
As the public health situation winds down, a distinct window of opportunity is opening for rights holders to craft new partnerships with host cities. As for governments themselves, keeping and attracting events will be paramount for economic recovery.
In representing a multitude of rights holders across music festivals, esports and federation-owned sports events, we see two groups of right holders and event organisers coming through which are less impacted than others – ones with ticket revenue as a tertiary income stream and ones that have long-lasting, integrated partnerships with public hosts.
It would be unfair to say this group has not been affected – because they have. However, their business model and diversity of revenue streams allow them to continue business with lesser impact than others.
Host City Partnerships
The second group, however, are right holders with long-lasting partnerships with host cities, regions or countries. They are not only less affected than others but are also well-positioned to move forward in the current global circumstances.
Host cities, as well as host regions, destinations, and nations, have proven extraordinarily loyal and committed to their rights-holding partners. For example, cities have:
- Refrained from recovering support previously paid out to events that were cancelled due to a crisis.
- Paid advanced fees for later editions of events to keep entities afloat.
- Actively assisted rescheduling events in terms of sites, permissions and communication.
That is because cities know that rights holders are in an unprecedented position to become a driver of economic recovery for the hard-hit sectors of tourism, entertainment and hospitality. In moving past COVID-19, cities will invest in attracting and securing events, thereby rebuilding the aforementioned industries. Accordingly, a window is opening for rights holders to attain new (or restructure existing) host city partnerships with public entities as primary partners.
Here we outline some characteristics of host city partnerships that should be considered now, and why they are the way forward following the worst of the crisis.
The rebuilding of a brand, revenue, city pride, and confidence in the future
Following the current pandemic, analysis has suggested protracted changes in global travel patterns. Domestic travel is expected to increase at the expense of visiting international tourism destinations. Long-term contracts ensure the return of guests, re-focus the world’s attention, and provide dependable sources of future revenue.
Events can make incremental progress in rebuilding destination brands, generating revenue within the hospitality sector, restoring the pride of local citizens, and, most importantly, providing confidence in the future. As such, cities are looking for partnerships and now is the time to seize that opportunity.
Yield management for destinations
With severe damage to the tourism and hospitality industries, we will see stakeholders become even more forward-looking – considering both short-term remedies as well as looking toward longer-term goals. Having long-lasting agreements with rights holders is a part of detailed calendar planning. For example, mitigating crowding out effects which would be a net loss to a city.
Major events will increasingly become a yield management exercise. That is, how to further maximise tourism revenue for specific events given a new global travel environment.
For instance, working to build and prolong shoulder seasons, as well as developing creative ways for utilising the offseason at holiday destinations. In such a context, rights holders will be met with more specific requests, in the short and long term, for dates and planning. In this context, established, defined agreements with host cities will be increasingly critical.
All parts of the value chain will incur substantial financial losses during this crisis. Entities will go bankrupt or otherwise suffer severe economic damage. Cancellations and defaults will continue for months (or longer). Sponsors, participants, ticket buyers and broadcasters will be sceptical regarding events being re-established and as to their long-term sustainability. Everyone involved will become more selective, with careful attention to sustainability.
For the above-mentioned parties, as well as for banks, suppliers, and talent agencies, a 10-year contract with a public entity will signal credibility and a more viable future. Partners will base their confidence in the reputation and record of the public body and will seek secure future cash flows.
From the city (or country) perspective, they can develop a more defined long-term plan. They can have a more predictable hotel and hospitality inventory, as well as a template for planning for associated services (security, public transportation etc). Events can become an integrated part of the city’s calendar, providing assurances for both the rights holder and the public body. Based on these benefits, cities are eager to partner with right holders, and thus may be willing to offer rights holders generous terms on extended partnerships.
Mitigating future risks
We know now, from having observed and assisted rights holders in the industry, that one of the most important entities to have support from during a crisis is the relevant public authority. An integrated partnership with a public host suggests that the city (or country) considers you as a close partner – a relationship that needs to be sustained regardless of current economic, social, or political situations. In the best cases, they will offer the same considerations they extend to ingrained cultural institutions, such as operas, orchestras, and football clubs.
Thus, an integrated partnership becomes an effective way of mitigating future risks from other financial crises or postponements (for example due to climate/weather, currency devaluations or civil unrest).
A proper plan for mitigating risks will likely become critical for stakeholders and investors, such as how professional security and crowd control plans emerged as critical considerations more than 20 years ago. An integrated partnership with the host will be ever more important in the context of uncertainty that will prevail following the crisis.
A short-term step for organisers will be planning and producing more financially sustainable events. Minimising costs is essential to that. Deciding on a long-term home for an event will allow for long-term planning and thus substantial cost-reductions related to planning, site inspections, event-to-event negotiations with authorities, permissions and authorisations, site preparations, insurance, security, and marketing. Indirect effects will affect suppliers positively, thus benefiting all parties involved.
As a part of agreements, cities can provide reduced costs for such things as security, cleaning, site rentals, and expenses for permissions. Events and right holders with solid public partnerships will see these cost reductions. Furthermore, several cities have been interested in developing new sites and infrastructure directly with their long-term event partners.
Not every event can stay
Not all events are built to stay in one location. Events may want to circulate among locations to build broader markets, to assure stakeholders, and to build a more diverse brand foundation.
Even in this context, public partnerships are important. The rights holder might not be able to utilise all benefits from a long-term partnership, but will still be able to benefit from circulating RFPs, carrying out transparent decision-making, and gaining experience in how to build integrated host city agreements based on mutually-beneficial partnerships.
A Way Forward
Integrated host city partnerships for sports events will be exceedingly beneficial for all parties after the crisis. They instil confidence at a time of uncertainty, setting the stage for long term sustainability, stakeholder reassurance, sharing of risks and modelling a much-needed stable future.
Most right holders are back at the drawing board, reshaping what is left of 2020, and building the outlook for 2021 and beyond. To those we say: so are mayors, governors, ministers and presidents. Take this opportunity to synchronise your goals with theirs and leverage off each other’s assets, it is the best way forward.
About the Author
Ronnie Hansen is director of sports culture and entertainment at Geelmuyden Kiese. He is an expert in the integration of many forms of sports, culture, and entertainment, supported by thorough experience in festivals and multi-events. Hansen has also worked on a significant amount of city outreach projects coming from a city management background himself.
Geelmuyden Kiese is a boutique Nordic agency maintaining the world’s largest and most updated database of host city contacts worldwide as well as extensive experience in partnerships between right holders and the public sector.
Main image: ESL One esports tournament at Commerzbank Arena, Frankfurt. Courtesy ESL-One/Helena-Kristiansson