Lecture 9

Event budget
Lecture outline
• Introduction to event budget
• Requirements of event budget
• Feasibility study
• How to make an event budget. Examples
INTRODUCTION TO EVENT BUDGET

The event budget is a projection (forecast) of the income and expenditure that the event will incur based
on plans made and information gathered.

The preparation of a budget is an essential part of event management. It is fundamentally important

that Event Directors are able to predict with reasonable accuracy whether the event will result in a
profit, a loss or will break-even. This is achieved by identifying and costing all probable expenditures
and by totalling all expected revenues (income). By comparing expenditures and revenues, it then
becomes possible to forecast the financial outcome of the event.

The construction of an event budget allows the Event Director to exercise financial control. Many
organizations have run into severe financial difficulty and even bankruptcy as a result of staging
events. The budget therefore enables the Event Director to make sound financial decisions about the
choice of venue, and expenditure on promotion and equipment.

The process of budgeting also enables the Event Director to calculate how much revenue is needed
to stage the event in accordance with provided details.
Although the budget takes time to develop, there are some rules that should be observed
throughout:
 Budget to avoid making a loss
 Be realistic about event incomes
 Have a financial contingency plan i.e. what happens if the sponsorship is not
forthcoming?
Once constructed, the budget assists the Event Team to determine whether a proposed course of
action fits within planned financial strategies, or not. If the answer is in the affirmative, i.e. the
item is said to be “within budget”. If the answer is in the negative, then there is an understanding
that continuing to pursue that strategy has a higher degree of risk, and the event profit will be
reduced. This does not mean, however, that any departure from the set budget is inadvisable. It
may be that the “unbudgeted” cost item has obvious financial benefits.

Make sure you understand the financial situation before you start organizing your event in any
detail. Here are some relevant questions that may assist you:
 What is the available budget?
 Do you need to charge guests admission?
 Do you need to hire venues and employ staff?
 Is catering required?
 Is advertising and promotion necessary? Does the event have sponsors?
 Will Fringe Benefit Tax apply
Once the type of event has been established, we need to know if it is possible to carry it out and
to do that we need to make a budget with the income and the expenses.

REQUIREMENTS OF THE EVENT

A draft budget will be drawn and modifications will be made along the organization of the
event. This takes a long time beforehand and is basically theoretical. Halfway though the
organization, a second budget will be made. It will be closer to reality, with updated
rates, although the number of participants will be still unknown, as well as the final sources of
financing.

Eventually a final budget will be made. It will be real and operational and a logical consequence
of the second. We should highlight here the importance of the fact that unexpected costs will
be appearing along the organization of the event. These are extraordinary expenses
that arise throughout the development of the event and that may take up to 20% of the
total costs.
 FEASIBILITY STUDY

An itemized budget should include the technical requirements, suppliers and necessary services
for the development of the event. According to the funds expected for the event decisions
should be made about the logistical, organizational, staff and formal requirements, as well as
the size of the venue to be held, time of the year and length of the event.

Every aspect of the event should be included in this study. It is necessary to know
whether it is possible to organize and hold it, bearing in mind the minimum goals and
the percentage of these goals over the total costs, so as to know whether the final benefits
would be obtained. A strategy to obtain funds will be designed so that the event can be
successful. This strategy should attract private or public sponsors, as well as participants.

We need to check that there is a demand that will accept our project. We also need to know
how to achieve the necessary funds and whether the event will have any sort of profit margin.
 HOW TO MAKE A BUDGET. EXAMPLES

In order to make the budget we need to ask, and answer, a few basic questions. What is
the size of the event? To whom is it addressed? What participation expectations do
we have? Where is the venue? In every budget, there must be a total balance between
income and expenditure.

Two example budgets are shown in the next slides. These are likely to be the most
representative: a sport event and a scientific event.

The sport event is a social gathering with a large number of participants as this is a
very dynamic sector that attracts widespread interest from both the audience and
the sponsors if the right sportsman is chosen. One of the main goals of a sport event
is to have economic benefits. In the present example it is easy to see in the final balance
the benefit obtained, as the income was higher than the expenses, and therefore the
organizers will have a surplus either for the organization of the next event or for their own
benefit.
In this example, expenses are:
SPORT EVENT
 Transport, accommodation and competitors’ and judges’ allowances and salaries,
which are the logistics expenses.
 Opening Cocktail or Ceremony with the participants and the media.
 Expenses of the corporate image: event programme, tickets, posters, journals,
websites (from which to sell online tickets), mailings (to the prospective participants
and sponsors).
 Technical and audiovisual equipment: screens for the results, cabins for the
translators, public address system, etc.
 Coordination expenses. The technical secretariat means a very important cost but
at the same time it is their responsibility to ensure the success of the event, to
plan, develop and hold the event from the beginning to the settling of the accounts.
The press office will be in charge of the media coverage of the event. Further costs
are press insertions with the participants and dates.
 Venues and premises: the space necessary to hold the event.
 Public-liability insurance will cover the organizer’s responsibility in case of
attendees’ accidents, faults in the facilities involving refunds or the
cancellation of the event due to participants’ injuries or withdrawal.
 Unexpected costs are included here as they are likely to appear through the even
There are four parts in the income section:
 Participants’ fees: these are the attendees to the event who pay
their ticket.
 Sponsors: Sport labels and sponsors in general who will
bring their economic support for material expenses, easy to
justify to the public tax office.
 Public Institutions: All the funds received form the local
government where the event takes place.
 Local Council: will provide the funs for the venue of the event
 SCIENTIFIC EVENT: A CONGRESS

For a scientific event the budget will include just the necessary expenses to
hold it. It is not necessary to include large sums for design, venue, etc and it will
be more economical as the goal is in the latest scientific developments rather than
the economic profit.

The difficulty lies here in the sponsorship of the event as it receives neither much
media coverage nor immediate benefit for the private companies. Most financing
comes from research grants or the support of universities or research institutions. It
is usually not more than what is needed to cover costs. Fees from the participants
will help cover all expenses.

A special type of scientific event is the medical one because it attracts

sponsorship from the pharmaceutical industry, interested in presenting their new
products, to cover expenses such as catering (lunches and dinners), travelling
expenses for the speakers, the proceedings, etc.
In this example, expenses are:
 Transport, accommodation and allowances for invited speakers.
 Catering: Coffee breaks and lunches included in the sessions.
 Costs from the scientific programme and corporate image of the event. There will be at
least three programmes, two tentative and a final one, depending to the dates
provided by the organizing committee, with updated information to be sent to
participants, speakers and public in general.
 Technical and audiovisual equipment to be used at the sessions.
 Organizational expenses: the technical and the scientific secretariat will be in charge of the
development of the programme
 Venue. The venue will be a large Auditorium and Congress Centre
 Public-liability insurance and delegates insurances.
 Unexpected costs are included here as they are likely to appear through the event.
Anyway, in this case these costs will be less likely to appear as all costs are usually
accounted for.
There are two large parts in the income sections:
 Participants Fees: The main source of income for this type of event.

 Sponsors, Public Institutions and Universities: will cover part of the

expenses, usually for the plenary speakers and printing. These funds are
easy to justify.
Review questions:
• What is event budget?
• How is preparation of a budget is an essential part of event
management?