Explain the advantages and disadvantages of bringing in a private management company such as SMG or Global Spectrum to manage a public sport facility. If you were the lead government official in your municipality, would you hire private management or keep the facility under in-house control? Why?
As the general manager of this type of facility how would you evaluate organizational effectiveness? Choose one of the organizational models discussed in the module and explain how it would be used.
Bringing in a private management company like SMG (now ASM Global) or Global Spectrum (now Spectra Venue Management) to manage a public sport facility has both advantages and disadvantages.
Advantages of Private Management
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Expertise and Efficiency – Private companies specialize in venue management and have extensive experience in booking events, marketing, and operations, leading to increased revenue and better customer experiences.
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Cost Savings – These firms can often reduce operational costs by leveraging economies of scale, purchasing power, and efficient labor management.
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Revenue Growth – Private firms typically have established relationships with promoters, sponsors, and event organizers, increasing the facility’s revenue potential.
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Reduced Government Liability – Municipalities can shift financial and legal risks to the private management company.
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Access to Advanced Technology and Best Practices – Private firms bring modern management strategies, data analytics, and event promotion tools that might be unavailable in a government-run facility.
Disadvantages of Private Management
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Loss of Local Control – The municipality may have less oversight and influence over operations, pricing, and community accessibility.
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Profit-Driven Approach – Private management companies prioritize profit, which might lead to higher ticket prices, rental fees, or a focus on commercially lucrative events over community-focused activities.
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Job Security Concerns – Employees may face layoffs or reduced benefits when transitioning from public to private management.
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Potential for Conflicts of Interest – Private firms may prioritize events that benefit their own brand or interests rather than those best suited for the local community.
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Long-Term Costs – While short-term cost savings may be realized, long-term contracts with private firms can be expensive, and municipalities may lose out on potential revenue.
Decision as a Government Official
If I were the lead government official in my municipality, I would consider factors such as the facility’s financial health, the need for specialized management, and the level of community engagement. If the facility was struggling with low revenue, underutilization, or inefficiencies, I would hire a private management company to maximize its potential. However, I would negotiate a contract that ensures local oversight, reasonable pricing for community events, and performance-based incentives to align the private firm’s goals with public interests.
If the facility was well-run under in-house control and had strong community engagement, I would retain public management to maintain local control and affordability while potentially outsourcing only specific services like marketing or concessions.
Evaluating Organizational Effectiveness
As a general manager, I would evaluate organizational effectiveness using the Goal Attainment Model, which focuses on whether the facility achieves its stated objectives, such as:
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Financial profitability (increased revenue, cost efficiency)
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Event scheduling and attendance numbers
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Customer satisfaction and community engagement
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Operational efficiency (staffing, maintenance, technology use)
This model is useful because it provides clear, measurable outcomes to assess success. For example, if the goal is to increase annual revenue by 10%, I would track financial statements, event bookings, and sponsorship deals to determine if the objective was met. If community accessibility is a goal, I would measure public event attendance, survey feedback, and affordability metrics.