DAVID LEATHER DEPUTY CHIEF EXECUTIVE AND FINANCE DIRECTOR MANCHESTER
2002 COMMONWEALTH GAMES
Deloitte partner Neil Wood is the FD of the bid team trying to win the 2012
Olympic Games for London. David Leather was the FD of the 2002 Commonwealth
Games in Manchester. Here, Leather talks about his experience and offers his
advice to Wood, who explains his approach to “an absolutely tremendous posting”
. Now they’re working together, London should be in with a sporting chance.
It is important to realise that work on the 2002 Commonwealth Games began six
years in advance. We started as a team of five, and one of the defining
strategic issues was that we would need to put together a very substantial team.
This included 650 full-time employees and 10,300 volunteers for the 25 days of
the games, plus 10,000 performers for the opening and closing ceremonies.
In common with Manchester, the London bid team needs the expertise of people
with a detailed understanding of what is required to stage a global multi-sport
event. But obviously for a bid, a much smaller team is required.
We were never out of recruitment mode, and about half the paid workforce only
started work in the last 12 months leading up to the Games. As the delivery
team, you really gear up during that last year.
Building a multinational team with the right mix of experience was not easy;
attracting the huge army of volunteers was testing and raising the funding to
deliver the services and the infrastructure was even more of a challenge.
When we started, we did not have all the funding in place. We had to raise
some £56m from commercial revenues. This came from a variety of sources;
sponsorship, TV rights, ticket sales, accommodation revenues and licensing
concessions. We started with a blank sheet of paper and developed a detailed
strategy for each revenue area.
The sponsorship strategy was based on the segmentation of the market into
exclusive categories, such as telecommunications, IT, property, legal utilities,
etc, with sales at different price points, and sponsorship rights packages
tailored to both the price paid and the marketing objectives of each sponsor.
The TV rights sales strategy ensured the Games were watched by a TV audience
of one billion, with 20 million people in the UK alone tuning in for the opening
and closing ceremonies. The BBC was the host broadcaster and domestic
rightsholder and their experienced team ensured the highest quality of
production was available for the overseas rightsholders.
Finding suitable locations for the non-sports venues, such as the
international broadcast centre, the main press centre and the athletes’ and
technical officials’ villages, in close proximity to the sports venues is a
fundamental part of the bid planning process.
The main challenge with ticketing was to set prices at a level that would
attract sufficient spectators and achieve our ticketing revenue targets.
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We carried out benchmark tests for similar events overseas and undertook
market research to establish the most appropriate prices. These varied dependant
on the popularity of the sport, the stage of the competition and the number of
tickets available. Ticket sales were one of the major successes of the Games,
with revenues more than 30% higher than budget.
Part of the challenge we faced was to build a marketing and branding campaign
and strategy that would position our event correctly. Again, the bid team does
not have this kind of concern, because the Olympics has such a strong brand.
One overriding principle underpinned the sports facilities development
strategy, which was to ensure each Games venue would be independently
commercially viable after the Games – no white elephants!
Many of the budget features for the Olympics are a good deal clearer. There
is much greater clarity on the number of sports that will be involved, the
number of athletes and the size and quality of the venues. Moreover, a subst
antial part of the costs are actually mandated by the IOC and a proportion of
the sponsorship, as well as TV revenues, are provided by the IOC so the London
bid has some certainties it can begin with.
Preparing the expenditure budget for the Commonwealth Games was not
The budget prepared by the Commonwealth Games bid team was based on the 1994
Victoria Games, which was only a 10-sport event and largely managed by
The Manchester Games had 17 sports, with more than 5,700 athletes and team
officials, making it more than 50% larger than the 1994 Games. Partly as a
result of the increase in scale of the Games and partly as a result of the new
performance standards set for multi-sport events in Sydney, the resources needed
to stage the Commonwealth Games in Manchester were much greater than the bid
team had envisaged.
The total budget for the Games was £300m, with this split into £170m for
capital projects, and £130m for the operational budget. We were very pleased,
post event, to have some £16m unspent, which we were able to return to the
appropriate public funding bodies, Manchester City Council, Sport England and
We put in a very robust system of financial controls, so there were no
surprises in the lead up to, or during, the event. Any utilisation of
contingency, together with the reasons, had to be reported to the finance team
in the Games’ operations centre on an hourly basis. This enabled flash reports
of revenue and expenditure to be prepared for 6am every day throughout the
25-day event. Reports were also prepared for the Games co-ordinating committee,
including the government, city council and Sport England each morning. We also
had teams on secondment from KPMG and Ernst & Young who were part of the
financial monitoring and audit teams. This helped to anticipate problems and to
flag them up at an early stage.
If there is one thing we would like to have done differently, we would
doubtless have chosen to bring in the chief operations officer earlier.
Although we had directors running different divisions, it took us some time
to appreciate that we needed a COO to closely co-ordinate the activities of each
team and the responsibility for the overall project management.
NEIL WOOD, DELOITTE PARTNER AND FINANCE DIRECTOR, LONDON OLYMPIC 2012
There is no doubt that a bid team faces different challenges from one charged
with running the games. My job comes in two parts. There is an external and an
internal facing role.
The internal job, clearly, is to run the finance function of a relatively
small company. With a headcount of 80 and a budget of £28m, we are definitely at
the lower end of the SME category.
However, this is not a corporate and the comparison does not go very far. It
is much more informative to characterise what we are doing as running an
election campaign. One of the first things we discovered was that our world is
far too fluid and dynamic to sit inside the kind of rigid budget structure that
you would set up for an SME.
As a company, you would expect to budget, produce variance reports and hold
people to account for departures from budget. For our part, we have to keep
reinventing the budget as new elements and factors emerge. A normal small
company structure is just not agile enough to cope with this kind of dynamic
We have gone for a far more collegiate approach, with fewer departmental
barriers. We still have departmental budgets but a large proportion of this is
constituted as a war chest, and everyone bids for these resources on an
This way there are still clear lines of responsibility as to what each
department is charged to do and is responsible for, but before anything is
spent, the whole management team has to agree the spend. You don’t have people
saying, “This budget is in my department so I’ll control how it is spent,”
since that approach would not deliver the right resources for the bid as a
The external part of my role has three facets. The first is to develop around
a US$2bn operating budget for the Games. We have to put together very detailed
estimates for the amount of revenue we might expect, though the IOC pretty well
tells us what we can expect by way of broadcasting revenues. We then have to
cost every element, from security, technology and broadcasting costs right down
to meals for the athletes.
The IOC also requires us to submit a detailed capital budget setting out the
construction costs of any new venues we propose. We have a very ambitious
programme of new build facilities, including the new London Olympic stadium, the
velodrome and the aquatic centre. The new aquatic centre will be built
regardless of whether we win the bid or not.
Lastly, the IOC also seeks to understand the overall impact of the Games,
including the cost of other capital works that are required in order to hold the
Games. Our plans here are based on a very large redevelopment of the Lower Lea
Valley, a huge redevelopment that would have taken place over, say, a 25-year
time frame if it were not for the stimulus of the Games. The planning
application was submitted around Christmas and was, I understand, the largest
single planning application ever made in the UK.
In fact this is one of our arguments to the IOC, which is keen to look at the
legacy the Games will leave behind. The accelerated redevelopment of the site
will be a lasting benefit to Londoners and to the country.
The development exercise is being led by the London Development Agency and we
are working hand in glove with them.
The IOC are very keen to see countries and cities avoid the development of
white elephants, and it is tremendously challenging to come up with legacy
solutions to all the infrastructure we are planning. We are putting a huge
amount of effort into exploring potential uses for every element after the
The aquatic centre, for example is a challenge, since in general swimming
pools do not make money in this country. They always seem to need an element of
public subsidy, and very few swimming events need Olympic-size grandstands.
But there are imaginative things that one can do in terms of mixing temporary
seating and permanent seating, in ways that do justice to the Olympic event.
Another huge challenge for us is the quality of the other eight cities in
this bidding race. We are up against Paris, New York, Moscow, Rio, Leipzig,
Havana and Istanbul, which means we have formidable competition.
But we are convinced that London can hold its own and shine in this company.
All the bidding cities had to submit a single A4 sheet answer to each of 25
questions in January, and on 18 May the IOC will announce which cities become
candidate cities. There is no pre-set cut level, so a few cities could go
through, or all nine could go through.
Then by 15 November, the cities have to submit a very substantial candidate
file. This goes into much greater detail on a number of themes, and includes
detailed architectural drawings and costings. An evaluation commission from the
IOC visits each city around February to March next year and then writes a report
for IOC members.
On 6 July 2005, at the IOC meeting in Singapore, each of the candidate cities
gives a one-hour presentation. After that, a series of votes are held, with the
city with the least nominations dropping out each round until one with a clear
majority emerges. There are no prizes for second place.
We don’t anticipate London not making the first cut. Our expectation is that
we will reach the candidate phase, and then it will all come down to a crunch
decision on 6 July 2005. Win or lose, the bid phase ends and our company winds
For my own part, this is a tremendous posting and I am delighted that
Deloitte gave me the opportunity to put my name forward. This is a fantastic
project for any FD to be involved in and it is one that will stay with me all my
WHAT LEATHER SAYS ABOUT WOOD
From a revenue perspective, my advice to Neil would be to plan for the
worse-case scenario and not assume that the markets will be buoyant in 2012! It
will be a challenge to achieve the commercial revenue targets, though the team
will benefit from the Olympic brand being so well recognised.
The same could not have been said for the Commonwealth Games brand, but this
has started to change in recent years following the launch of their new
The bid team will benefit, too, from the fact there is an IOC led sponsorship
programme that rolls on from one Olympic Games to the next. Plus, there are
vastly more countries competing for TV rights.
Another piece of advice is to make sure the critical success factors for the
event are well defined early on and that all the stakeholders are agreed on a
common definition of success. Also, communications – particularly with the media
– are vital and a good communications team, preferably well known and well
respected by the media, is vital. Setting the right level of expectation is
critical to success.
Being the deputy chief executive and FD of the Commonwealth Games was an
incredibly rewarding and stimulating experience, and I am sure Neil will find
the Olympic bid equally so. We are up against some strong opposition, but the
London bid is very strong and I wish him – and the rest of the team – the best
WHAT WOOD SAYS ABOUT LEATHER
There’s little doubt that the success of the Manchester 2002 Commonwealth
Games helped drive the government’s decision to proceed with London’s bid for
the 2012 Olympic Games. Through his role at the Manchester Games, David is a
significant benefit to the capital’s bid. Indeed, we have co-opted David onto
the audit and finance sub committee of our board to ensure we gain directly from
his knowledge. There are differences between the two projects however, the most
fundamental being that we are principally running an election campaign rather
than planning for the Games themselves.
Having said that, we are required to prepare very detailed plans for a London
Olympic Games, and this is where the Manchester experience is invaluable.
While we have links into the teams that ran the most recent Olympic Games,
there is no substitute for having someone at hand who’s done something similar
in the UK just two years earlier.
As David has said, the Olympic bidding process is very formalised and there
are some certainties where the International Olympic Committee sets down either
the process we need to adopt, or sets out how much income will be available, for
example from television rights. So we do have some absolutes which David didn’t
have when he started planning for the Manchester Games. However the Olympics is
huge and London’s plans are very ambitious, so we have some challenges of scale
that Manchester didn’t face. We are proposing many more new venues and the
non-unified structure of London with its boroughs makes planning for the
post-Games legacy much more complex.
I know that David enjoyed his time as the Commonwealth Games FD and I am
equally enjoying the challenges of being the London 2012 bid FD. I am sure David
would agree – these opportunities do not present themselves every day!