Virtual Think Tank
‘Managing the Recovery of Local Government Leisure Services’
06 August 2020
Summary Report
The Sport, Leisure and Culture Consultancy (SLC) facilitated an online Think Tank – ‘Managing the Recovery of Local Government Leisure Services’ for local authority clients and Sport England colleagues only on 06 August 2020 from 3pm-4.30pm.
Facilitation was provided by Duncan-Wood Allum, SLC Managing Director, supported by Judith Schrenk, SLC Research Consultant.
Participants:
- Andrzej Juraszek (Central Bedfordshire Council, Leisure Services Contract Manager)
- Ryan Vittles (Southwark Council, Leisure Monitoring Officer)
- Louise Cary (Wiltshire Council, Head of Community and Development)
- Lynda Pincombe (South Somerset DC, Specialist – Strategic Planning)
- Gemma Ryan (Sandwell Council, Business Manager – Sport & Leisure)
- Geoff Caine (Stevenage Borough Council, Culture, Wellbeing and Leisure Services Manager)
- Chris Fennell (Watford Borough Council, Head of Leisure and Environmental Services)
- Martin Burton (South Gloucestershire Council, Customer Contact Manager)
- Louise Randall (North Hertfordshire District Council, Leisure Contract Manager)
- Michael Shepherd (Slough Borough Council, Leisure Development and Client Manager)
- Paul Baker (Crawley Borough Council, Senior Leisure Officer)
- David Rushton (Director, SLC).
Agenda
- How can you be confident that your operating partner is performing at expected levels as the market recovers?
- Are you clear on what financial information your operating partner should be providing through the recovery period to inform a truly transparent and open book review of financial performance?
- Are you clear on what other, non-financial information might be required to ensure the strategic priorities of the service and the needs of all user groups are met within a period of strong commercial focus by your operating partner?
- Could you benefit from ‘live’ comparable benchmarks from the wider leisure operating sector to help measure how your operating partner is performing compared to the rest of the market?
- How can you be assured your operating partner is managing their costs effectively through the recovery period and is the recovery of income in line with the wider market?
- How can you be assured your services are being restarted in accordance with your operating partner’s recovery plan?
- At what point can you start to consider risk transfer to your operating partner and ultimately a return to a pre-Covid management fee position where achievable?
- What are the longer-term implications post-COVID for your sport and physical activity strategy, potential leisure investment, procurement, and affordability?
Summary
How can you be confident that your operating partner is performing at expected levels as the market recovers?
Council officers are presented with the challenge to monitor their leisure operating’s performance against their forecasting. There is a question around how local authorities can be confident in their partner performing at expected levels as the market recovers. A thorough review requires the use of comprehensive KPIs for benchmarking and solid data. Local authorities have to ensure they are presented with both sufficient and relevant data by their leisure operators to enable them scrutinise the figures. There is a concern amongst local authorities that some leisure operators may have been overly optimistic in their forecasting. Some concerns around transparency in the sector will make it hard for local authorities and their leisure partners to manage recovery if trust and transparency has been reduced. Understanding the situation and approaches being used by other local authorities and their operating partners will be key in enabling optimal recovery for the sector.
One of the larger leisure operators has reported a significant number of ‘no-shows’ in their gym and class bookings. Visitor numbers traditionally being low during the summer months presents and additional challenge to local authorities and their leisure operating partners as they commence recovery. Not wanting to lose market share, a majority of leisure operators have opened their doors to the public as soon as they were allowed – in many cases, the visitor numbers have been low and there is a question around financial viability of having reopened some of the sites. Indoor facilities have attracted significantly lower numbers than outdoor offers such as golf or tennis. Many leisure operators have not used outdoor spaces in as innovative way as many local authorities would have hoped. Local authorities have found that some leisure operators have not integrated National Governing Bodies (NGBs) sports and elite sport squads into centres to the degree they would have liked to see. This can lead to the sites missing out on a large proportion of revenue generation for facilities such as 3G-pitches. It was agreed that continued dialogue and partnership working is essential linked to a clear joint communications strategy.
Are you clear on what financial information your operating partner should be providing through the recovery period to inform a truly transparent and open book review of financial performance?
It is key for local authorities to be informed not only about financial performance by their operating partner, but about the underlying assumptions, programme and context. Local authorities are the ones that have to effectively underwrite the difference between forecasting and actual performance of their operating partner for the foreseeable future. This puts the operating partner under pressure to provide a robust justification for the financial subsidy they are asking for. Local authority officers also wish to be informed on non-financial information, such as planned redundancies, payroll, bonusses and strategies for the furlough scheme. Once the immediate challenges of recovery are overcome, local authorities will have to re-evaluate their operating partner’s performance and consider risk transfer. There is a balance to be achieved between scrutinising the numbers and maintaining a good, productive relationship with the operating partners.
Are you clear on what other, non-financial information might be required to ensure the strategic priorities of the service and the needs of all user groups are met within a period of strong commercial focus by your operating partner?
One of the biggest challenges for local authorities and their leisure operating partners will be those parts of leisure centres that do not generate a surplus. The community outreach work, which is at the very heart of public leisure provision, is one of those valued but now vulnerable non-profit services. While these workstreams are key in delivering strategic outcomes of public leisure provision and there will be political pressure to maintain them, operators may wish to reduce them. Local authority officers conclude that it is a key challenge in recovery to achieve a balance between financial and strategic priorities and communicate this to elected Members.
Some leisure operators have chosen a phased approach, slowly introducing engagement with the community sport back into their offer. This can be challenging as non-commercial offers facilities such as sports halls tend to not be financially viable in the precarious situation of reopening. Some operators have undergone internal structural changes – this can have an effect on leisure provision in their other local authority contracts. It is therefore key to have an open conversation between all partners throughout this recovery period.
These changes can also provide local authorities and their operating partners with the opportunity to reshape leisure services and reshape the leisure offer coming out of this crisis.
Could you benefit from ‘live’ comparable benchmarks from the wider leisure operating sector to help measure how your operating partner is performing compared to the rest of the market? How can you be assured your services being restarted in accordance with your operating partner’s recovery plan?
Council officers have concluded that evidence of other local authority leisure operators’ performance and a like-for-like comparison with other similar local authorities would be hugely beneficial in reviewing the performance of their leisure services. Being grouped with comparable local authorities would allow officers to have better insight into how the performance of their leisure contract compares. It was agreed that these benchmarking exercises would have to build on reliable, robust data from a central database and should not put too much pressure to provide additional data on operators. Questions around how a leisure operator’s performance sits compared to national average have been asked by elected Members of numerous Councils. Being able to present the results of benchmarking would back up officer’s request for financial support with senior officers and Members. It was concluded that a robust benchmarking tool is not optional, but imperative for a successful recovery of the sector. Some local authority officers even suggested bodies such as Sport England introducing benchmarking as requirements for financial support linked to any future Treasury Funding.
Quest NBS are producing a support package tailored to the Covid-19 crisis to help local authorities benchmark KPIs such as expenditure, equalities and customer experience. SLC, together with 4Global, have developed a tool that compliments the Quest / NBS product. SLC’s Local Authority Performance Monitoring Tool uses information generated through the 4Global Datahub which captures and analyses live income data from 1,500 leisure facilities across the UK. Data consistency is guaranteed through the central datahub, for which most major operators have signed up. The tool enables local authorities to track actual live financial performance of their sites linked to all the core income areas of a leisure operation and to maintain ‘real-time’ visibility on how the wider market is responding. Comparable local authorities will be selected for the user – the leisure operator’s performance data will be benchmarked against the performance of the comparable local authority’s leisure service. The tool generates a bespoke report with a visualisation of the data through a series of graphs.
The benefits of the SLC and 4Global Local Authority Benchmarking Tool include:
- The tool will allow users to provide your elected Members with quarterly / monthly benchmarked updates on performance based on the most up to date ‘live’ validated income and participation data
- Support the reconciliation process and negotiation of ongoing funding support on a quarterly basis to ensure your local authority’s funding support is optimised and creating the best possible conditions for recovery and risk transfer
- Understand the impact in the event of any recurrences of COVID-19 in your local area and what this means for your leisure operating partnership, recovery plans and future support funding.
For more detail on the Local Authority Benchmarking Tool, please email help@slc.uk.com
At what point can you start to consider risk transfer to your operating partner and ultimately a return to a pre-Covid management fee position where achievable?
There is a concern that the sector has been overly optimistic in its predictions of the end of this crisis. It is likely that a full recovery will not be achieved, as assumed by many, by March 2021. Local authority officers remarked that it is impossible to make any decision regarding risk transfer or getting back to old contracts before local authorities have access to three or four months consistent income recovery data. Contracts have to be closely monitored to start having a conversation about risk transfers with operators at the right time. This is where live data from the Local Authority Benchmarking Tool can help plan for the future of a leisure partnership. SLC is supporting local authorities to manage both partner’s expectations of risk transfer throughout the recovery period. Members and senior Council officers may have a wrong expectations if sector is overly optimistic and additional requests for further unanticipated funding support may not be well received. SLC advises that modelling for a second lockdown, which still poses a huge risk for the sector, is advisable for local authorities and their leisure partners to make elected Members aware of the potential consequences and costs.
Other points
- Local authority officers agreed that a collective approach between a number of Councils and a reciprocal review of their operator’s financial performance would be hugely beneficial
- Local authorities that were in a procurement process at the start of the Covid-19 crisis are faced with the challenge of an uncertain market
- Most of the plans for new leisure facilities have been paused due to financial uncertainties and a likely period of recession
- Nevertheless, the Covid-19 crisis presents an opportunity for the sector to learn, re-shape and renew itself.
SLC would like to thank all contributors and Think Tank participants for investing their time and providing insight and suggestions on how our sector can work through these difficult times.