Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


APPENDIX 7

Memorandum submitted by Mr Nick Bitel

INTRODUCTION

  1.  Nick Bitel is a partner in Max Bitel Greene a firm of solicitors specialising in Sports Law. Clients include the Ryder Cup, Wembley National Stadium, PGA European Tour, Wimbledon Championships, Racehorse Owners Association. The firm is currently advising on the ticketing arrangements for the 2002 FIFA World Cup and previously advised on the Rugby World Cup and hospitality arrangements for the Cricket World Cup.

  2.  Mr Bitel is also the Chief Executive of the London Marathon, vice-chairman of STAR (Society of Ticket Agents and Retailers), a member of the Major Events Steering Group (has served as vice-chairman) and is currently the Chairman of the British Association of Sport and the Law.

  3.  This memorandum represents the personal views of Mr Bitel and is not meant to represent any of the organisations of which he is a member nor the views of any of his clients.

BACKGROUND

  4.  An economic impact study carried out by Leisure Industries Research Centre has shown that the 2000 Flora London Marathon generated over £63 million worth of economic activity. It is not therefore surprising that the Government has identified that the attraction of major sporting events to Great Britain is an important object to be supported by Lottery funding.

  5.  UK Sport's budget for major events is about £1.6 million per annum.

  6.  At present, a body wishing to obtain funding for such an event has to approach UK Sport which then takes advice from the Major Events Steering Group. If the event does not fall within the criteria then the organisers can still approach their home Sports Council for funding. However, although funding for events such as the Rugby League World Cup and the World Judo Championships has come through this direction, the very major funding required for the World Cup, World Athletics Championships or the Olympics would have to come from Sport England which retains the budget to be able to do so.

  7.  Thus the bid for the 2005 World Athletics Championships was funded through UK Sport Lottery having been through MESG but funding for the Stadium and the Championships has to go through Sport England.

  8.  Apart from funding, Government support is often required for major events in other areas such as legislation (eg protection of Olympic marks, waiver of tax and duties on FIFA), visas, work permits and guarantees. For instance FIFA requires as part of the bid file a guarantee that visas shall be issued "unconditionally to the entire FIFA delegation, the delegations from the finalist national associations, the Official FIFA Partners, the Official LOC Suppliers and the media representatives, regardless of nationality, race and creed".

  9.  As well as funding support, UK Sport also provides a limited degree of logistical help through its flags and anthems library. It will also often require representation on the organising committee as a condition of grant.

TICKETING

  10.  An important part of the funding of major events is the packaging of tickets for hospitality and travel. Very often the World Governing body controls the television and main sponsorship rights leaving the local organising committee with only limited sources of revenue. Ticketing income therefore becomes central to the ability of the LOC to raise funds. As they cannot sell sponsorship packages which include venue advertising, the ticket then becomes central to the package of rights being offered to the local sponsor.

  11.  A secondary market in tickets allows non-sponsoring companies to effect ambush marketing by use of tickets acquired on the black market and this severely restricts the value of official sponsorship rights.

  12.  Section 166 of the Criminal Justice and Public Order Act 1994 makes it unlawful in the course of a business to sell a ticket without the organisers authority for any designated football match. The Act also gives the Secretary of State the power by order to extend this to any event for which more than 6,000 tickets are sold.

  13.  On 24 April 1997, Jack Cunningham, the then Shadow National Heritage Secretary said that "Labour is committed to stamping out ticket touting" and that Labour would use the existing powers to ban "ticket touts at all sporting events where more than 6,000 tickets are for sale" adding that Labour would work with major governing bodies in sport and the police to implement a consistent crackdown on ticket touts.

  14.  The funding of any major new stadium, such as Wembley, depends on the ability to raise funds from debenture or private seat licence schemes. If there is a thriving black market in tickets then there is no reason to purchase tickets through such schemes. It is no accident that Wimbledon was able to fund its new Court 1 development through debentures only after years of legal action against unauthorised ticket sellers.

  15.  Despite the selling of tickets for football matches being illegal, at the England v Scotland Euro 2000 qualifying match, there were more than 4,000 unauthorised hospitality places. Despite repeated requests to the police, no hospitality company has yet been prosecuted for their continued flagrant breaches for the Act.

  16.  Since the offence takes place at the point of sale the decision to prosecute is taken at the local level each time and there is no co-ordinating role or overall authority. The result is that prosecutions are not undertaken by forces which see only an isolated problem.

  17.  The result is that Britain has a reputation in the world of sport as being a haven for the ticket tout and unauthorised hospitality company. At any major sports event anywhere in the world, British ticket touts are seen. At the Ryder Cup in Boston in 1999, the main unauthorised hospitality was being undertaken by British companies.

  18.  It is therefore recommended that:

  18.1  The Secretary of State should exercise his power to extend the ambit of the Act to all events for which more than 6,000 tickets are sold; and

  18.2  The Home Secretary should be directing police forces to undertake prosecutions to enforce the existing law.

Lessons of the 2005 World Athletics Championships

  19.  As detailed above, there has been a lack of co-ordination regarding this bid from the start. The bid organisation made the bid without having secured a venue for the event. MESG approved the funding of the bid event though it has no role in later funding either the Stadium or the event itself.

  20.  UK Athletics cannot sign the contract with the IAAF and at present no one can be found to sign it. UK Sport and Sport England are legally not allowed to enter into the contract. The GLA has insufficient funds to do so and requires a Government guarantee.

  21.  Very often MESG has found that the National Federation has secured the staging of an event but have little organisational ability to then stage the event. The only weapon at its disposal is to withhold funding but this then puts it in the firing line for adverse publicity. There should be a greater degree of control over the whole bidding and staging process rather than leaving matters entirely to often poorly resourced (financially and in terms of skills) national federations.

  22.  The actions of UK Athletics are a prime example of the problems outlined in paragraph 21. It has secured the 2001 World Half Marathon Championships, the 2003 World Indoor Athletics Championships and the 2005 World Athletics Championships. However, no LOC has been set up for either 2003 or 2005. UK Athletics have no money with which to stage the events and have no personnel that it can devote to staging of the events.

  23.  Lee Valley Regional Park is struggling to find the funds to develop the Stadium and until the proposal of funding from the London Marathon, which is still subject to ratification by Trustees, there was no prospect of revenue funding for the legacy use of the Stadium.

  24.  UK Athletics cannot set up the LOC for the staging of the 2005 World Athletics Championships as yet. They have no funding and without knowing who is to sign the contract, there is no one to give legitimacy to an LOC. It seems remarkable that the third biggest sporting event on the world calendar can be secured without anyone having thought about who was going to sign the agreement with the IAAF.

  25.  As the funding for the staging of the event and the building of the Stadium is not coming through UK Sport, it means that it was able to fund the bid, without knowing whether or not the organisers would get the funding to actually make the event happen. For the organisers it means that they are put in a position of having secured the event without having to have had their proposals scrutinised by the body (Sport England in this case) which would ultimately be responsible for the funding.

  26.  The problem with securing revenue funding for the legacy use of the Stadium is not an isolated case. The Lottery requires evidence that what they are funding can survive financially but is not prepared to contribute towards those costs, either by endowment funding or annual grants. The result, as has been seen with the Dome and many other major Lottery funded projects, is that projects make unsustainable revenue projections when in reality the projects are likely to have shortfalls.

  27.  In the case of athletics this is even more pronounced. If any one looks at the examples in the UK of dedicated athletics tracks, they all make substantial losses. Athletics stadiums are expensive to upkeep but have virtually no income. Promoters of athletics events usually want the stadium owner to pay them for the privilege of hosting the event. Thus Birmingham paid Fast Track £70,000 to be allowed to host an event this year. The result is that Birmingham, Sheffield, Crystal Palace and Gateshead all make losses and have to be supported by local or central government funding.

  28.  It is therefore not realistic to expect Picketts Lock to break even and the losses should be seen as the price for having first class athletics facilities in that locality. The only question is how are those losses to be funded. Normally a facility is funded by the local authority as part of its provision of leisure facilities for the local community, but this is not applicable in the case of Picketts Lock which is intended as a national resource.

  29.  It is therefore recommended that:

  29.1  There should be one central body for the funding of major events. This body should evaluate and monitor all aspects of the required grant funding including bidding, staging and building of facilities.

  29.2  Lottery rules should be amended to allow for revenue funding, including endowment funding of required facilities.

  29.3  The rules of UK Sport should be amended to allow it to enter into staging agreements with International Governing bodies.

Transportation

  30.  In October, the MESG met in Manchester and had a presentation by the local organisers of the 2002 Commonwealth Games including a short visit to the new City of Manchester Stadium.

  31.  On the same site (Sportcity) as the athletics stadium will be the indoor tennis centre (to be used for the table tennis) and the National Squash Centre whilst the National Velodrome is immediately opposite the site.

  32.  Members of MESG were horrified to learn that the extension of the Metro was not to take place until after the Commonwealth Games and that the plans for the transportation to and from the site were not well advanced.

  33.  On a peak day, such as the 30 July, athletics, cycling, squash and table tennis are all taking place at the same time and yet there seem to be no plans as to how up to 50,000 will be able to arrive at and leave the site especially after the evening sessions.

  34.  The organisers spoke about park and ride schemes and buses but did not appear to have any notion of the resources needed for such transportation plans, had not identified places for park and ride schemes and did not appear to have given adequate thought to the space required on site for the buses needed for these schemes.

  35.  This is to be contrasted with plans for the 2001 Ryder Cup at the Belfry where Ryder Cup Limited have contracted the car park at the NEC for a park and ride scheme, have a massive bus parking and stacking area and will be running special bus routes from hotels in the area. The Ryder Cup organisers know from their experience at Valderamma and in the USA that an efficient transportation system is central to the smooth running of a major sporting event and that such a system is an integral part of the design of the facilities.

  36.  Many of the complaints about the 1996 Olympic Games revolved around the inadequate transportation system. Stories abound about bus drivers getting lost, poor quality buses, and massive delays.

  37.  The List of Requirements for bidding for the 2006 World Cup said "A detailed transport scheme for staging the 2006 FIFA World Cup shall form an integral part of the bid file . . .". It is a concern that in almost all other events staged in this country, transportation is an after thought.

  38.  It is recommended that:

  38.1  Planning consents should not be given for major facilities without outline approval of the transportation system to be used in the staging of major events in the facility.

  38.2  UK Sport, Sport England and other national funders be encouraged to make it a condition of grant that transportation plans be filed for approval with the application for grant.

Accommodation

  39.  Increasingly, an important part of the funding and staging of major events is the provision of hotel accommodation. It was one of the List of Requirements for the bidding for the 2006 FIFA World Cup that in the bid file were contracts in a specified form for accommodation which, inter alia, fixed prices at certain levels and ensure FIFA was charged only for those rooms actually used (ie no breakages charges).

  40.  The FIFA contract and accommodation systems were designed by a British company, Byrom plc, which is the world leader in accommodation for major sports events. Byrom has been appointed by FIFA, Ryder Cup, Asian Games and many more to provide accommodation services.

  41.  Despite the clear requirement in the FIFA List of Requirements, the FA's bid file did not include contracts with the hotels in the required form and as a result the FA received a letter from FIFA saying that its bid was going to be ruled ineligible as it did not comply with the basic requirements. It was only at this stage, despite prior warnings, that the FA seemed to take this issue seriously.

  42.  The laissez faire attitude towards accommodation seems to be endemic amongst sports organisers in the United Kingdom. Bids are made for major events, such as the 2003 World Indoor Championships, without having secured contracts for the required hotel accommodation. The result is that once the organisers are seeking accommodation the hoteliers are aware of their success in bidding and now have no pressure upon them to agree reduced rates or to allow for breakages.

  43.  In many British cities hotel accommodation is barely adequate for the needs of a major event and even in London there is a severe shortage of rooms at the mid-price range. Unless there is a greater degree of pre-planning hotel accommodation becomes expensive and often difficult to source. All of these problems could be easily avoided by adopting the FIFA model of contract before major events are secured.

  44.  It is recommended that:

  44.1  UK Sport and other funders be encouraged to require the submission of an accommodation plan before agreeing to fund bids for major events.

Role of DCMS

  45.  The actions of the Secretary of State were of central importance in securing the award of the 2005 World Athletics Championships for Britain. Without the guarantee given to the IAAF, the bid could not have succeeded.

  46.  In the funding phase of the building of the new stadium at Picketts Lock, DCMS are playing an important role in co-ordinating efforts and in some cases in actually directing the funding raising activities where other government or international agencies are concerned.

  47.  When it comes to the selection of the LOC, the role of the DCMS is less clear especially given the uncertainty as to who will sign the contract as detailed above. However, it is entirely possible that the choice as to who will chair, or indeed be part of the LOC, will largely be made by others.

  48.  However, the main funding for these major events, including the building of the facilities and the staging, is directed by quasi-independent Lottery funders who have had no part in the decision to support the event originally and, of course, have nothing to do with the guarantee given by the Government. The result is that despite DCMS's central role in winning the event, it then has very little direct control over the running of it.

  49.  The perception then arises that the Government only takes a direct interest when matters are going wrong. In this way the appointment of Ian McCartney in respect of the Commonwealth Games and the grant given for the opening and closing ceremonies are each seen as a response to a crisis. It would surely be better if DCMS were seen to be taking a more positive role within the organisation from the start.

  50.  The economic and cultural importance to the nation of such a major event as the World Athletics Championships is too elevated to be left to a semi-private LOC.

  51.  It is recommended that:

  51.1  DCMS should have greater control over the funding of major events, especially where they have only been secured on the basis of a Government guarantee;

  51.2  For major events which are secured with a Government guarantee (such as the Olympics, FIFA World Cup and the World Athletics Championships), DCMS should have greater control over both the bidding and staging process;

  51.3  For these events, part of the funding conditions should be that DCMS has control/approval of the creation of the LOC.

December 2000


 
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