Leisure Operator Partnerships:
Managing the Crisis and Planning for the Future
9 April 2020
The Sport, Leisure and Culture Consultancy (SLC) facilitated an online Think Tank – ‘Leisure Operator Partnerships – Managing the Crisis and Planning for the Future’ for Local Authority Client Officers with a leisure contract on 9 April 2020 from 3pm-4.30pm.
Facilitation was provided by Toby Kingsbury (Director, SLC), supported by Anna Lunn (Research Consultant, SLC) who took notes.
The delegates who attended were:
- Michael Shepherd (Slough Borough Council, Leisure Development & Client Manager)
- Liz Slater (Plymouth City Council, Leisure Partnership Manager)
- Laura Jones (Test Valley Borough Council, Sports Recreation Officer)
- Mark Hammond (Malvern Hills District Council, Contracts & Development Manager)
- Simon Allaway (East Staffordshire Borough Council, Leisure Services Contract Officer)
- Steve Taylor (Harborough District Council, Health and Wellbeing Manager)
- David Redfern (Wiltshire Council, Head of Communities)
- Priscilla Simpson (London Borough of Hillingdon, Sport and Physical Activity Manager)
- Mark Lockhart (Westway Trust, Chief Executive)
- Gemma Ryan (Sandwell Metropolitan Borough Council, Business Manager – Sport and Leisure)
- Steve Welch (Sport England, Leisure Operations and Facilities Strategic Lead)
- Kevin Mills (Sport England, Director of Capital Investment)
- Iain Greenshields (Womble Bond Dickinson, Partner)
- Duncan Wood-Allum (SLC, Managing Director)
- David Rushton (SLC, Director)
- Mark Tweedie (SLC, Associate)
Key Areas of Discussion:
- Reaction phase – immediate response to managing closures and negotiating financial support for operator partners
- Recovery phase – medium-term planning for reopening facilities and the potential need to ‘reset’ existing contracts
- Regeneration phase – Longer term implications for leisure contracts linked to the future leisure market.
Attendees noted broadly similar issues with their current contracts and operators:
- Immediate financial support – some are considering covering 20% top-up of furloughed staff and meeting costs of utilities, repair and maintenance, cleaning, delaying / deferring of management fee. Some are continuing with negotiations and have yet to agree details of financial support. Consideration of short-term loans to cover staff costs prior to receiving government support on furloughing. Pre-payment of management fee to operator also being considered.
- Recognition that discussion and negotiation over any potential longer-term financial adjustment would be required once the timeframes of the recovery phase is clearer.
Key Discussion Points:
- Sport England are working at a ministerial level to ensure the impact of the crisis upon the local authority leisure sector is well understood by government.
- Sport England recognise the pressure local authorities are under and are committed to providing Councils with a support package of resources, advice and expertise which will help build capacity in managing the situation. This will include reviewing and assessing the short-term situation, as well as medium to long-term considerations on what re-opening may look like and what changes might be required to leisure operating contracts. The impact of Covid is going to exceed 3 months and partnerships will not go back to where they were before.
- Sport England are pulling together a summary guidance note for Councils to support them in managing the crisis including a recommended approach moving forward for collaboration with their operator partners.
- The importance of an ‘open book’ approach was stressed in order to ensure full transparency on the financial implications of the crisis for operators both during the immediate closure period and then through the recovery phase. Establishing trust through a genuinely ‘open book’ approach will be critical in navigating the financial implications of COVID-19 and strengthening a collaborative partnership.
- Agreeing a short-term package of support with operators will be important to provide the Council with ‘breathing space’ to look beyond 3 months and understand how to mitigate and manage risk moving forward.
- Concerns were raised regarding the vulnerability of outreach interventions beyond traditional facility management which operators are delivering but which are cross-subsidised by other income streams. The longer it takes for the market to recover, the more ‘at risk’ these interventions are likely to be, subsequently affecting the most vulnerable populations.
- Starting to consider what the recovery phase may look like was flagged as crucial by a number of attendees. Although conversations are currently focused on the ‘here and now’, there is concern regarding the longer-term financial implications upon the management fee position. Councils need to start having these conversations with their operator partner over the coming weeks to better understand what the medium and longer-term implications might be.
- Councils which have the largest positive management fees are likely to suffer the most, as a good management fee is contingent upon strong income levels. In the current climate, it is going to take the operator time to re-establish this income, particularly within the context of a likely economic recession. This will require officers to manage expectations for the Council on future management fee payments and the time it will take operators to return to previous levels.
- Sport England are working with the sector to help accelerate a ‘re-mobilisation’ period through funding, capacity support and guidance. Market intelligence from consultants and Sport England on what the potential outcomes could be for operators and Councils will be key. This includes sector insight on consumer behaviours and possible changes in physical activity habits. Having strong, ‘real time’ insight into this behaviour once facilities are re-opened will be important to closely monitor how the consumer market may change.
- A key part of recovery will be focusing on how the sector can protect the wider outreach services which have been pivotal to tackling inactivity amongst the most vulnerable groups in the community. The danger is that once facilities re-open, the focus will be on getting people through the doors and selling memberships to boost finances and the added value activities and community outreach designed to help tackle inactivity may diminish.
- The current situation does though present an opportunity for Councils to sit down with their operator partners and re-focus the services in line with the Council’s priorities and required outcomes. As well as this longer-term strategy, it could also involve short-term interventions, for instance, targeting communities living in high-rise flats who do not have access to a garden.
- The sector has an opportunity to review and reset partnerships with their operators and not simply return to pre-COVID activities. Councils have a strong role to play in ensuring the leisure contract remains sustainable and this presents a real opportunity to reframe discussions and ensure the contract is fit for purpose for the local community.
- This opportunity could extend to re-defining relationships with other partners, such as health, adult social care and children’s services, and to broaden the role of sport and physical activity in delivering wider outcomes.
- The importance of being physically active has been highlighted by central government amidst the COVID-19 crisis, presenting an opportunity for leisure services to be part of wider contributions to community health and wellbeing. The sector needs to be ready to capitalise upon this increased profile.
- There is an opportunity to harness the ‘re-opening’ of leisure centres to bring in new users who have perhaps developed a stronger connection between physical activity and personal health. Ensuring operators are staying engaged with their existing members during the lockdown period, such as through online services, will also be critical to a strong recovery phase.
- The timing for all these conversations is key and will require a careful balance between the immediate crisis management and cashflow issues and the reset / review period designed to ensure sustainable and hopefully improved future partnerships.
- Whilst a turbulent and difficult few months lie ahead, Councils can view the period as an opportunity for positive change that helps strengthen leisure partnerships and ultimately delivers a sustainable, long-term service.
We would like to thank all the delegates who invested their time to support each other and share their thinking.
The next Virtual Think Tank exploring Leisure Operator Partnerships – Managing the Crisis and Planning for a Sustainable Future is on 16 April.
For further information on upcoming themes for exploration in our weekly virtual Think Tanks, please visit SLC’s website www.slc.uk.com
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