Credit: Andy Buchanan, AFP
In recent days the Victorian Government has announced its intention to step back from hosting the 2026 Commonwealth Games. What lessons can we take from this for all events, and how can IPSEM Squared help you as an event owner, or an organisation seeking to bid for and stage an event?
After a previously awarded host (Durban) was stripped of its right to stage the 2022 Games due to financial concerns, the Commonwealth Games Federation (CGF) had hoped to announce the successful 2026 & 2030 bids in 2019. It was unable to do so as bids from a number of cities were withdrawn due to cost concerns.
The Victorian Government stepped in and in April 2022 it was announced that the 2026 edition would be hosted in Victoria, Australia using a model based on events being hosted in several regional centres, involving 16 sports. At that time the announced expected cost was AU$2.6bn (US$1.77bn).
This week, the Victorian Premier Daniel Andrews announced that the state would be seeking to terminate its host agreement with the CGF. The prime reason being the cost estimate for the event had blown out to AU$6bn (US$4.07bn) - “more than twice the estimated economic benefit” - and could potentially go even higher. He stated that that some of the money that would have been spent would now be re-directed to a regional development package of sporting infrastructure and housing programmes.
Andrews made the startling pronouncement that "I've made a lot of difficult calls, a lot of very difficult decisions in this job. This is not one of them," and that the Games would be "all cost and no benefit."
In a furious response, the CGF announced that some of the cost blow out was due to decisions being made by government “often” (although no definition of what often meant was provided) against the advice of the CGF and Commonwealth Games Australia. It noted that the $6bn figure was 50% higher than they had been informed in June.
You need real world, practical, event-hardened experience . . . . to make the best (and right) decisions
On the basis of this last statement, it appears that the confirmed budget figure had blown out from AU$2.6bn to AU$4bn ((US$1.77bn - $2.72bn) in the space of 16 months.
Within a few hours of Victoria’s announcement, other Australian states announced they would not be stepping in to stage the Games due to cost concerns, with one describing the Games as “ruinously expensive”. Some states had already undertaken their own cost-benefit analysis of staging the Games and had previously decided against bidding.
If you are thinking about hosting an event you need to be able to answer certain questions before hand:
• Do you understand what you are bidding for? What is the agreed scope and the required deliverables?
• Do you know why you are bidding? Is there a clear strategy driving your approach to staging events? Why are you doing it? What are your objectives? How are you measuring success against them?
• How robust are your bid figures? How have you sanity checked them? If so, who has done that? What is their level of real event expertise that allows them accurately do this?
• Do you have the right expertise to develop the detail, and costs, of your bid? Where have they worked in events before? What real world experience do they have?
Your need to have a clear and compelling case for their existence. Beyond the FIFA World Cup and the Summer Olympics, very few events can rely on their aura to invite bids in spite of the economics of hosting them.
Events need to cut their cloth to be attractive to future hosts. That all other Australian states were quick in confirming they would not take the Games on shows that, in many countries, money spent on major events is now allocated more cautiously and with a greater eye on returns.
You can’t always control politicians and their decisions. The Victorian decision probably had a political consideration that the short-term impact of stepping away will be outweighed by the longer-term benefit of being seen allocating money to more community-oriented items. Likewise, Indonesia has not hosted two events this year - the FIFA Men’s U20 World Cup was stripped from them when they would not guarantee the ability of the Israeli team to participate. It also stepped away from the ANOC World Beach Games only a month before they were due to commence, seemingly for budget reasons, but also rumoured to be linked to the participation of Israeli athletes.
Event owners need to have clear criteria for awarding events to reduce potential damage, both financial and reputational:
• Are the parameters for your event clear? (number of competitors, number of sports / disciplines)
• Is the local economy robust?
• Is there a large population based nearby to support ticket sales and drive meaningful sponsor acquisition?
• Are the event requirements realistic? Do your expectations match the profile of the event and the ability of potential hosts to deliver these in a reasonable time, at a reasonable cost?
You can’t always control politicians
As event owners are you taking on the appropriate level of responsibility for hosting decisions:
• Is the budget identified by the bidder realistic? If not, what is your response and how will you manage the inevitable crises and negative publicity?
• What contractual guarantees are in place that would reduce the chance of an awarded host walking away?
• Is the delivery model right? E.g., The Chief Executive of Commonwealth Games Australia stated Victoria had ignored recommendations to move events to the state capital, Melbourne. If this was after the event was awarded (and the delivery model known), it represents - at best – ignoring what was agreed, or worse an acceptance of a flawed bid with the hope of fixing it later. The CGF stated that cost increases were due to the geographically devolved event model - the same model they agreed to when confirming the bid.
Whether you’re an event owner, or bidding to host an event, you need the input of experienced event professionals with domain expertise to ensure the best results. Unfortunately, management consultants, and public or civil servants do not have sufficient knowledge to confirm what hosts are committing to as well as minimise the risk to all parties. You need real world, practical, event-hardened experience like that provided by IPSEM Squared to make the best (and right) decisions.
At IPSEM Squared, our team have all the experience and skills necessary to guarantee the smooth running of any event. This can be done while also reducing event timeframes and accelerating knowledge transfer to your local team. Get in touch today to see how we can help you.
As it is today, the Commonwealth Games faces an existential crisis.
Why do they exist? While the CGF has released a new strategy paper, it is not clear how the event remains relevant in today’s market, particularly in the countries that can afford to host.
The Games need to restructure to reduce hosting costs. Competitor numbers have increased from 3,600 (Manchester 2002) to 5,000 in the space of 20 years. While providing more freedom for hosts to choose sports being staged, the expected number still sits at about 15.
The CGF have struggled to find hosts. For 2002, 2006, 2022 & 2026 there was only one bidder. In 2022 Durban had their rights to host stripped due to financial concerns before Birmingham took over. The 2026 event was awarded to Victoria after a prolonged search, 3 years later than the CGF had originally intended to announce the host.
The financial model needs reviewing. In 20 years, the percentage of operating expenditure covered by sponsorship and ticket sales has fallen from about 46% to about 20%. This confirms a model based around prising money from governments as they are increasingly aware of the cost / benefits from staging events, as well as dealing with deteriorating global financial circumstances.
It is a difficult place for an event rich in history to find itself. Only time will determine if the CGF can find a new sustainable way forward; a model that promotes countries beyond the traditional three or four hosts staging the Games.