Structure of the Leisure & Recreation Industry.

Structure of the Leisure & Recreation Industry

Traditionally, leisure facilities & activities have been provided by 3 sectors:

In recent years the differences between them have become less pronounced, and a provider in one sector may have characteristics which are usually associated with another sector. Such overlap is normal, but it is useful to recognise these variations when carrying out analysis of observations. Here is an example:

Wimbledon Lawn Tennis & Croquet Club and Queens club are voluntary sector clubs where for most of the year their ordinary members play tennis. Yet for three weeks of every year they stage 2 of the biggest and most commercial tennis events in the world.

Despite overlaps, each sector still maintains a distinctive profile as a result of its purpose and the way each is controlled and funded.

Private Sector

The primary objective of private sector organisations is to make a profit. If they fail to make a profit they go out of business. To make a profit they need to produce services and goods at a cost that is less than that at which they sell them. They are also in competition with other leisure providers and need to maintain value for money to keep prices down in order to retain their market share.

Private sector operators can locate wherever they want. In areas where there is a small market there will be a lack of operators, while in areas where there are large markets there is a good deal of competition and firms will compete to win customers. There are two types of private sector organisations; non-limited businesses and limited companies, they generate in different ways and have slightly different products to offer.

Non-limited Businesses

Sole Traders: These are people who set up and run a business which they own

themselves. It is normally small, with few or no staff. Being a sole

trader can be a precarious business, as the owner can raise money

only from conventional sources such as personal savings, loans,

and mortgages and is liable for any damage or debts incurred by

the firm’s activities. The advantages are that the trader owns the

company and can keep all profits and make all decisions. They

often own visitor attractions, tent gardens, beach shops & cafes.

Limited Companies

Private limited companies: These are privately owned firms where control is

passed to a board of directors. The chief benefits are that the

owner/directors are not personally liable for any business debts

or any damage caused by the firm unless they have been negligent

of laws such as Health & Safety. In addition, in a limited company

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owner/directors are not personally liable for any business debts

or any damage caused by the firm unless they have been negligent

of laws such as Health & Safety. In addition, in a limited company

the staff & owner are paid a set salary & cannot use the company

funds for any personal expenditure. They are often family firms

where the directors are from one family or connected to it. Some

do grow very large, an example of this is Littlewoods Pools which

was sold in 2000 for £161 million. They can be recognised by the

letters ‘Ltd’.

Private sector organisations can get the money they need to invest in their business from several different sources:

Personal savings – owners provide money themselves
Loans – banks, building societies, insurance companies all lend to private sectors
Private shares- a private limited company can sell shares in the business to private individuals such as staff, friends & family who are connected to the business in some way
Public shares- a public limited company can sell shares to the public anywhere in the world via the stock exchange
Venture capital- venture capitalists are banks & companies who specialise in financing new business ventures
Governments grants- the government may award grants if it thinks that the organisation will make a significant contribution to the local economy

Some examples of facilities provided by the private sector are:

Sports & recreation- sports clubs, water sports, snooker halls, tennis courts & golf courses
Arts and entertainment- galleries, cinemas, theatres, race tracks, bingo halls

Public Sector

This diagram shows the bodies that make up the public sector.

Its main functions are:

To develop policy
Provide facilities and services that are not adequately supplied by the private sector and are for ‘common good’
Provide funding and other help to the voluntary sector

Public sector services are provided for the public and collectively paid for by the government. Their operation is ultimately accountable to elected bodies, including local councils (like West Wilts county council) and Parliament. The public sector regards the provision of leisure services as a social service to the community rather than as a profit making venture. An example of this is Westbourne Tennis Club. Consequently local authorities usually provide low paying or free services for the communities they serve. In so doing, they give opportunities and needs for groups such as school pupils, the disabled and the elderly. Public sector provision cab be at one of two levels: national or local government.

Central Government

In the UK the government doesn’t often get directly involved in providing leisure and recreation facilities. Instead it provides financial assistance through government agencies which make grants available to local authorities and voluntary organisations.

The government department that controls these agencies is the Department of National Heritage. The Department gets an annual budget from the Treasury. Since 1994, much of the money available to the agencies which support leisure and recreation comes from the national lottery.

Other government departments providing funds for recreational activities are:

The Department of Agriculture – supports the Forestry Commission
The Department for Education and Employment – supports some recreational activities through education budgets
The Welsh Office – funds the Wales Tourist Board and CADW (Welsh Heritage)

The government has four main functions:

Planning and control – setting the boundaries for leisure provision to ensure that development of the industry is in line with government policies
Marketing – promoting the benefits of leisure activities
Financial distribution – providing funding through distribution of government monies
Co-ordination – ensuring that the activities carried out by different government organisations and departments do not conflict

The Sports Council

There are four Sports Councils in the UK – one each for England, Wales, Scotland and Northern Ireland.

Sources of funding:

National government
Commercial activities
Sponsorship from the private sector for specific activities

Aims:

To increase participation in sport and physical recreation
To increase the quantity and quality of sports facilities
To raise standards of performance
To provide information for and about sport

Activities:

Make grants and loans to local authorities to fund community facilities and projects
Provide funds to national sports governing bodies for improving administration, participation, coaching and training standards
Run national publicity campaigns
Run the National Sports Centres

Administer and distribute sports and recreation grants from National Lottery funds

The home country sports councils also manage the thirteen national sports centres including:

Bisham Abbey – tennis, football, hockey, squash, golf
Crystal Palace – athletics, swimming and sports injuries
Lilleshall – football, hockey, gymnastics and archery
Plas y Brenin – mountain activities
Scottish National Watersports Centre, Cumbrae, Firth of Clyde

Local Provisions

Most local authority leisure and recreation services are financed by local taxes from:

Businesses – they pay a tax known as the Uniform Business Rate
Residents – they pay a Council Tax related to the value of their homes

These taxes pay for a wide range of services, like education, housing and social services. So there isn’t usually a lot left over for leisure. Local authorities have a legal duty to provide some amenities, such as public libraries. But in general the provision of leisure and recreation services is discretionary. These services are usually provided through leisure and recreation departments.

English Heritage

English Heritage is the national body created by Parliament in 1984 charged with the protection of the historic environment and with promoting understanding and enjoyment of it. English Heritage is the government’s official adviser in England on all matters concerning heritage conservation. This includes buildings, monuments, gardens and even landscapes.

English Heritage’s principal aims are to:

Secure the conservation of England’s historic sites. Monuments, buildings and areas
Promote people’s access to, and enjoyment of, this shared heritage
Raise the understanding and awareness of the heritage and thereby increase commitment to its protection

The Voluntary Sector

Organisations in this sector get their income from donations, legacies, grants, membership fees, admission fees and trading activities. The National Lottery also provides funds. The revenue raised by voluntary-sector organisations is always invested back into their facilities and services.

The voluntary sector is an important part of the UK leisure and recreation industry. Many smaller facilities are completely or partly run by volunteers – small, local concerns like local sports clubs, social clubs, conservation groups and youth clubs as well as large nationwide organisations like the National Trust. Volunteers often carry out the managerial, administrative and operational work, sometimes with paid staff and sometimes on their own.

Many organisations in the voluntary sector exist to promote special causes, issues and interests. They lobby government at national and local levels to support, protect and encourage the sector’s aim, activities and interests.

Many large voluntary organisations attract national interest in their activities by raising people awareness of concerns and issues through campaigns and promotions. They but a lot of money into promotions, sponsorship, educational projects, newspaper and magazine adverts.

The voluntary sector may provide facilities that the public sector can’t afford or that won’t raise a high enough or quick enough return for private-sector interest. All these facilities still have to be run on a commercial basis. To attract customers, facilities need to offer what the customers want by offering ease of access, value for money, services like food and drink, information and customer care.

The voluntary sector also develops facilities in parts of the industry that are too small or too specialised to attract funding from the public or private sector. For example, many local and amateur sports facilities are set up, managed and maintained by volunteers.

Being able to finance what they want to do is as much an issue for the voluntary sector as it is for the public and private sectors. Funding comes from trusts, donations, legacies, grants, membership fees, admission fees and any trading activities like gift shops. Organisations have staff responsible for fundraising activities like gaining sponsorships and grants and increasing membership. Fundraising is often part of marketing.

Voluntary sector organisations which register as charities have to satisfy certain conditions. Their objectives must be charitable, non-profit making ,and for the advancement of education or for other purposes beneficial to the community.

Relationships Between the Sectors

All three sectors- public, private and voluntary – have a role in providing leisure and recreation services. The example below show that the three sectors can provide similar facilities in recreation.

THE GOLF BUSINESS

There are around 2,000 golf courses in the UK and 5 million players. The industry is worth around £3 billion a year and is still growing. In 1989 a report estimated that 700 new courses would be needed by the year 2000. Recently, many of the prime site courses in the UK have been bought by Japanese investors. Golf courses are run in three main ways- as private courses, municipal courses and as voluntary-sector clubs (sometimes known as private membership clubs)

Private Clubs- are run as businesses and aim to make a profit for the owners. They are managed by employees of the company. Income is mainly from membership fees, green fees(payments made by non-members who play the course), tuition and retail sales of golf equipment, clothes and accessories. Many private clubs also provide other leisure and recreation facilities such as bars, restaurants, conference facilities, fitness suites and squash courts. Some diversify more widely into hotels and timeshare or second home developments.

Municipal Courses- aim to provide a service to the local community. They are publicly owned and managed by employees of the local authority. Income is mainly from ‘pay as you play’ fees, although some municipal courses have members as well. Extra income comes from tuition, catering and retail sales. Less than 20% of golf courses in the UK are currently publicly owned.

Voluntary-sector Clubs- are owned by their members. They aim to satisfy the needs and wants of members, and to break even. They are run by a committee of members and usually employ a steward to manage the facility. Their main sources of income are membership and green fees. Non-members pay a temporary membership fee allowing them to play the course for a limited time, such as a day.