35
Hard data on the costs of integri-
ty breaches is difficult to come by.
Many sports businesses are pri-
vately held and jealously guard
financial information. Moreover,
many owners mingle their inter-
ests in sport with other holdings,
which complicates the challenge
of assessing the costs of discrete
incidents. And those in a position
to know often have little incen-
tive to disclose cost data.
Despite these circumstances, it is clear that the costs of integrity breaches
tend to be high and enduring. This is because of the broad scope of the costs
incurred as well as the dynamic effects of integrity breaches on a wide range
of constituencies. Some arise in the immediate aftermath of an incident – the
costs of professional services for crisis managers, lawyers, investigators, med-
ical personnel, security personnel, and PR firms. Importantly, opportunity
costs abound–management time and attention diverted from other impor-
tant matters or business needs. If the legal or disciplinary process leads to
sanctions or the suspension of key players, then overall team performance
may decline, with associated loss of revenue.
When attendance slumps, there is a cascade of knock-on effects: lower ticket
sales result in reduced revenue from parking, concessions, and event-based
merchandising. The ripple continues outwards to the host community, hurt-
ing local hospitality businesses, retailers, and legions of pavement hawkers.
Media coverage may accelerate the downwards spiral, eroding a team’s good-
will in the community, diminishing support from politicians and legislators,
and drawing added scrutiny from regulators. Broadcast ratings may also
tumble, undermining the profitability, not only of the team in question, but
also of the sponsors and broadcasters, who may then terminate contracts or
approach future negotiations with lessened enthusiasm. Merchandise sales
are at sequential risk as the drop in attendance passes through the web of
Quantifying
the Costs
of Integrity
Breaches
© MONITOR QUEST LTD. 2011
GUARDING THE GAME Preserving the Integrity of Sport
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