Comment: What price security?

Sport Business News

MEI's editorial director, Rachael Church–Sanders, takes a look at the financial burden that security can place upon a major event.

The complexity of planning and executing a major event such as an Olympic Games, FIFA World Cup or music festival is a monumental task. This is made even more challenging by the need to protect athletes/musicians, officials, dignitaries, commercial partners and of course, the public from acts of terrorism and other potential dangers. Against a backdrop of atrocities over recent years in places such as New York, Bali, Madrid, London and more recently Mumbai, Cairo and Lahore, the events industry is finding that robust security is becoming a necessity rather than a luxury, but at a substantial price. As a first step, events–no matter what their size or genre – need to have a stringent risk assessment model in place and carefully consider what could go wrong and what the worst outcome could be. Once these risks have been identified, events need to establish whether these risks can be covered in a contract, through an insurance policy or through safety and security procedures. Industry insiders claim that many organisers underestimate the assumed risk of an event. An estimated maximum loss of $30m for example can quite easily spiral up to a worst case scenario of $300–500m, such insiders claim, particularly if many spectators get injured or die. The loss of television coverage or sponsorship due to the cancellation of an event can barely be quantified–as organisers of the Dakar Rally no doubt found out in 2008 when the race had to be rescheduled due to terrorism threats – and some scenarios, particularly relating to terrorism, cannot be insured against anyway. Prevention therefore has to be better than cure and security experts must take over where insurance brokers cannot when it comes to a major event. The security landscape however has dramatically changed over the last decade and the costs of policing, counter terrorist activity and other security have risen so dramatically that many cities and nations are finding themselves priced out of bidding for major events in the case of sport in the first place, dissuaded by the sums involved in making an event secure for all parties. Consider the figures. At the Athens 2004 Olympics, $1. 24bn was spent on security at the Games (compared with just over $1bn for the entire operation of Sydney 2000). Vancouver 2010 organisers initially declined to say how much of their security–related spending was to be directed at protecting the thousands expected in the city and its surrounds during the Winter Games next February. Officials had estimated the cost of security at C$175m when Vancouver was first awarded the Games in 2003, but figures released at the end of February 2009 put it at C$900m, with media reports suggesting it may rise to over C$1bn. Meanwhile, London 2012's initial budget of £600m for security is likely to rise to over £1. 5bn according to media reports, despite UK government assurance that it will not. Industry estimations are that London will have to police almost 15m–20m people every single day during the Olympics. Unsurprisingly therefore, the UK government claims that the final bill for security cannot truly be tabulated until the Games are over. Costs have also reportedly risen in South Africa following fears that security in the country for the 2010 FIFA World Cup was falling short of requirements. Around R665m ($60m) will be spent on procuring special equipment, including crowd–control equipment, crime scene trainers, unmanned aircraft, helicopters, water cannons, cars for extra highway patrol and up–to–date body armour. Around 300 mobile cameras will also be used and there will be four mobile command centres at a cost of around R6m each. The fact however that these investments will continue to assist the South African police in their security initiatives long after the FIFA World Cup has shipped out, helping to boost confidence in the tourism industry, shows that although the short–term costs may be high, the payback in terms of long–term legacy may be invaluable to a host city or nation. And who can put a price on that?

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