Benefits and Shortcomings of Outsourcing Sports Venue Services

Outsourcing Sports Venue Services

Outsourcing sports service management has become a recent innovative strategy to cut costs and deliver quality services to customers. Amidst of increase in the costs of operations, increasing sport venue organizations are outsourcing some of their management services to third party companies. (Schiederjans, 2005). While outsourcing management services or pertinent services has several advantages, the outsourcing business services have some shortcomings, which management of sports venues should take into a consideration.

The objective of the study is to investigate the advantages and disadvantages of using the third party companies for the sports venues business.

Advantages and Disadvantages of Third Party for Sports Venue Business

Outsourcing is a business tool that sport venue organizations use in turning their non-core activities to the third party providers. The outsourced service assists organizations to focus on sales efforts in order to maximize revenues. Zullo, Burden, & Li (2014) argue that increasing number of sport venue companies have adopted the outsourcing strategy to earning additional revenue and cut the costs of operations. Typically, outsourcing has become a crucial business strategy that assists firms turning their non-core activities to third-party providers while concentrating on the core activities. Similar to other businesses, the venue management organizations have also faced stiff competitions in the competitive business environment. Thus, managing all the business processes is becoming too costly amidst of growing competitions and pressure from stakeholders, thus, firms do not have an option but to outsourcing part of their businesses in order to cut costs. For example, sport venues companies are obliged to turn their marketing businesses to the third party.

The major benefit of turning the sport venue services to the third party is the revenue growth. It is essential to realize that ticket sales are the major operation of the sports venue, by allowing other parties to take over non-core businesses, sport venue companies will be able to focus on the businesses that generate more revenues. Moreover, the sports venues provide several soft services that include cleaning, catering, security, vending machine services and receptions. While the soft services are the essential components for the sport venue companies, however, outsourcing some of these services will assist the sports companies to deliver quality services to their customers thereby enhancing competitive market advantages. Coupled with a guarantee revenue growth, turning some of the business processes to a third party will assist the sports venues to implement better promotion and marketing of the sports activities. It is essential to realize that marketing companies are more specialize in this line of business. They guarantee a wide coverage for the sporting events. Thus, a sports venue allows a third party marketing company to promote their business which will assist them achieving competitive market advantages. (Burden, & Li, 2005).

Moreover, sports venues will be able to integrate the latest information technology tool to their business process. In the contemporary business environment, the IT has become a strategy that organizations employ to achieve competitive market advantages. Typically, the IT tool has become an important factor that shapes business strategy in the competitive market environment. The importance of IT cannot be overlooked because it assists firms to formulate strategies linked to their business development. Despite the benefits of IT tools in the formulation of business advantages, in-house IT resources are still expensive for many sports venues. Moreover, some management of sports venue does not have skills and capabilities to manage the IT resources successfully. Additionally, providing direct employment for IT professionals is not cost-effective because the salary and remunerations for the IT professionals are very high, and some IT professionals may not stay with a particular company for a long time. The only option left for the sports venues is to turn over their IT management to the third party companies. With the assistance of the third party, the sports venues will be able to process their customer data at a faster rate, which will streamline the business advantages. Moreover, external service providers will assist the sports venues to achieve business efficiencies, implement high standard operations and processing. More importantly, the sports venues will be able to overcome a challenge of running technical IT tools.

Other advantages of the third party provider are their ability to negotiate efficiently with the venue suppliers. Porter (2008) argues that a power over suppliers is essential to assist an organization to achieve competitive market advantages. A company that has power over suppliers will be able to reduce the costs of operation and tap materials at reasonable costs. Thus, the external service providers will assist the sports venue to eliminate financial loss in the midst of turbulent business environment by assisting in working and negotiating and with venue suppliers. (Power, Desouza, and Bonifazi, 2006).

Despite the benefits that sports management can derive from using the external service providers, some of the disadvantages of using the third party are as follows: First, the sports venue faces the risk of allowing the external party to have access to their data, which is very risky for their business advantages. Some external providers may not be trustworthy, some of them may go the level of selling high valued data to competitors thereby jeopardizing their business advantages. Some third party providers are not trustworthy and they may not provide essential services tailored to the organizational requirements. Moreover, management of the sports organizations will not be able to have a total control on the services rendered by the third party companies. Despite the shortcoming identified in outsourcing the sports services to the third party companies, the advantages of outsourcing outweigh the disadvantages.

Discussion and Conclusion

If I were the leading team in the brand new stadium to a third party company, I will outsource some of the services to subcontractors. First, I will outsource the following services to the subcontractors. I will outsource the marketing services to the external service providers. It is essential to realize that effective promotion of sporting events is very critical to generating revenue. Thus, many marketing companies are well equipped to provide direct promotion for the sports venues. The strategy will assist our organization to generate revenue and cut the cost of operations. Typically, the in-house marketing department may be expensive to manage. Apart from paying high salaries and remunerations to the employee in the department, the organizations will be responsible for shouldering direct and indirect costs of managing the marketing department. Thus, contracting the external services providers is more cost-effective because our organization will only pay for the services rendered, which will assist in eliminating the direct and indirect costs associated with running the in-house marketing department.

Moreover, I will use the external service providers to manage some of our IT services. The services will include the security of our information systems. I will also use the third party to deliver training for our IT employees and other employees within the organization. However, I will not allow the third party to manage our entire IT systems. A management of the organizational data will still remain in-house to prevent the risk of allowing a stranger getting access to the company data. Moreover, I will outsource soft services such as cleaning, physical security, gardening, and other non-core soft services to the external service providers. The outsourcing business strategy will assist out sporting venue to increase revenues, reduce the cost of operations and deliver quality services to our customers.

Reference

Burden, W. & Li, M. (2005). Circumstantial factors and institutions' outsourcing decisions on marketing operations. Sports Marketing Quarterly, 14(2), 125-131.

Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review.

Power, K., Desouza, C. and Bonifazi, C. (2006). Outsourcing Handbook: How to Implement a Successful Outsourcing Process, London; Philadelphia: Kogan.

Schiederjans, M. (2005). Outsourcing and Insourcing in an International Context,

Armonk, N.Y.: M.E. Sharpe.

Zullo, R. Burden, W. & Li, M. (2014). Outsourced Marketing in NCAA Division I Institutions: The Companies' Perspective. The Sports Journal.