Olympic Returns Decimation

Who doesn't love rummaging around a good business case? Well...

One arena where we can take plenty of pointers from on how we draw such up and pitch them, comes from so called 'mega projects'. When such emerges in the form of the mega-event in Olympian mould, then cut-through can enter mainstream.

And so we come to what feels like the end of an era. With the Commonwealth Games now without a host (again) for its 2026 staging.

Given I was in the city at the time, I noted how Birmingham managed to turn a slight return from the 2022 event. As reported in The Times; "Assorted studies said it made a £100 million profit". Infrastructure boosts on top, too.

I might concede that, Barcelona 92 (& to a lesser extent London 2012) aside, there appears broad consensus these are vanity projects where you should exclude new buildings, train tracks or landmarks. Yet there are those who seek to blow up the rationale for hosting such jamborees not on these or ephemeral civil pride slants but on purely economic grounds.

I note reference to purported gains from Utah's 2002 Winter Olympics.

Number crunching of economists Robert Baade and Victor A Matheson duly cited;

“... a common rule‑of‑thumb often used by economists who study mega‑events:
if one wishes to know the true economic impact of an event, take whatever numbers the promoters are touting and move the decimal point one place to the left.”

Ouch.

This basically suggests that any business case projection of returns is out by a factor of ten. What you get is a tenth of what you signed up for.

Whatever the validity of this scathing assessment, there's something in this adage we can use when presenting our own RoI figures.

Bear in mind The Business Case alone seldom has main prominence in decision criteria should you hold firm grasp on the emotion driving selection.

For all the competitive bidding, procurement scorecards and any senior exec meddling, being able to both uniquely recognise and remedy a specific 'problem' which is causing someone with clout and chutzpah enough pain, in the here and now or future-proofing, is often your prime route to signature.

That's not to dismiss your projected numbers' value.

Yet there is the old joke among those long in the tooth within Finance that they've never seen a business case where the riches flowed as promised.

Given all this, our friend is sensitivity analysis.

To acknowledge that amounts may feature the nebulous is to own the winning hand.

And you can now introduce this mega-event stat to apply your levels of variance.

In many cases, offering a range of plausible numbers can help.

The classic trident of best case, worst case and landing somewhere in between.

A take on Fan Chart styling, although somewhat tarnished by current central banker use of the tool, can work well here.

What the global sporting bonanza reminds us too, is that the more everyday the number, the more believable it is.

It's simpler to gain agreement for an atomised say, thousand-per-input, as opposed to an all embracing billion overall, wherever possible.

Back in the day one question I used to ask enthroned counters of beans was along the lines of, 'what return must a discretionary spend request exceed?'

You may hardly be surprised to learn that I cannot ever remember receiving an actual, specific, direct answer.

A business case is about documenting the bang-for-the-buck. Going beyond the mere single output will help you have the loudest.