So how will the current financial crisis impact upon venues and major events industry in Australia? Clearly the current situation represents one of the most significant emerging risks to these industries experienced in recent times. Revenues Firstly, the falling exchange rate will make it less attractive for major US and European artists to tour Australia if our currency continues its current rapid slide. Sponsors of major events and public venues will become more selective in terms of their marketing spend and this will flow on to a reduction in revenues for sponsored entities. If the economic downturn continues towards a global recession, unemployment will increase and the public will have less disposable income to spend on discretionary items such as concert and major event tickets.
Expenses As the credit crisis worsens across the financial sector, more of the insurance industry is likely to be affected. The loss of one of America's largest insurers, AIG, shows the potential that the crisis presents to the insurance sector. As insurer profits diminish, insurance premiums will likely increase, given the current point in the insurance cycle.
Risk-Based Approach The instinct for sports, venues and event organisers may be to batten down the hatches and cut costs. It is in fact, a time to review the organisation's risk profile and manage risk effectively. Your organisation may have to take on more risk in a market that is shrinking. That is, assessing and mitigating the organisation's financial exposures and liabilities while maximising opportunities presented by the changing economy. All this while maintaining compliance standards and continuing to differentiate your organisation's brand and reputation from competitors. A tough ask but an important one!
In this environment, all businesses must fight harder to win every dollar and make a more concerted effort to keep every dollar that they have. Prudent risk management practices are the key.