The Conference Organizer’s Dilemma

INTRODUCTION
Angie Dickenson, the Executive Director of the Society of Business Academics
(SBA), was chairing a conference call to review the results of the SBA annual confer-
ence that wrapped up the week before. On the call were the Conference Chair, Earl
Holliday, who was responsible for organizing the conference program and bringing in
guest speakers, and Gail Sawyer, Membership Chair, who was responsible for recruit-
ment and member engagement.
Earl was excited, “The conference attracted more attendees than we expected
and the post-conference surveys were very positive. Attendees were very happy
with the content and location. Presenters found the venue worked well for them.
And our sponsors spoke well of the hospitality provided and networking opportu-
nities. I don’t think this conference could have been any better!”
Gayle Sawyer, the Membership Chair, added, “Conferences like this one make
it easier for me to recruit new members. It demonstrates the value the Association
offers to our members. Several people who attended our conference for the first
time have already signed up as members for next year!”
Angie drew the conference call to a close with some final comments, “You all
did a great job on this year’s conference. You can be very proud. But there is some
bad news: we lost money on the event! I will do some analysis and we can discuss
this further at the Board meeting next week.”
Angie was puzzled by the financial results from the conference. By all accounts,
the conference was a success. The conference included presentations of research by
leading academics, sessions providing updates on professional standards and regu-
latory changes affecting business, and workshops on state-of-the-art teaching meth-
ods. In addition, there were receptions and formal conference lunches and dinners
at which various awards were presented and attendees could network. Although
the conference was a huge success according to most metrics, the financial results
were disappointing. In spite of attracting more people than expected, the confer-
ence lost money. Angie, who was responsible for the overall financial success and
risk management of the association, would have to explain the results to the Board
of Directors of the Society at their next meeting. More importantly, the Board
would expect recommendations for change in the way that the Society managed its
conferences to reduce the risk of financial loss!
The SBA is a nonprofit association of professors in university and college busi-
ness schools. Its mission is to advance business research and teaching; its vision is to
be an indispensable resource and destination for all business professors seeking to
promote their research and develop their teaching skills. The SBA publishes a schol-
arly journal and hosts two academic conferences each year. The Society is budgeted
to break even each year although the Society does maintain a reserve fund to cover
contingencies such as this year’s conference deficit. The conferences are treated as
profit centers 1 and were budgeted to break even on a standalone basis (other SBA
activities and member dues covered the cost of running the Society).

1
1. A “profit center” is a subunit of the organization administered by a person or persons who
have control over both the costs and revenues of the subunit and are evaluated according to
the net income generated by that subunit.
TABLE 1
Budgeted and actual costs and operations data

Item Budgeted Actual

Registered attendees 300 350

Registration fee per attendee $200 $200
Sponsors’ lump-sum contribution $35,000 $35,000
Rental of meeting rooms and AV equipment $10,000 $9,800
Travel costs for guest speakers and staff $10,000 $10,200
Cost of meals per attendee (as per contract) $170 $170
Registration materials per attendee $20 $20
Transportation per attendee to an off-site reception $10 $10
Cost of breaks/refreshments per attendee (as per contract) $50 $50

The annual conference of the SBA was held in various locations across the
country. This provided opportunities for academics and practitioners in each
region to attend within their restricted travel budgets. The conference attracted
anywhere between 250 and 400 attendees depending on location and other factors
beyond the control of organizers (such as the state of the economy and weather).
The conference was usually held in a major hotel although some hospitality events
might be located off-site to take advantage of local attractions such as art galleries
or museums. The SBA would contract with the hotel to provide rooms for the
meetings, audio-visual equipment, and hospitality services (e.g., refreshment
breaks, meals). The agreement with the hotel included a fixed cost to cover the
meeting rooms, etc., and a cost per attendee that reflected the level of hospitality
service provided. The Society also paid the travel costs for guest speakers and its
own staff to attend the conference.
The Society was fortunate to have a number of sponsors who provided funding
in return for the opportunity to increase their visibility with the Society’s members.
These sponsors included publishers, data providers, and professional and academic
organizations. The amount of a sponsor’s contribution was committed months in
advance of the conference and was independent of the number of people attending.
In return for this support, sponsors might be provided with a booth in the conference
venue to display their products and meet with attendees. Sponsors would also receive
specific recognition for their support (e.g., advertisements in conference materials
and banners at sponsored events). The sponsors saw the conference as a cost-effective
way to interact with a large number of professors at the same time and to support
the SBA in its activities. Sponsors liked to see as many professors as possible attend-
ing the conference as this increased the effectiveness of their networking activities.
The SBA conference that just wrapped up anticipated 300 attendees but 350
registered and attended. The budgeted and actual costs and revenues are shown in
Table 1. As shown by the Income Statement in Table 2, the Society lost money on
 TABLE 2
Income statement for the SBA annual conference

Item Actual

Revenue
Registration fees $70,000a
Sponsors’ contribution $35,000
Total revenue $105,000
Total expenses ($107,500)
Surplus (deficit) ($2,500)

Notes:
a
350 9 $200 = $70,000

the conference in spite of keeping costs under control (partly by negotiating fixed-
price contracts and partly through careful management of discretionary expenses).
The SBA wanted Angie to make their events open to as many attendees as possi-
ble, but this had to be done within the budget available. Angie had not faced this
trade-off before.
“On one hand the conference attracted more people than we were expecting so the
Board and sponsors should be happy with that outcome,” Angie thought, “but as a
small nonprofit organization we can’t afford to lose money on events! My intuition is
that if the Board had to make a choice it would rather restrict attendance than lose
money—I guess I will have to recommend to the Board that’s what we will do next
year.”
“The Board has also been struggling with the question of whether or not the
conference should be held in smaller cities where attendance tends to be lower than
in the major cities,” Angie thought, “maybe going to smaller cities is a good idea
if it keeps attendance down!”

Note: Case source can be obtained from instructor.