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Feasibility Study Report: Exploring the Potential for a Business & Events Development Service for Sport in Wales Prepared by the Funding Centre for Welsh Sports Association

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Feasibility Study Report:

Exploring the Potential for a Business & Events Development Service for Sport in Wales

Prepared by the Funding Centre for Welsh Sports Association

1 September 2017

Table of Contents

Executive Summary21. Introduction and Context42. Sports in Wales The Sector Now7Policy Context7View from the Sector - Consultation Survey Data10The Sector - Conclusions163. The Market17Sponsorship18Audiences and participants20Public Funding21The Market - Conclusion224. Competitor / Comparator analysis23Business Development Support and Interventions23Competitors operating in the Sporting Events Market in Wales265. Options for Support30Estimating the costs of support.34Estimating income and measuring success356. Conclusions and Recommendations36Headline Conclusions36Recommendations39Appendices41Appendix 1 Experts: Selected responses from In-depth Interviews41

Executive Summary

1. The Welsh Sports Association (WSA) commissioned this feasibility study to explore the potential for the WSA to establish shared business development and event management services to its members, the National Governing Bodies of Sport (NGBs).

2. At a time when public finances are under tremendous strain and demand for the services provided by NGBs is ever increasing, something needs to be done to improve the sustainability of funding for NGBs.

3. There are some outstanding examples of significant sporting events that deliver significant revenues back to NGBs as well as furthering their strategic objectives. Unfortunately there are simply not enough of them. The successful projects do serve to prove that the potential is real but they are limited the very largest NGBs.

4. The most urgent need is therefore to support the majority of NGBs that are small.

Smaller NGBs not only lack the skills and knowledge necessary to be more commercial in their approach, but many lack the fundamental capacity to deliver new initiatives without compromising core activity. This capacity challenge can be partly met by bringing in external expertise in the form of volunteers and trustees but more fundamental changes are probably required.

5. There is strong evidence of a healthy and growing market for sporting events in Wales. Whilst the economic conditions in Wales may limit the potential for sustained growth over time, there is clearly room for more activity, which is potentially profitable for NGBs. Some investment is available from the public sector although the particular stresses on local authorities are having an effect on their ability to support large-scale events.

6. The main barriers to greater levels of commercial activity from NGBs are largely internal. Most lack the skills or capacity to run complex events and do not have the governance in place with the experience to oversee such activities. A more positive and nuanced attitude to managing risk will be required if they are to succeed.

7. It is therefore important that the development of organisational skills, capacity and governance are addressed at the same time as exploring how to develop the full potential of events and other commercial activity.

8. There is a desire amongst NGBs but not necessarily the will to take on more ambitious activities themselves a culture change is required that is also supported with higher levels of skill and expertise in commercialisation.

Possible ways forward

9. WSA is well placed to provide a range of support to NGBs:

Raising the bar providing training, skills development etc.

Finding talent and experience Board bank type approach

Backing winners hands on support with strong ideas and helping get them game ready for investment - possibly providing this investment directly

Educating investors

Building partnerships and facilitating collaborations and consortia

10. Trial the new service for a fixed period (12-18 months) to explore the effectiveness of the model and to refine the offer. Performance could then be reviewed and a decision could then be taken over running the service on a longer-term basis.

11. We would envisage a service that involves an additional 2 FTE staff members to cover the various strands of the service. These could be appointed on a fixed term to align with the trial period for the service.

12. The initial annual operating budget for the service would likely be in the region of 150-200k. This would of course be dependant on the way the service is configured, but this range is in keeping with the costs of comparable services of this kind.

13. Clear Outcomes and Outcome Indicators need to be developed for any new service. This will help define success and set out the measures to be used to evaluate the progress and achievements of the intervention.

14. NGBs should be involved in the design and ongoing review of the service - this will ensure that delivery fully meets the needs of the sector, and that the offer is regularly reviewed and refined over time.

15. When mature, we would expect the service to deliver a minimum of 3-4 times the level of annual investment into the service, from revenues for NGBs as well as significantly higher levels of commercial activity amongst the wider membership.

1. Introduction and Context

The Welsh Sports Association (WSA) is an independent membership body, passionate about bringing together Wales major players in sport. With a membership of some 79 organisations, WSA is the gateway to business support services to empower, equip and inspire members, including National Governing Bodies (NGBs) of sport and professional associations.

This Feasibility Study aims to examine the need and opportunities for helping Welsh Sporting Associations increase their income from business development, events and commercialisation activity. The context for the study is a backdrop where perhaps the greatest challenge facing NGBs over the next five years come from ongoing cuts in Government funding. Many NGBs in Wales are heavily reliant on the public purse, making their exposure to these risks both immediate and significant.

This need for Sporting Bodies to become more sustainable and commercial in their approach was set out by the Minister, in his Sport Wales Remit letter 2016-17:

The Welsh Government continues to encourage its sponsored bodies and their partners to seek out additional sources of funding to supplement grant in aid and your income from the National Lottery. I welcome your approach to being more commercial and the development of a commercial strategy for sport.[footnoteRef:1] [1: Source: letter from Ken Skates AC/AM to Prof. Laura McAllister (Sport Wales) 24/03/2016]

In response to this, the WSA has sought to explore the potential for helping members increase their revenue generating capacity in the short to medium term. The WSA has set up a working group, in partnership with sector representatives, to explore the potential of a collaborative service to support income-generating and cost reduction opportunities for NGBs. Draft One of a document, which outlines the case for the creation of such a service, is now complete. However, while the document is comprehensive a detailed scoping exercise was deemed necessary to provide an evidence base for decision making.

Study Objectives

The clients project team has already conducted an options appraisal and it has been agreed that the three key areas considered to have the greatest potential to meet the funding objectives are: Business Development, Event Creation/Management and Fundraising.

Whilst Fundraising is the focus of a separately commissioned report, this study concentrates on issues relating to Business Development and Event Creation/Management.

Consequently, the client has defined the following objectives for the study:

Review potential / market size listing the strengths and weaknesses of the key ambition

Consult with NGB members (contacts and introductions will be arranged by WSA)

Consult with other potential consumers of the services such as the business community and potential customers for events

Provide a competitor analysis

Forecast potential income possibilities

Create a robust risk register associated with the provision of the services

Forecast the potential cost to the WSA in respect of the on-going operation of this service.

This report carefully considers these objectives, referencing relevant data and evidence, prior to presenting some detailed Conclusions and recommendations for the consideration of the client.

Key themes appreciation of the brief

The main purpose of this research is to explore the evidence that is available to support the case for investment of time and money into the development of a more commercial behaviour in the governing bodies of sports in Wales.

Because of the wide-ranging nature of the brief, a degree of subjectivity in the choice of evidence to review is a distinct risk. From the outset we have assumed that the approaches being explored by this commission are innovative and likely to be unique. Therefore much of the evidence is likely to speculative and open to considerable challenge.

We have spoken in depth with colleagues in the sector before embarking on this research. We also have good knowledge of other sectors in Wales as they are rising to the challenge of generating more funding to supplement reductions in public funding.

What is clear from the current evidence base is that at the heart of the challenge is the need for Behaviour Change. Some organisations have the capacity, skills and the willingness to embrace managed risk and employ very commercial practices in the way they manage their NGB. However, these positive behaviours are likely to be few and far between. The challenge will be to encourage positive behaviour which, will in turn, deliver positive results.

The reasons for a conservative attitude amongst many NGBs are complex and diverse. However much of this conservatism is built into these organisations at a structural level. The trustees and directors have a duty to protect their assets and to be judicious in their use of public money. Therefore risk-taking and investing in activities that are not immediately part of their brief to improve performance of athletes and levels of participation are avoided.

Behaviour change theories can be highly complex and there are whole departments of the worlds greatest universities devoted to the process of developing behaviour change. However there are some basic principles of behaviour change theory that we can employ:

Understanding current behaviour and motivations of individuals and their organisations

Understanding the barriers/motivations that are preventing positive behaviour

Understanding interventions that have worked elsewhere or in similar contexts

Testing interventions and evaluating their impact

Conditions in the funding environment will continue to be challenging

Without prejudicing the recommendations of this study, it is likely that any intervention that arises as a consequence will have to be considered in the long-term and will have to develop and adapt over a considerable amount of time.

The study for this report was conducted in two stages. The detailed fieldwork and desk research, which established the needs, ambitions and capabilities of a wide range of NGBs, was designed and undertaken by Eric Davies Associates. The final report and recommendations were researched compiled and authored by the Funding Centre Ltd.

2. Sports in Wales The Sector Now

Policy Context

The Welsh Governments vision for sport in Wales was originally set out in, Climbing Higher: A Strategy for Sport and Active Recreation in Wales. This was published in 2005 and articulated the contribution of sport to the wider policy agenda and in particular, to the health of the nation, setting some ambitious targets for increased participation and elite level success.

The document was then followed in 2006 by Climbing Higher: Next Steps in 2006; a document which outlined plans for investing the additional 7.8m secured by Climbing Higher for the Sport budget in 2007/08 and 2008/09. In the three years following the publication of Climbing Higher the Sport budget increased from 10.36m to 19.91m and was aimed at programmes and activities to support the achievement of the strategys targets. The current Welsh Government investment into Sport Wales, for 2017-18 is 22.52m.

The only policy statement on sport the Welsh Government has made since the publication of Climbing Higher, in 2005, was on the subject of elite sport. It followed an independent review in 2008 and triggered the development and publication of Sport Wales first Elite Sport Strategy in 2010, a document that was refreshed in 2015.

More recently the annual Welsh Government Remit Letter has served as the vehicle for setting the policy context and priorities for Sport Wales and its budget. The budget has for a number of years only provided an allocation for one financial year.

Like many other policy areas, Sport can be seen to have direct relevance and impact across a range of other key policy areas. These include:

Business & Economy

Culture & Tourism

Education & Skills

Health

People & Communities

In addition, there are clear and wide-ranging parallels with the ambitions set out out by Welsh Government in the Wellbeing of Future Generations Act (Wales).

The potential of Sport as a driver for Welsh Government policy objectives is therefore evident, and as such securing the financial sustainability and health of the sector is of vital importance.

It is also worth emphasising the significant economic impact of Sport at both a Wales and UK level. The 2008 Study The Economic Importance of Sport in Wales[footnoteRef:2], showed that the sector made a large and growing contribution to our economy. The headline indicators were as follows: [2: http://sport.wales/media/346157/update_64_e.pdf]

Consumers expenditure on sport in 2004 was 707 million, or 2.3% of total consumers expenditure in Wales. The comparable figure for 1998 is 2.2%.

Value-added to the Welsh economy in 2004 by sport-related economic activity was 704 million, or 1.8% of Gross Value Added (at basic prices). The comparable figures for 1998 are 531 million and 1.7%.

Employment in sport was 23,200 in 2004 compared to 19,400 in 1998, representing an increase of almost 20%. Employment in sport accounts for 1.8% of total employment in 2004 compared to 1.6% of total employment in 1998.

As a comparison, the Economic Value of Sport in England study[footnoteRef:3], undertaken by Sport England, also emphasised the significant contribution made to the economy at all levels. Headline statistics included: [3: https://www.sportengland.org/media/3174/economic-value-of-sport-summary.pdf]

In 2010, sport and sport-related activity generated Gross Value Added (GVA) of 20.3 billion 1.9% of the England total. This placed sport within the top 15 industry sectors in England and larger than sale and repair of motor vehicles, insurance, telecoms services, legal services and accounting

Sport and sport-related activity is estimated to support over 400,000 full-time equivalent jobs 2.3% of all jobs in England.

NGBs and sports organisations play a pivotal role in driving and sustaining this activity. As such, their resilience and economic viability are key to continuing this positive trend. The efforts to build capacity through commercialisation can be seen as an integral part of this mission.

Sport Wales A Vision for Sport in Wales

Sport Wales is the national organisation responsible for developing and promoting sport and physical activity in Wales. Working alongside partners such as governing bodies of sport and local authorities, they aim to encourage sporting ambitions in the young, and promote championship standards nationally.

They are the main adviser on sporting matters to the Welsh Government and are responsible for distributing Lottery funds to both elite and grassroots sport in Wales. The organisation therefore works not only to improve the level of sports participation at grassroots level, but also to provide aspiring athletes with the support required to compete successfully on the world stage.

These aims and objective are outlined in the Sport Wales Strategy, A Vision for Sport in Wales, which was produced in 2011. The document represents a very clear intent by Sport Wales, together with the sector, to deliver on the Welsh Governments physical activity agenda and achieve sporting success at the highest levels.

Like most other public bodies in Wales (and beyond), Sport Wales faces on going cuts to their budgets, which in turn will constrain the amount of financial and capacity building support they can offer National Governing Bodies across Wales. This provides the context for why commercialisation, business development, income from events and fundraising, are increasingly being looked at as means of sustaining the sector.

The National Governing Bodies supported by the WSA are varied and diverse. They range in size, budget and scope; and in their capacity to develop their commercialisation activities. Despite this, many face similar challenges and opportunities, and it was felt important that this study consider the experiences, views and opinions of the sector as part of the this analysis of how best to support future commercialisation and business development.

The Welsh Sport Association Supporting NGBs and exploring options to support commercialisation

The Welsh Sports Association is an independent umbrella body that supports and represents the sport sector in Wales, including over 60 National Governing Bodies of Sport (NGBs). They categorise the sport sector to mean anyone involved in the business of sport and active recreation in Wales.

Working as a voice for the sector, they also provide a range of support services aimed at helping members become stronger, more successful and sustainable.

In the recent Independent Review of Sports Wales (2017)[footnoteRef:4] it is noted that Sport Wales had agreed the Welsh Sports Association was better placed to lead on developing a commercialisation strategy for the sector and allocated some funding to them for that purpose; which is of course the focus of this report. [4: http://gov.wales/docs/drah/publications/170719-sport-wales-review-an-independent-report-en.pdf]

Indeed, the Welsh Government 2017-18 Annual Remit letter to Sport Wales explicitly states:

It is important that National Governing Bodies of Sport are also encouraged to be less reliant on public funds and to secure investment from other sources and I welcome the collaboration between Sport Wales and the Welsh Sports Association in pursuing that objective.[footnoteRef:5] [5: http://gov.wales/docs/drah/publications/170518-sport-wales-remit-letter-2017-18-en.pdf]

In considering the opportunities and challenges for commercialisation across WSAs membership, its important to note the bid differences in size, scope and status that exist between members. This is directly relevant as there are clear implications in terms of capacity, willingness, desire, and potential to undertake business development and commercialisation activity.

For example, WSA membership ranges from the Welsh Rugby Union; an internationally renowned Governing Body that is actively involved with wide ranging commercial activity (sponsorship, ticket sales, commercial sales, TV rights, etc.), through to the Welsh Tug of War Association. In considering options for improving commercialisation, the WSA will therefore need to assess where interventions are most needed, and where they can have the biggest impact (and whether a one size fits all, or tailored approach is needed).

View from the Sector - Consultation Survey Data

In order to fully understand the current state of play within the Welsh Sports Sector, primary research was undertaken by Eric Davies Associates with two key stakeholder groups. This work involved:

In-depth interviews with sector experts

Consultation interviews were undertake with a sample of sector experts, drawn from CEOs of the major NGBs in Wales, Sport Wales senior staff and Board members, Business leaders and other individuals with a specialist knowledge in the area of our research.

Interviews were conducted face to face or over the telephone, using a semi structured topic guide. In total 28 interviews were completed between March and April 2017.

Telephone survey of smaller NGBs in Wales

To provide a broader perspective from across the sector, a telephone survey of smaller NGBs in Wales was undertaken. The interviews were conducted during April 2017 and in all, we were able to obtain 24 completed interviews.

Both pieces of work explored themes relating to income, challenges for the sector and how commercialisation/business development/event activity might be best supported, with a view to increasing the resilience and sustainability of the sector. Interviewees were also able to provide suggestions on

Summary findings from the in-depth qualitative interviews

The summary findings from this stage of the primary research are presented below. This analysis provides an overview of the challenges facing the sector, attitudes to commercialisation and business development, as well as a range of suggestions on how the sector can best be supported moving forward. Full transcripts of interviews of interviews have been included as appendices to this report.

1. What do you see as the context for commercialisation in sport in Wales?

There was a fairly strong consensus amongst the respondents that public sector funding cuts were a major driver behind the need for greater commercialisation. However, this was only part of the reason for taking a more business-like approach. Respondents referred to the need to manage better, and to be more customer focused. Some went on to say that the starting point for commercialisation was, looking at how we spend what we currently get, i.e. to be more efficient. In addition, some respondents referred to the over reliance on volunteers in some NGBs, which added to the lack of stability of their organisations (hence the need for alternative funding to support paid roles).

The respondents cited also other problems associated with on over reliance on public funds including ring fencing (i.e. monies provided for a particular purpose defined by WG or the Lottery), and short termism (i.e. the one year round of funding, which militated against medium term commercial planning).

Despite this, respondents were able to describe a wide range of commercial activities currently in place, or actively being considered, which illustrates that the sector has already taken up the challenge. [Please see Themes 6 & 7 for more details]

2. What do you see are the main opportunities for shared services focusing on Business Development and Events creation/management?

The respondents were more varied in their responses to this theme. Some suggested the starting point for considering opportunities should be an Assets Audit i.e. a review of the physical and intellectual assets held by NGBs in Wales that are of value to others.

Others commented that high participation/high spectator sports are much easier to commercialise than others.

A number suggested focusing initially on members and potential sponsors to find out what our customers needs are and to match our offerings to their needs i.e. a customer focus. In line with this, it was suggested that the best place to start was to look at how we might obtain more revenue from the things we currently do e.g. from conferences that are currently run.

Some noted caution and said that developing new revenue streams was not as easy as it might seem and anything considered had to be economically feasible it was suggested that it is all too easy to expend a lot of effort for little or no return.

Some saw the best opportunity as focusing on healthy living as a way of raising revenue and suggested running in-house programmes for corporate clients staff focusing on exercise and fitness.

A number suggested that shared services (to deliver buying economies) might offer the best return on effort in the short run.

A few referred to their Club structure and felt it was important to work with the clubs in this area because of their closeness to the members.

Others felt that there is a need to generally increase the level of business experience on NBG boards (especially in the areas of marketing and customer relations) and felt there was a need to have a more up-to-date approach to information technology i.e. to focus on Apps not web sites as a way of communicating with our audiences.

Finally, it was suggested that opportunities for smaller sports were less clear-cut and in their case there was a need to collaborate and innovate.

3. What do you see are the main threats for shared services focusing on Business Development and Events creation/management?

There was a more varied response to this theme.

Firstly, some respondents said that the main threat was NGBs lack of understanding of customers needs members, potential members, spectators, sponsors and media.

Others focused on the costs and effort involved in securing sponsorship and the ease with which sponsors can disengage with a sport.

Some respondents referred to the risks associated with engaging with business and divided these risks into operational (actually delivering the agreed activity or event) and contractual (the contractual conditions placed on the NGB by the sponsor), both of which could have serious financial implications. A number added that sponsors were becoming much more demanding in terms of their requirements from a sponsorship deal and NGBs had to be aware of the kind of objectives sponsors have, e.g. to boost employee morale and engagement with the company, to support product development, to boost a brand (associations with sport, art, etc.) and to help drive customer loyalty.

Others focused on issues related to the NGBs (i.e. complacency amongst the leaders regarding the need for commercialisation), to threats to sporting facilities (from cuts on public spending) to the relatively small size of Wales (i.e. 3m population), and to pressure on corporate spending from economic uncertainty.

4. What do you see as the main strengths of WSA in providing shared services focusing on Business Development and Events creation/management?

The majority view was that WSA was the right place for this sort of activity (i.e. Business Development & Events creation/management). WSA already had an advocacy role, which could be extended to the corporate world and by working with the NGBs could make a real contribution to the funding of sport in Wales.

Others felt that WSA should build on the work they had already undertaken in shared services (DBS and insurance) and felt there were significant cost savings to be made in terms of recruitment, accounting, fleet, travel and general clothing etc. In particular, a number of respondents referred to the experience and abilities of the WSA team as a major strength.

5. What do you see as the main weaknesses of WSA in providing shared services focusing on Business Development and Events creation/management?

A significant minority cited WSAs lack of experience of Business Development & Events creation/management. Others wondered where resources would come from to support such services.

Others pointed out that some of the larger NGBs already have staff engaged in these activities and this would be a competitive threat to WSA. Others added that some Welsh NGBs obtained these services from their UK/English NGB.

Other less frequently cited threats were:

Possible conflict of interest when seeking sponsorship for more than one sport from the same pool of sponsors

Too many sports in Wales simply being too small for commercialisation

The length of time needed to develop business relationships with sponsors could be beyond the funding of WSA.

6. What would you see as the most likely form of Business Development shared services?

Respondents were quite enthusiastic and imaginative in their reaction to this theme. They offered the following ideas:

Develop sports based away day/team building schemes for corporate clients (public, private & third sector)

Develop more competitions and competition based events

Design events to meet companies needs employee wellbeing, team building, relationship building with customers/suppliers

Focus on the needs of members and take a more commercial approach to the membership list

Conduct an asset audit as a basis for business development

Use our athletes to enhance current activities for commercial benefit and to create commercial events based on their involvement

Promote strength and conditioning training to individuals and organisations

Look at merchandising

Develop healthy living Apps

Link to tourism (with the benefit of Visit Wales grants)

Collaborate with other sports to develop unique events

Engage with TV to get a higher profile for sports in Wales and to get a fee for their coverage

Offer in-house training/coaching in competitive performance for corporate clients (public, private & third sector)

Look at all the different groups in society we can involve in our events

Run summer camps where kids can get involved in a range of sports

Add a non player membership category to our membership structure to enable non players to be involved and to raise some revenue

Improve the understanding of marketing within the NGBs in Wales

Use social media to create new sporting activities (like Street Games).

7. What would you see as the most likely form of Events creation/management?

Generally, respondents seemed to see this area as offering the most potential. They referred to:

Building on events they currently run, such as business breakfasts, conferences, sports festivals, etc

Bidding for International events

Creating multi sports events that meet a niche demand (avoiding competing directly with the private sector)

Developing events that include all participating groups, gender, age, disability, BEM, etc

Developing multi sport events such as CAST (cycling, athletics, swimming and triathlon)

Creating multi media events mixing sport with music, food etc. (a la Boardmasters)

Developing business focused events such as CEO Kickabout (WFA Trust and Acorn Recruitment).

8. Are there any other comments you would like to make?

A significant minority focused on shared services (as a way of obtaining economies of scale) and stressed that this was a key way for WSA to make an immediate benefit for NGBs in Wales.

Some respondents pointed to the fact that the NGBs in Wales were very disparate and that WSA should not think that a one size fits all will work for this group. In response to this, some said that WSA must carefully target those NGBs that can offer the best return on effort, both for WSA and the NGBs in question and sport in Wales generally.

Others raised the issue of where WSA is positioned (i.e. in terms of Sport Wales, the NGBs, and Welsh Government) in Sport in Wales?

Some said that WSA should look at the issue of the need for volunteer recruitment.

Summary findings telephone survey of smaller NGBs in Wales

Findings from the telephone survey interviews largely mirrored the themes highlighted in the in-depth interviews. Respondents confirmed the challenges facing sporting bodies at a time of declining income from public sector sources, increased competition and challenges linked to capacity and experience.

Interviewees were asked a range of questions, the full responses to which are included as an Appendix to this report. Perhaps some of the most interesting data (in the context of this study) came in response to questions on the current funding climate, the capacity of organisations to undertake business development work, and the need for additional support for the sector. The table below offers an overview of these responses:

Please tell me if you agree or disagree with the following cited statements?

% of respondents

Strongly

agree

Agree

Disagree

Strongly

disagree

NR*1

1

There is a real

funding problem facing our sport in Wales

45.8

54.2

0

0

0

2

We dont have the

staff to mount any

meaningful business development work

45.8

41.7

4.2

4.2

4.2

3

There is a need for

a support service to

help us source new funds

58.3

37.5

4.2

0

0

Another interesting question considered the current breakdown of income for respondents. This showed the overwhelming importance of public sector funding and grants, compared with modest figures for sponsorship, events and any other commercial activities.

Can we look at how you are currently funded. In rough percentage terms how much of your income for the most recent financial year came from the following sources?

Source

Mean values for the sample

%

Sport Wales

30.0

Membership

35.2

Competitions & events

6.2

Sponsorship

8.2

Other (*1)

17.0

Other (*2)

4.5

Total

100.0

*1 Misc. DSW, Grants, UK NGB, WG Health, School, Clubs, Sport England

*2 Self-financing, Misc.

The respondents were also asked about the forces that are driving greater commercialisation across the Sector; data that provides some insight into current attitudes and behaviour.

Do you agree or disagree that any of the following factors are driving commercialisation in sport in Wales?

% of respondents

Strongly

agree

Agree

Disagree

Strongly

disagree

NR*1

Year on year reductions in the funding from Sport Wales

16.7

66.7

4.2

0

12.5

The short term nature of SW funding restricts our medium term planning

29.2

54.2

12.5

0

4.2

The pressure to meet non sporting goals set by Welsh Government

8.3

50.0

16.7

4.2

20.8

A desire for more independence on the part of NGBs

12.5

33.3

16.7

8.3

29.2

Finally, a range of other questions explored themes of how business development/ commercialisation could support the sustainability of NGBs. Respondents offered a range of suggestions and ideas, including:

Grow income

Develop Business partnerships

Partnering

Attract big sponsors

Get business involved

Commercialise skills

Create products

Better publicity

Both the consultation interviews and telephone survey responses demonstrated recognition of the need to do more to generate income through commercialisation. In addition, stakeholders were keen to receive more support and guidance to drive this activity and acknowledged there was a need to improve capacity and skills across NGBs.

The Sector - Conclusions

The evidence shows that there is a clear need for greater diversification in funding and an appreciation that greater commercialisation is needed. What is particularly telling is the key motivations for greater commercialisation amongst NGBs. It is not seen as part of the day job but as an impending necessity born out of declining public revenues. It is not seen as an opportunity to deliver a better service or improve performance. This is at odds with the larger NGBs that are performing well, who see more commercial activity as a positive driver that will enable an expanded or more innovative service to be delivered.

Respondents have provided some clues as to the type of interventions and support that the sector requires in order to improve commercial performance. We have a clear picture of the perceived barriers to improvements amongst the smaller or less commercially active NGBs. As predicted by the brief, these barriers are largely to do with limited capacity and capability.

From a sectoral perspective, the WSA is well placed to provide support to NGBs as it has the mandate, although not the resources to undertake this support. It appears to be seen as a trusted partner of the NGBs and the logical body to deliver support in this area.

In order to explore the type of interventions that could be developed it is important to understand the market potential. Is there room for growth and is further investment really available? Are there examples of outstanding commercial performance that can be replicated, developed or expanded? The following section will address these questions in detail.

3. The Market

In this section we will explore the wider market potential to develop and run events in Wales. We will explore the local financial and economic potential and then look at some examples of successful initiatives to understand the factors that have enabled that success.

Before we investigating the wider market though, it is worth considering the level of financial need that will need to be met by commercial activity. This will help direct our analysis and focus on the broad quantum of revenues that might be available

Direct public expenditure from the Welsh Government and the National lottery amounted to just over 41million in 2016/17. The table below shows the distribution of this funding between national and local

WG

Lottery

Total

Communities local

8,399.80

6,354.50

14,754.30

Communities national

7,930.80

4,346.20

12,277.00

Elite & performance sport

0.00

6,691.90

6,691.90

Corporate and sports development

5,327.40

1,705.90

7,033.30

Total

21,658.00

19,098.50

40,756.50

[footnoteRef:6] [6: Source: This is Sport Wales Business Plan 2016-17 http://sport.wales/media/1849728/sw_business_plan_english_pdfv1.pdf]

Given the recent historic cuts in government funding and the steady decline in lottery ticket sales, it is difficult to estimate the exact shortfalls that NGBs will face, but it conceivable that

a 5-15% cut in funding is possible over coming years. Therefore, there is a potential shortfall of around 2 - 6 million per annum, that will have to be met from other sources. When exploring the size of the market and the revenues that can be generated, these kinds of sums will be used as the benchmark.

Market potential

If events are to be the main focus of commercial activity for NGBs then the following the sources of funding will be the main drivers of financial success.

Sponsorship - is there a thriving sponsorship base that can be accessed at a Wales-wide or even UK level to help fund activity? Can businesses based outside Wales be attracted to support events in Wales?

Audiences/participants - Are there large enough audiences in Wales or will come to Wales to enjoy events. What is the nature of these audiences and do they have the financial resources to buy tickets and merchandise at the levels required to make events a success

Public funding - are there other sources of public funding that can be accessed that can help underwrite risk and provide reassurance and incentive to other investors?

It is important to explore potential within Wales in particular but also to understand how to use events to access the UK and international markets.

Sponsorship

UK Sponsorship Market

Sports sponsorship can be defined as the funding of sporting activities by commercial organisations as part of their communications strategies, which often include PR, advertising and marketing activities. Key Note estimates that the value of major new deals in the UK sports sponsorship market increased strongly in 2015, boosted in part by a number of major new contracts signed by Barclays Premier League clubs.

Annual sponsorship spend in the UK is around 700 million. The large majority of this around 80% is sports sponsorship, with a further 80 million spent in support of the Arts.

Advertising and Sponsorship spend in the UK 2013[footnoteRef:7] [7: Source: Deloitte analysis on Advertising Association/Warc (2014), Arts & Business (2012), Key Note (2013)]

bn

%

Advertising:

All Advertising:

17.43

95.30

Sponsorship:

Sports

0.69

3.77

Arts

0.08

0.44

Other

0.09

0.49

All Sponsorship

0.86

4.70

Grand Total

18.29

100.00

Football remains the most lucrative area of sport in terms of sponsorship deals, with the global popularity of the Barclays Premier League being the major generator of record breaking sponsorship deals. Other sporting events to attract high levels of sponsorship in 2015 included the Rugby World Cup. The sponsorship of womens sport remains marginal by comparison to mens sports, however, with for example the England womens cricket team only having signed their first standalone sponsorship agreement in 2014.

Getting an accurate picture of the total value of sports sponsorship is complicated by the changing nature of such sponsorship, and by the fact that many organisations do not report their revenue in detail. As a source of funding, however, sponsorship is often crucial to the staging of high-profile sporting events.

Football and Formula 1 racing together account for more than half of all sports sponsorship spending in a market otherwise fragmented across dozens of sports, each offering sponsorship opportunities for leagues, cups, teams, individuals or even stadium sponsorships.

The market attracts sponsoring companies from most industry sectors, although financial services and alcoholic drinks brands are traditionally the biggest contributors to sports sponsorship (e.g. the Barclays Premier League in football, and the Heineken Cup and Guinness Championship/Pro 14 in rugby).

The Welsh Sponsorship Market

The UK sponsorship market is only relevant for the highest profile events in Wales or for the very largest sports. For the majority of events the Welsh market is going to be of greatest importance.

In terms of corporate giving and sponsorship, Wales has a number of disadvantages. Few major companies are headquartered in Wales, and so a corporate landscape dominated by branches, regional offices, and operational centres rather than head offices results in relatively small discretionary budgets available locally.

There is only one FTSE 100 company in Wales Admiral Group. There are a few other major players with a track record of supporting charities and investing in sponsorship, such as Principality Building Society, but the pool of prospects for major corporate sponsorship is relatively small. The Welsh Government noted this in the Feasibility Study for the 2026 Commonwealth Games:

Sponsorship generation in Wales has always been a challenge and probably a bigger challenge than the rest of the UK because there are not the same number of major companies with headquarters in Wales.[footnoteRef:8] [8: Welsh Government, July 2016, Summary of Wales 2026 Commonwealth Games Feasibility Study, p9]

SMEs are used to supporting sport at the grassroots level, but some education may be required if they are to think beyond sponsoring a jersey or advertising in a season brochure.

Very little hard data exists for sponsorship in Wales alone. In 2011 Arts & Business estimate that 6.97 million - was invested by businesses into the arts and culture in the form of cash, in-kind and corporate memberships. There is no comparable data for sports but if we assume that there is a pro-rata equivalent investment compared to the UK overall, then it is clear that the market is worth tens of millions.

Audiences and participants

If events are to be successful and to grow then revenues will be driven at all levels by the volume of participants or spectators. In this respect the picture for Wales is very encouraging.

Sport Wales conducts research into participation in sport in Wales on a regular basis. A recent report, Active Adults Survey, 2014 State of the Nation provides an interesting insight to adult sporting activity in Wales. This shows a steady increase in levels of participation over the last decade. As the table below illustrates participation levels have increased significantly over the period from 57% in 2000-1 to 72% in 2014.

Participation in sport (any participation in the previous four weeks[footnoteRef:9])[footnoteRef:10] [9: Interviews were conducted between 29/01/14 and 02/0315] [10: Source: http://sport.wales/research--policy/surveys-and-statistics/statistics.aspx]

% of respondents[footnoteRef:11] [11: Sample size 8,156 adults, stratified to represent the 22 Unitary Authority areas]

2000-1

2002-3

2004-5

2008-9

2012

2014

% adults

57

49

59

56

70

72

What is more, the frequency of participation is also increasing.

Participation in sport and physical activity number of occasions per week

% of respondents

2012

2014

Three times a week or more

39

41

Average of twice a week

9

9

Average of once a week

12

12

No frequent activity

40

38

In addition to being avid consumers of sport on television, we are increasingly attending major events to consume live sport. The importance of these events to Welsh life have been set out by the Welsh Government's Major Events Unit in their ten year strategy, A Major Events Strategy for Wales 2010-2020[footnoteRef:12], as well as being considered by the National Assembly for Wales Communities and Culture Committee in their 2010 report - Making the Most of Sporting Events[footnoteRef:13]. Both documents note the increasing importance and popularity of major events in Wales, and define some of the impacts and indicators that can be used to measure the difference these events make to our economy, sports participation, health and a rage of other key metrics. [12: http://gov.wales/docs/drah/publications/100928-event-wales-a-major-events-strategy-for-wales-2010-2020-en.pdf] [13: National Assembly for Wales. Making the Most of Major Sporting Events]

In recent years, with Welsh Government support, Wales has successfully hosted and attracted some of the worlds biggest and most prestigious sporting events including the Ashes, UEFA Super Cup, Senior Open Championship, Rugby World Cup, UEFA Champions League Final, and Volvo Ocean Race. Alongside these global brands, the Welsh Government supports a thriving portfolio of other sporting, arts and cultural events, such as Hay Festival, Machynlleth Comedy Festival, and Festival No 6. The rationale and method for this support is defined in the Major Events Strategy and summarised below.

Public Funding

Welsh Government Major Events

The Welsh Government (WG) state that major international events:

influence the way we see Wales and the world, and how the world sees Wales.

Building a positive external reputation and brand image for Wales is an important challenge recognised by the Welsh Government. The Welsh Governments Major Event Unit invests in a range of events in order to stimulate growth, underwrite risk or attract additional investment in events that deliver this aim.

WG classifies major events into four groups:

Major Events these are peripatetic events defined by their scale and appeal to attract and influence large-scale international audiences and extensive media coverage, and to deliver economic impact and significant visitor numbers for the host destination. They can command global TV audiences and involve major international sponsors. They can have a positive impact in influencing specific market segments and in changing attitudes and behaviours. These international events are not owned by Wales and would have to choose Wales in the face of international competition. Examples include an Ashes Test Match, rugbys Heineken Cup Final and the MOBO (Music of Black Origin) Awards.

Signature Events these events can also have a strong international dimension but unlike the category of major events described above they are recurring. They are also either unique to Wales or distinctively Welsh in flavour, and reflect our culture, traditions and values. They enhance the image and cultural identity of Wales and provide a high quality experience for visitors. Successful Signature Events continuously re-invigorate and replenish their audiences. Examples include established events such as the Hay Festival, the National and Urdd Eisteddfodau, the Llangollen International Musical Eisteddfod and the Royal Welsh Show, as well as newer events like the Green Man and Wakestock festivals.

Mega events like major events, these are peripatetic events with a global reach. They are distinguished by the fact that they are normally preceded by large-scale capital projects, often involving building new venues and supporting infrastructure. They involve a major bidding effort and demand a high level of government resource and support at all stages from bidding to delivery. Typically, this means the creation of a stand-alone organisation with a dedicated budget to manage the entire process from start to finish. Examples include the Commonwealth Games and the Ryder Cup.

Growth Events these are smaller events, often new, with a footprint and focus that is regional, local or sector led and which demonstrate the ambition and potential to evolve and grow to become Major or Signature Events for Wales. These events can also act as milestones in growing the capacity, experience and credibility of destination Wales, acting as a necessary precursor to the hosting of targeted major events. These will be considered for support. An important dimension of this added value investment is in creating and nurturing home grown events, thereby supporting efforts to build a strong and sustainable events industry in Wales. Examples include the Cardiff Half Marathon.

Major sporting events make a significant contribution to this suite of high profile events for Wales. However there is a desire to see more events being brought forward to the Major Events unit for consideration. Like many government departments, the unit is stretched in its capacity to deliver core activity and is unable to actively work with the sector to develop project ideas. Similarly it has limited capacity to develop intelligence about forthcoming opportunities. It requires the sector to bring these opportunities forward.

David Evans, who heads up Sport at the Major Events Unit was enthusiastic about any initiative that would help develop projects that could be made investment-ready for the MEU to consider. He acknowledged the limits of their remit to work with initiatives at an early stage, however, as a major investor he was receptive to involving the MEU to influence other investors or to influence project processes to the benefit of Welsh events.

Local Authorities

According to Wales online the average amount spent by Welsh councils per person fell from 39.95 in 2009-10 to just 30 in 2014-15. And it fell even further to just 26.33 last year. Total funding on sports and leisure facilities by councils in Wales is now lower than it has been for 11 years.

When population growth and inflation are taken into account, the scale of the cuts to services that have been needed to cope with the fall in spending are far greater.

This background of falling investment directly in sport also filters through to large-scale events. There is a growing threat to the sustainability of some large-scale events if they do not get the financial backing of local authorities.

The Market - Conclusion

Public funding for large-scale events is probably going to continue to decline in the coming years. However, this is not to say that it is going to disappear altogether. Most local authorities will work closely to develop successful events that drive trade and economic activity. They will undoubtedly continue to support events in many ways including with in-kind support, making facilities available and granting licenses etc.

Support by Welsh Government for Major Events appears to be very robust as the programme consistently provides support for events of the highest quality and impressive outputs. There is a clear appetite from the team at MEU to see more high quality events being proposed and it is up to sporting organisations to compete more effectively and consistently for this investment.

We know that audiences and private sector investors are not as wealthy as their counterparts in England but this is not to say that they are declining. Welsh events have done very well at attracting both investment and audiences from well beyond Wales borders than can help supplement the limited investment available in Wales. There is no reason to believe that more cant be done to grow this kind of activity by NGBs in Wales.

4. Competitor / Comparator analysis

We could find no examples of another service that provides the complete offer proposed by WSA to encompass both business development support and event management support, whether in Wales, the UK or internationally. However, we have identified evidence of direct competitors in some areas, and also comparators worthy of mention. We have also uncovered evidence of substitute offerings.

Business Development Support and Interventions

Sport Sector

Private sector sponsorship consultancies

Welsh NGBs going it alone e.g. Disability Sport Wales

UK/England NGBs offering this service to their Welsh counterparts (e.g. British Cycling)

Light-touch support offered by sports councils / funding bodies and their equivalents (Sport England and UK Sport, Sport Ireland, Sport New Zealand, Australian Sports Commission, etc.)

Activity around the 2012 London Olympic games such as the FTSE-BOA Partnership [case study below]

Non-Sport Sector Examples of Good Practice (Arts and Heritage)

Arts & Business Cymru [case study on page 24]

Heritage Lottery Funds Catalyst fundraising capacity building programme for heritage organisations

Arts Council Englands Arts Fundraising and Philanthropy programme

Case Study: the Financial Times Stock Exchange (FTSE)-British Olympic Association (BOA) Partnership[footnoteRef:14] [14: Dr Geoff Walters, Bidding for Major Sporting Events: Key Issues and Challenges faced by Sports Governing Bodies in the UK. Birkbeck Sport Business Centre. Birkbeck, University of London: September 2008.]

This was a capacity building initiative spearheaded by the British Olympic Association in 2007 in advance of the Vancouver 2010 and London 2012 Olympic Games. It drew on the in-kind support and expertise of FTSE companies, which aimed to match 33 major British companies with the 33 NGBs of Olympic Sports (both winter and summer). Football and tennis excluded themselves from the initiative, apparently due to the their scale and existing wealth of commercial experience. The British Olympic Association acted as a broker, and found partners for the majority of the NGBs. Taekwondo, curling, fencing and biathlon were among the less likely candidates to have found a match.

The in-kind support offered through the programme developed along the following themes:

Access to expertise and time

Missing skills

Improved policies and procedures (board level governance)

Sounding board (advisory group)

External advisor on board

Access to other agencies

Benefits to the FTSE 100 Companies fell into the following categories:

Personnel development

CSR

Association with the Olympics

Access to London 2012 Olympic competitors (e.g. for staff talks)

Staff motivation (e.g. G4S encouraged their staff to take up judo through the initiative)

Staff volunteering opportunities

The companies themselves tended to view the relationship as a CSR exercise, in that they were not expecting a return on their investment. It was observed that NGBs are by their nature resource-hungry, and needed the help the companies could provide far more than the companies needed the association or benefits.[footnoteRef:15] [15: Stephen Morrow and Leigh Robinson. The FTSE-British Olympic Association Initiative: A resource dependence perspective. Sport Management Review. Vol 16, 2013. pp 413423.]

As one example of a partnership through this scheme, Alliance & Leicester were matched with the Leicester-based British Swimming, with the objective of addressing an identified need to improve British Swimmings customer relationship management. Alliance & Leicester staff were also able to assist British Swimming with the delivery of the 2008 FINA World Swimming Championships in Manchester, with staff volunteering at the event itself, and at other British Swimming events.

The NGBs had no rights to grant in relation to the Olympic Games and were also unable to grant rights with respect to the British Olympic team, Team GB, so this in-kind approach was a good way to maximise what collateral they was available. Some of the participating companies such as Sainsburys and John Lewis found ways to capitalise on the advertising and PR opportunities relating to the association with their respective NGBs (English Table Tennis and the British Equestrian Federation) without infringing on the Olympic rights holders.

The FTSE-BOA partnership was essentially a time limited campaign with London 2012 as its endpoint, but it is not difficult to see the potential for creating a similar campaign even without the Olympic hook. WSA already benefits from a similar partnership with Acorns Executive Search Division, who offer in-kind advice and support for NGBs seeking to recruit voluntary / non-exec board members. Would other companies working in Wales be more willing to offer in kind support and expertise if they saw it in the context of a campaign, with other successful businesses also taking part.

Case study: Arts and Business Cymru

About Arts & Business Cymru: Background

Arts & Business grew out of the creation of the Association for Business Sponsorship of the Arts (ABSA) in 1976, taking inspiration from a model pioneered in the US. As an organisation, it was almost entirely core funded by the Arts Council of England for the majority of its history. Funding for the work in England came to an end in 2011 (a casualty of the policy drive for austerity), and it has since merged with Business in the Community. However, the offices in Wales, Northern Ireland and Scotland set up as separate charities, and received funding from the devolved governments in those nations. Arts & Businesss core funding from the Arts Council of Wales came to an end in April 2016.

Programmes

Arts & Business Cymrus work has two main strands: building capacity and resilience in the arts, and promoting business sponsorship. Its core offer includes

Professional Development Programmes. A service matching volunteers from the business community with arts organisations in need of their skills (mentoring and coaching, board placements, and other pro bono placements)

A sponsorship brokerage service

Awards to recognise and promote business sponsorship of the arts

Capacity building and training opportunities for arts organisations

Arts & Business Cymru have also created and administer a sponsorship match funding scheme (CultureStep) funded by two local foundations, and an arts fundraising internship programme, which has been funded by a range of statutory funders and foundations over the last 4 years.

Structure and Business Model

Arts & Business Cymrus business model is a membership organisation, with approximately 70 business members and 160 arts members. It is registered charity and company limited by guarantee, with a wholly owned subsidiary trading company.

In the past 5 years, the organisation has helped 273 arts organisations to improve their skills and income generation, and assisted 129 business members to meet their own business objectives by engaging with the arts. Among its achievements, it has levered over 1.5 million from businesses to the arts in Wales and has brokered 120 business / arts partnerships. Last year the value of the in-kind or pro bono support provided by business members to arts organisations through the Professional Development Programmes was more than 500,000.

Although it is impossible to know how much of the investment in the arts in Wales should be attributable to Arts & Business Cymrus intervention, it is clear that the organisation has succeeded in the valuable work of:

Educating businesses and the market on the value of partnering with arts organisations

Equipping and supporting the workforce of Welsh arts organisations in a number of key areas such as sponsorship, and in many cases educating them on the need for a professional approach to governance, marketing, communications and fundraising

Attracting and levering new investment to the sector from business

Competitors operating in the Sporting Events Market in Wales

Welsh NGBs (including Football Association Wales successful bid to host the 2017 Champions League final, Welsh Athletics spin-off Run 4 Wales [see below])

UK/England NGBs

Major private sector events companies and competitions (e.g. Ironman, Volvo Ocean Race, Extreme Sailing Series, etc.)

Smaller private sector events companies (e.g. Invincible at Margam Park, Always Aim High Events, and RunWales, organisers of the Conwy Half Marathon and other North Wales road races)

Charities (e.g. Kidney Wales partnership with Run 4 Wales)

Clubs (e.g. Glamorgan Cricket)

Case study: Run 4 Wales

About Run 4 Wales

Run 4 Wales is non-profit sporting event management company delivering more than 15 major road races in Wales, including the Cardiff University Cardiff Half Marathon and now Velothon Wales from 2016-2018 (taken over from Ironman on a license agreement). Its objectives are To promote, manage and deliver events in Wales To build event management capacity in Wales To prepare bids for Major Events to be hosted in Wales To promote Wales as a sports tourism destination To support the running community and race organisers To support the development of grassroots athletics in Wales

Events managed by Run 4 Wales had 50,000 competitors in 2017. Half of these were participating in the Cardiff Half Marathon, which is the largest mass participation event in Wales and the second largest half marathon in the UK. But it is the sheer growth of the event that is impressive. Participation has doubled over the course of 7 years from 11,000 running in 2009 to 22,000 in 2016. 25,073 have already registered for the 2017 race being held on 1 October, again breaking the previous record. The number of spectators has also more than doubled from 20,000 to more than 50,000. The media coverage of the half marathon by the BBC and Welsh press, its traction and shareability on social media, and the high volume of spectators make it particularly attractive to potential sponsors.

Run 4 Wales Structure

Run 4 Wales is a separately constituted social enterprise and company limited by guarantee. It was set up by Welsh Athletics to manage the risk of managing major events and to limit liability in the event of Run 4 Wales making a loss. Welsh Athletics is a director of Run 4 Wales and has one seat on its Board, but does not have significant control of the company, in order to maintain the separation of the two organisations.

The Run 4 Wales Charitable Foundation is the charitable vehicle of Run 4 Wales and is a separate entity from both Run4 Wales Ltd and Welsh Athletics (who many nominate up to two trustees of the Foundation). Its charitable object is to promote community participation in healthy recreation for the public benefit in Wales. So far, the Foundation has provided a grant to the Welsh Schools Athletic Association to support participation at National and International competitions, and also to fund a National Support Officer whose role is to support and develop the schools work. The existence of a charitable vehicle may allow Run 4 Wales Ltd to operate more tax efficiently (not least enjoying an 80% business rate relief on its premises), and may also encourage corporate donations and sponsorship. In the most recently available financial year (Jan 15- Oct 15) the Foundation received 256,922 in donations, which were presumably mainly given by Run 4 Wales Ltd.

Case study: 2015 World Orienteering Championships, Inverness

Orienteering is a niche sport most popular in the Nordic countries, but it also has a home in Scotland at the Scottish Orienteering Association base (the National Centre at Aviemore).

Event Scotland invested hugely (relatively speaking) in helping the Scottish Orienteering Association to host the World Orienteering Championships, providing 280,000 towards an event that does not raise any commercial revenue for organisers through ticketing, sponsorship income or broadcast rights fees. The investment paid off, however, generating an economic impact three times greater than was initially (conservatively) forecast. The Scottish Orienteering Associations trading subsidiary the Six Day Event company directly managed the event. Although the organisers were disappointed that sponsors could not be found[footnoteRef:16], the event was tremendously successful in other respects: [16: The World Championships in 2016 (Estonia) and 2017 (Sweden) did find a headline sponsor, the Finnish company Nokian Tyres.]

It was estimated to have an impact of 9.4 million on the Highland economy, attracting more than 8,000 participants and spectators from more than 50 countries. (Most of the participants and spectators were from Northern Europe, especially Scandinavia, a target market for Highland outdoor tourism.)

It helped the Scottish Orienteering Association to make a profit of 30,000 (which in this case was reinvested in the sport itself)

The Scottish Orienteering Association were also able to attract new volunteers and members, growing participation and membership by 20% through 2015

(As an aside, the Scottish Orienteering Association is a charity registered in Scotland and its charitable status has enabled it to attract funding from Scottish trusts and statutory sources, and to use the World Championships as a vehicle for their outreach and participation work.)

Although undoubtedly there are other examples closer to home, this case study is a good example of what can work as a way of generating income for a NGB in an almost unknown sport whose primary audience is outside the UK. It also highlights some room for growth and potential missed opportunities that perhaps could have been seized with better or longer-term support in terms of business development and event management, and more investment in organisational development. (The organisation has begun to address this by creating a Chief Operating Officer position, but it continues to rely heavily on its voluntary board of directors and other volunteers for business development activities.)

Major Events Funding: Sport England Major Events Bid and Legacy Fund 2017-2021

DCMSs current sport strategy, Sporting Future (December 2015), notes that in England there is no direct equivalent to the support available for developing major events bids offered by the devolved governments in Scotland, Wales and Northern Ireland. The need for more support was raised in their latest consultation, and it was felt that English venues were being put at a disadvantage. Therefore Sport England is now establishing a scheme, alongside the existing major events engagement fund, to support English bids for major sporting events. A fund of 2 million is being offered to help NGBs with major events, with the objective either of supporting innovative business models and better income generation, or to help develop programmes to engage less active local people in sport or physical activity around the event.

Through the first objective, Sport England is hoping to work with NGBs to test the commercial opportunities around major events already being exploited by major sport clubs, commercial leagues, and other countries. This could involve testing:

Developing innovative ticket packages

Priority booking

Pay per view event streaming

Upselling and cross-selling onsite and through ticket packages

Developing onsite experiential opportunities

From a Welsh perspective, this initiative should hopefully provide some interesting case studies and learning that can be replicated in Wales. This initiative addresses one of the key issues around risk that NGBs face -- simply that they often cannot, or perceive that they cannot, afford to take on too much risk in trying innovative commercial approaches. It should also be a salutary reminder that Wales cannot afford to rest on its laurels in a fiercely competitive major events environment. Welsh NGBs usually cannot compete for bids internationally because they are not part of the international federation, so the direct competition is within the UK under the auspices of Sport UK.

International Examples

In terms of NGB capacity building, we looked at public sector sporting bodies and federations in a range of other countries including Sweden, Canada, Australia, New Zealand and Ireland, and found a few examples of light touch capacity building (e.g. online toolkits and information sheets) but nothing more substantial.

In terms of events, most of the examples we found came directly from the Sports Council itself. For example Sport New Zealand has recently launched the New Zealand Sporting Events System, an apparently top-down strategy to ensure joined up event planning from the local community level to mega events.

In Australia, a great deal of sport development and infrastructure has developed at the State level as a result of its Federal system of government. The result is that, for example, Sport New South Wales (and its member sport governing bodies) may have different policies and programmes to Sport and Recreation Victoria (and its member sport governing bodies), and they compete against each other for major events. At the national level, the Australian Sports Commissions agency for elite / high performance sport is the Australian Institute for Sport, and the Australian Governments Department for Healths Office for Sport coordinates major events. With so many public sector organisations involved in sport, perhaps it is not surprising that there does not appear to be a single coordinated response to the challenges of event management and business development facing state or national governing bodies.

Competitor Analysis: Conclusions

There appears to be a wide range of support models in existence across sectors and even with the sports arena. No single model seems to have taken hold as the blue-print for success. This would seem to suggest that the need for greater commercialisation and reduced levels of public funding is a growing phenomena with which not-for profit entities are struggling to address.

There are some very encouraging examples of success from which we can draw ideas and inspiration, particularly Run4Wales and the programmes for arts organisations developed by Arts & Business Cymru. However it is clear that a unique model for Welsh Sport will have to be developed and delivered in Wales in order to address the unique conditions to be found here.

5. Options for Support

In the previous sections we have explored the need and rationale for helping sporting NGBs to become more sustainable through effective commercialisation activity. In the main this refers to increased income from events, but is also interconnected with sponsorship and other commercial activities.

It is impossible to separate the ambition to develop more ambitious events and the need to improve organisational development. In order to develop skills, confidence etc. then organisations are going to be governed, advised and lead in a more commercial way. Therefore any intervention programme must necessarily view these objectives as two sides of the same coin.

The NGBs supported by the WSA are varied in size, capacity and focus. It is clear that some of the larger Bodies already benefit from significant commercial activity. However, the majority of NGBs are not operating at this level and are facing significant operating risks in the short to medium term in part due to declining public funding. Commercialisation provides an opportunity to manage these risks through diversifying sources of income and developing partnerships and activities with the potential to grow sport at all levels.

Consultation interviews with NGBs and Sector Experts showed that at present, NGBs face a number of challenges that inhibit their ability to explore and capitalise on commercialisation opportunities. These include:

Lack of capacity to develop and undertake effective business development

Insufficient skills to address the opportunities/challenges associated with business development

Attitudes & Behaviour within NGBs cultural attitudes to risk, change, working with others, being entrepreneurial

Lack of development funding money to help explore/develop new opportunities

Lack of tailored support to help NGBs develop ideas at critical times

Conservative attitude towards risk and

Lack of capital with which to invest

Given the potential market for increased commercialisation (as outlined in Section 3) this means that our sporting NGBs are missing out on direct funding opportunities, as well as a route through which they could significantly grow their sports (profile, participation, etc.). To address this the WSA must consider how best it can build capacity within the sector and frame interventions that can make a real difference to attitudes, behaviour and outcomes.

Possible Interventions could include:

Changing Attitudes & Addressing the Skills Gap

Training, Advice & Guidance - A programme of training, advice and guidance that helps NGBs understand the opportunities and develop the skills of their staff in a way that enables them to perform better. This could incorporate thematic training sessions, staff workshops, sector wide events, and case study sessions where leading experts could share their experiences and insights. This would be a generic service across the sector aimed at lifting standards across the board. Key to this work would be achieving a change in attitude and behaviour through highlighting opportunities and giving NGBs practical advice on how to manage any risks involved.

Giving NGBs the Capacity and Confidence to Succeed

Tailored Support Service. A tailored support package for a limited number of NGBs to work up identified commercialisation/event opportunities. Specialist WSA staff would work alongside NGB staff to develop project ideas and take them through to fruition. NGBs could be asked to apply for a limited number of Support Packages; which would allow WSA to target their resources, set some clear criteria for the intervention and manage the expectations of members. Expertise could be provided directly by WSA staff or bought in via expert suppliers such as successful NGBs or professional services such as accountants and lawyers

Mentorship & Volunteering Programme. NGBs may lack capacity and expertise to develop a new approach to commercialisation. WSA would build on its current Board Bank model to match NGBs with individuals with the necessary skills and expertise to support the development process. This could also be extended to cover Volunteers who may have a personal/professional interest or expertise in Commercialisation activity and who want to gain experience/contribute through working with a NGB (event management, marketing, fundraising, branding, etc).

Development Grants. NGBs may require modest amounts of funding to explore opportunities and develop their ideas. WSA could operate a small grant scheme to facilitate this work; which in turn would open up a dialogue with Organisations considering new events or commercial activities. Any schemes with a significant potential could then be signposted to other support agencies and, if appropriate, be flagged up to the Welsh Government Major Events Unit for more intensive support. This funding could be used to incentivise more positive behaviour, such as encouraging Welsh NGBs to bid for UK or International events via their UK associations.

Growing the Market

Educating Business. The WSA should continue to promote and educate the benefits to business of working with NGBs and sporting organisations. This may involve identifying and developing new business prospects and providing NGBs with introductions and access to those companies (through events and networking opportunities).

WSA Brokerage Service. The WSA has a well-established advocacy role on behalf of NGBs in Wales. As such they would be well placed to nurture and grow relationships between the sport sector and the private sector both through promoting the benefits of working with NGBs to business, and by helping match make between businesses and NGBs. This would draw on clear examples of where this has worked in other sectors (Arts & Business) and provide a service that would add significant value for member organisations.

Collaborative Support. In the same way that collaboration between NGBs and business may deliver benefits, there may also be scope to promote/facilitate greater collaboration between NGBs to explore commercialisation opportunities. Developing joint events or activities could deliver significant benefits, especially where NGBs have shared interests and/or complementary skills. However there are inherent challenges to working collaboratively in any sector, and sport is no different. WSA could again look to broker these opportunities and help NGBs through the process of working together (covering legal and financial aspects; providing templates for consortium working; identifying examples of business models that have worked elsewhere, etc.)

Intervention

Advantages/Opportunities

Disadvantages/Risks

Training

Can be scaled according to demand.

Can be tested initially using external experts and then brought in-house if successful.

Can be delivered relatively cheaply to large numbers.

Can be designed to fit most organisations as knowledge base is already quite low

Take up could be very low as we know that capacity is an issue.

Difficult to get the entire NGB/organisation on board if only one-or two attend training events.

Broad based training may not take account of highly variable levels of knowledge and experience.

NGBs must be willing to prioritise implementing the learning from the training and using it effectively, and they may need additional support to do so

Advice/Guidance

Provide the information & knowledge needed to develop new products/events

Share best practice and help NGBs avoid common pitfalls

Raise the quality of practice across NGBs

Stimulate changes in behaviour and a different approach to risk

NGBs might not engage with advice/guidance

Reluctance to change established behaviours

Good advice/guidance doesnt always lead to improvements in practice

Developing package of advice/guidance will require an investment of time

Programme will need to be refreshed periodically

Tailored support

Is a positive way of getting to know an organisation

Provide the capacity/expertise to grow projects with high potential

Develop exemplar projects that will stimulate behavioural change in the sector

Help NGBs overcome reluctance/anxiety to innovate

Can be expensive and resource heavy if too much time is spent on ineffective projects

NGBs may see the support as a means of supplementing their core budget/team, instead of an additional resource to deliver something new

If NGB has insufficient capacity, they may not learn from the experience; therefore no legacy benefit

Mentorship/Volunteering

With good matches it can potentially be a free resource and mutually beneficial for both parties.

Helps cement positive relationships for WSA amongst business and NGBs

Administrative burden of overseeing Mentorship/Volunteering Programme

Risk that Mentors/Volunteers are ineffective

Difficulty recruiting sufficient numbers of Mentors/Volunteers

Development Grants

Provide necessary budget to develop good ideas

Give NGBs the confidence to innovate and trial new ideas

Introduce competitive element to the service - drive excellence and provide mechanism for managing the limited resources of the support scheme

Cost

Risk that funds are spent ineffectively

Could lead to NGBs initiating new projects simply to chase the grant

Educating investors

Develop network of potential sponsors

Change investor behaviour

Increase levels of sponsorship/collaboration with NGBs

Time consuming

May not translate into increased levels of investment

Limited number of firms capable of significant investment in Wales

Investor Brokerage

Help match companies to NGBs

Stimulate new corporate relationships

Add value to the WSA service

Limitations around the size of the private sector in Wales

Saturated marketplace - risk of hitting the same companies that other sectors are also targeting

Facilitating partnerships

Explore potential for shared services/economies of scale

Increase collaborative projects/events

Share skills & best practice

Reluctance to collaborate

NGBs may have insufficient capacity to collaborate effectively

Estimating the costs of support.

The costs of long-term support are notoriously difficult to determine or to recommend without having a strong evidence base of the likely returns. As there are no direct comparators we have examined the return on investment for some large-scale support programmes in the arts and heritage sectors as a potential guide.

It is important to note that these programmes are aimed at developing a mix of philanthropy and commercial activity. However the blend of training and support is comparable. Unfortunately, the Heritage Catalyst Umbrella programmes, that have been running across the UK for 4 years have not been fully evaluated yet. Whilst they are showing very positive evidence of changing behaviour amongst the beneficiary organisations, they are unable to show a numeric ROI. However they are able to give us a sense of the overall costs.

Catalyst Umbrella programmes[footnoteRef:17] across the UK, 9 projects were funded by the Heritage Lottery Fund. Average 500,000 and in Wales 650,000 over four years. [17: https://www.hlf.org.uk/looking-funding/our-grant-programmes/catalyst-umbrellaA total of 3.46 million was awarded to nine Umbrella organisations to deliver a variety of capacity building services, learning and networking opportunities to heritage organisations. The Umbrella projects are currently delivering programmes of activity tailored to different geographical areas and heritage sectors.]

Arts Fundraising and Philanthropy programme[footnoteRef:18] - 2 million over three years 2013-16 (it has since been extended) for a similar level of investment. [18: Arts Council England (ACE) awarded 2m over three years to the Arts Fundraising and Philanthropy Consortium to professionalise arts fundraising across England and promote the arts as a charitable cause.]

Arts & Business Cymru - a wide-ranging support programmes focusing on skills, apprenticeships and brokering business volunteer support. The organisations annual expenditure is approximately 370,000 per year (2015-16), of which approximately two thirds is dedicated to staff costs (7 employees in 15-16).

Looking more closely at Arts & Business Cymrus costs, it should be noted that the total expenditure includes approximately 120,000 in fundraised grants distributed to other recipients. Delivering the professional development and training programmes alone takes up approximately one sixth of their resources, with another sixth dedicated to the match funding programme and administering the internship scheme. (This does not include time spent servicing memberships and advocating on behalf of members, which is roughly another sixth of the staffing needs and will also contribute towards members overall support.)

Arts & Business Cymru report[footnoteRef:19] that the organisation has brokered 120 partnerships between arts and business and levered over 1.5 million from business directly to the arts since 2011. 1.5 million is also approximately Arts & Business Cymrus total budget over the same period. The organisation estimates that currently 560,000 is invested from business in the arts with the help of Arts & Business each year. Another 505,000 of in kind business expertise is provided to arts organisations through Board Bank and the other Professional Development Programmes. Together this represents an ROI of approximately 3.4 (including in kind value) for every 1 spent.[footnoteRef:20] (It should be noted that the income counted in this equation is not all pure sponsorship, however; at least 120,000 of the 560,000 are fundraising and donations, e.g. for the apprenticeships programme, rather than truly commercial sponsorship.) [19: Arts & Business Cymru, Public Report to the Welsh Assembly Culture Welsh Language and Communications Committee, Illustrating the value of A&B Cymru to Wales. February 2017.] [20: Arts & Business Cymru also suggested in the same paper that for every 1 of public money invested in them, they could raise another 5.80 to fund their own operations, but this does naturally place them in direct competition with the organisations that they are supporting.]

Catalyst Cymru and the Arts & Business Cymru are particularly helpful in giving us a guide to overall costs for a Welsh programme. This gives us a range of 160,000 - 250,000 pa.[footnoteRef:21] Interestingly, both programmes are made up of a blend of paid staff and consultant resource, which is provided on demand. Both programmes also make a modest charge for their support but training in particular is very heavily subsidised and bespoke support tends to be free of charge. [21: 250k is 370k (overall cost) minus the 120k in grants redistributed.]

Estimating income and measuring success

As we have seen from some comparable programmes, the impact of training and support can take time to filter through into financial performance. The key measures for the early years appear to be measuring changed behaviours and improvements in knowledge.

The sample of events that are currently being run effectively by larger NGBs in Wales is very small. Even then, the most successful initiative, Run 4 Wales, delivers around 240,000 of surplus - a tremendous contribution still modest compared to the overall needs of the sport and the contributions being made by the public purse.

The evidence serves to demonstrate that events can be run extremely successfully in many different formats and models. However the sample is far too small to give us a clear indication o