Connected Planning for Sports & Entertainment
Leveraging Anaplan and our industry expertise to orchestrate business performance.
Blog by Tristan Gaynor, [email protected], (602) 618 7407
Anaplan Solution Architect and Go to Market Lead, Anavate Partners
In an era of ongoing disruption, it’s never been more critical for Sports and Entertainment organizations (teams, venues, management, ownership, etc.) to be able to orchestrate complex financial and operational planning to the smallest detail, intelligently forecast the big picture, and empower leaders to make better decisions faster. Many factors have driven the need for planning and forecasting that is accurate, flexible, and insightful, both on an operational and financial level. Sports and Entertainment organizations operate with extensive legacy technology systems to manage and plan their businesses. Over time, these outdated and inflexible tools make managing and planning the business an arduous, time-consuming process requiring significant time and resources, all while risking accuracy, adaptability, and scalability. Sports and entertainment organizations have typically been quick to adopt tools to support analytics and intelligence on the court, field, ice, or stage; however, today’s challenges require more agile and powerful forecasting in the hands of the business.
What makes planning in the Sports & Entertainment industry so complex?
Sports and Entertainment are particularly unique because one team or arena could simultaneously operate dozens of different lines of business… Just take the Seattle Kraken’s Climate Pledge Arena, for example. Within this one arena, you can find: dozens of food and drink vendors, multiple merchandise vendors, logos of sponsors on the walls, multiple different professionals and collegiate sports teams calling the place home, revenue-generating parking garages, musical artists hosting concerts, and tens of thousands of seats – all sold according to industry standard, yet highly variable, price codes. Managing all of these moving pieces is a chess game played by hundreds of different individuals working behind the scenes on different teams, across business functions and legal entities, all of which add even more layers of complexity.
Speaking of a generic example, for a professional hockey team, you might find business functions broken out between Hockey Ops and Business Ops. Hockey Ops would be made up of folks like the General Manager, Professional Scouts, Athletic Trainers, Medical Staff, Equipment Managers, and the Hockey players themselves, all of whom make up their own departments. Business Ops would consist of sales teams, FP&A, accounting, marketing, business intelligence, and HR. All of these operations oftentimes then roll up to and across legal entities. Team and arena ownership can be complex, with revenue and expense sharing across multiple legal entities. They split top-line revenue with other organizations such as the governing body they are a member of, the venue itself, the opposing team, food and retail vendors, and more. Revenue can also vary from event to event. Highly anticipated A-list concerts or games will bring in more revenue than others, and planning for this variability is essential.
Typical challenges aside, COVID-19 amplified the complexity of finding success in this industry to a whole new level – shutting down many of the aforementioned revenue channels overnight.
Anaplan for Connected Planning
Anavate Partners celebrates the Connected Planning capabilities that the Anaplan platform brings to our clients. When an organization sets a goal or a target with a measurable value driver, it kickstarts a highly collaborative and iterative planning process across the business. These goals are debated quantitatively in models that confirm or deny their legitimacy. The platform consolidates all of the necessary assumptions, drivers, and constraints across different business functions into a workspace that connects all the individualized models that help to provide clarity, accountability, and efficiency in operating towards a goal. Instead of spending time managing dozens of spreadsheets and point solutions across multiple different business functions, debating assumptions over email or Slack, or engaging in version control acrobatics, Anaplan users spend more time analyzing data and driving actionable insights that result in measurable benefits – revenue growth, higher quota attainment, operating expenditure efficiencies, faster cash conversion cycles, lower open headcount, faster time to hire, etc.
For Sports and Entertainment, the platform provides the flexibility to plan at varying levels of detail depending on dozens of different factors and vast amounts of data from a variety of source systems, be it from an enterprise data warehouse, ERP, HRIS, CRM, CMS, ATS, or even the notoriously precarious Ticketmaster Archtics.
Planning & Forecasting – Finances & Operations
If there are thirty thousand seats in a venue, then X number of tickets need to be sold to break even at any given event. This question is made simple with Anaplan.
COVID-19 demonstrated how quickly the world can change. When teams couldn’t rely on revenue from in-person events, they had to adapt to find new sources of revenue. Financial leaders had to come up with new sources of income. Anaplan provides a flexible, streamlined planning process that simplifies building out a financial approach. Anaplan can pull the financial drivers into financial statements to create the P&L. While it is important to focus on the high-impact areas, Anaplan also can provide a level of granularity that was previously unheard of.
How should a pro sports company forecast its sponsorships? Ticketing? Parking Food and Bev? Etc.?
Sponsorship planning in theory sounds straightforward, but in reality, it can be one of the most complex parts of financial planning. Sports and Entertainment organizations might have different levels of sponsorship. Planners might work with different sets of assumptions within each sponsorship level – be it contract duration, pricing, pricing escalators, benefits, cost of fulfillment, or any other lever. All of these sponsors have different requirements spelled out in their contracts that must be met. For a sports team, sponsorship is a big driver of revenue, and financial planners need to be able to rely on sponsorship when building out their forecasts. Anaplan allows users to view and edit the set of assumptions within each level. Users can add new sponsors, users can make changes to sponsorship data and see the changes updated in real-time.
Tickets are a major factor when planning financial information. Ticket sales can be a driver of many other sources of income which is why it can be so complex. Ticket sales affect sponsorship revenue, food and beverage sales, parking, etc. Like sponsorship sales, ticket sales can also have different levels such as full season tickets, half-season tickets, playoff tickets, the list can go on and on. A financial planner needs the ability to plan different scenarios and view a wide variety of ticket sales.
As stated earlier revenue from ticket sales is often used to pay off expenses. When planning ticket sales the user needs to figure out how much of each ticket they need to sell to break even. In most instances, the planner can’t assume a sold-out venue, therefore they need the ability to view different scenarios of ticket sales.
Ticket sales can vary on a per-game basis. Some games are going to be more popular than others. Ticketmaster has a system to track ticket sales, however, it’s not the most user-friendly system. Anaplan allows the user to easily view historical trends giving them the ability to predict which games will have higher ticket sales.
Percent allocation can drastically vary in ticket sales. The organization might not always get 100% of the ticket sale revenue. Many times revenue can split between the organization and the venue. Utilizing Anaplan’s scenario planning capabilities, a financial planner will have increased accuracy forecasting ticket sales and ticket sales revenue allocation.
Start by looking at ticket sales, one of the top revenue streams during a pro sports team’s season. A conservative revenue estimate can’t assume a sold-out venue every game.
Look at general admission for every seat. If you have a thirty thousand-seat venue and charge general admission only, how many tickets would you need to sell to break even? Layer on the premiums for season ticket packages, higher value seats, and you need to know what to charge for premium seating, suites, season tickets, and so on. Figuring out what would happen if the venue capacity decreases from 100% to 40%, for example, is essential to maintaining profitability.
Then comes season planning: What games will be more popular? What happens to profitability if it’s raining for outdoor sports? What happens if there are issues with the indoor venue? What will happen if the team makes the post-season playoffs? Answering these questions requires multiple forecasts and planning that need to happen in real-time and be sensitive to team performance. Although Ticketmaster has a system for tracking ticket sales and mapping unique identifiers found in price codes to track budget vs. actuals, it’s not the most easy-to-use or efficient system.
The different tiers of sponsorship that usually serve as an important line of revenue can be sold on a rolling or seasonal basis. A holistic and complete view of the current state of sponsors If you can see what these scenarios look like in real-time you can quickly and efficiently make strategic decisions.
We can’t forget about food and beverage. Food and beverage is one of the most popular, and high margin, items during game days and events. Who doesn’t want a hot dog and a soda while watching their favorite team? In order to make sure all of the hungry spectators are happy, arenas have to be able to forecast demand and financials for food and beverage sales.
The distribution of revenue to the many stakeholders is also majorly complex. Most often, arenas are a public and private partnership- usually with the city or state government owning, zoning, and governing the land on which the arena resides. This means that there is often a revenue-sharing model with the local government in addition to the stadium, team owners, partners, merchandisers, affiliate sponsors, sports team leagues, performers, and any additional partner.
Planning & Forecasting – Operations
There are so many moving parts to the operations of the Sports and Entertainment industry that can change quickly depending on the season, team performance, and overall event schedule. Using a system that can bring visibility in real-time to the current state and your desired state will be a huge factor in establishing profitability. Other than saving valuable time and money, there are other benefits to having a strong, connected corporate ecosystem, including:
- Applying scenarios to P&L statements
- Reviewing customer accounts to predict renewal and expansion
- Comparing actual data to forecasted data
- Integrations across software platforms to connect all possible data sources
- Viewing labor and supply gaps to receive a recommended data-driven course of action
- Single Source of Truth for all of the organization’s data
Arguably one of the most important operational pieces of the puzzle is the management of labor and qualifications. Arenas need to know how many people they need to staff the events and what qualifications they need to have, given demand derived from ticket sales, seasonality, team performance, and accurate forecasts.
Having a connected ecosystem helps plan for all the variables involved in the operations of all the business models being supported. With the right system, arenas can track inventory for food and merchandise, forecast seasonal demand for these goods, and plan accordingly. Simple spreadsheets have very low visibility and it is difficult to ensure the entire organization is using the correct and most current data, which makes cohesive planning like this difficult.
Planning & Forecasting – Scenarios
Having visibility into all areas of the business is great, but seeing how it all reacts to various scenarios is even better.
For example, the Climate Pledge Arena must follow Seattle regulations on event capacity due to COVID-19. If events cannot exceed 30% capacity, that takes the 81,000 potential ticket sales down to 24,300. An arena may want to test the scenario to see, without exceeding capacity:
- Which seats or areas should be sold to maximize profit while maintaining social distancing standards and prioritizing safety of athletes and performers?
- How will this impact parking, food, beverage, and merchandise sales?
- How much food, beverage, and merchandise should be available for sale?
- How many staff will we need to support attendees?
- What will be the bottom-line impact?
Now, what if Seattle increases the restriction to a 50% capacity in the next COVID phase?
Just think of all the scenarios that could be relevant: How are ticket sales and prices impacted if my team gets into the Playoffs? How many taser-certified security guards do we need to maintain a safe environment? What if the weather is bad and we cannot use the arena? The list goes on and on.
Having the flexibility to see an organization’s direct impact from changes in policy or demand is crucial.
Using a system that can test any scenario in real-time will save thousands of dollars not only by accurately forecasting the “what-ifs” but also by saving time managing inaccurate and messy spreadsheets.
The ROI doesn’t just come from gathering accurate information, it also comes from different departments and teams being able to collaborate different scenarios with each other. The days of waiting for the sales team to send data to the accounting team, to Slack that report to the GM, to email that info to the next person is over. With a cohesive corporate ecosystem, data is shared across all teams at the same time leading to a more efficient, more accurate, and more profitable business.
With Anaplan intelligently using underlying data from software like ticketmaster, forecast accuracy for premium seating increased due to the comprehensive planning taking into account thousands of dollars missed by spreadsheets.
Anaplan also gives you a reduced planning cycle time and increased forecast accuracy. It takes the guesswork out of forecasting and makes forecasting more accurate. Executives can get data-driven results faster, teams can collaborate on projects and scenarios, budgets will be more accurate, and top-line revenue will be more accurate.
Wonder how we know the ins and outs of this business? We’re the official planning partner of the Climate Pledge Arena. We’ve built the systems from the ground up that makes it the most innovative arena in the United States. I wonder what we could do for you?
Feel free to reach out at [email protected] to schedule a demo, or shoot me an email or give me a call just to talk about Anaplan and this exciting, transformational ecosystem.