Stadium Funding and Operations

Stadium Funding and Operations

Determining Stadium Location

Market analysis is a necessary process that should be conducted before deciding on the new stadium’s location. Apart from helping one understand the new market, market analysis will go a long way in helping to understand the demands and supply trends applicable to the facility. A closer investigation of these elements will essentially shape the preliminary stadium concept. Market analysis will be conducted through surveys, interviews, and focus groups, which will help the organization discover the support base and its behavioral patterns.

Some factors that may affect the feasibility of the new stadium include socio-economic and political factors. The size and cultural orientation of the target customers also form part of the decision process. Also, government support access infrastructure will determine the new facility’s location. These factors will influence the seating capacity, the site, and the amenities to be installed at the facility. It is worth noting that one common mistake made when constructing a new stadium is looking at peak standards instead of average demand. As a result, entities waste resources on a vast facility that may not be fully utilized.

Sources of Funds

Public Funds

According to Fried, DeSchriver, & Mondello (2013), using public funds to finance the construction of stadiums is nothing new. Once the idea of building a new stadium is conceptualized, the organization can negotiate with the relevant state or municipality to decide how they can finance the new facility. In return, the relevant authority sources funds through increased product and tourism taxes. The city can also float bonds on the market to be paid later. Also, surcharges on parking costs are another way a city could raise funds to construct the new stadium. The reasoning behind the public funding for stadiums is that they create benefits for the community. In the short term, making stadiums creates jobs for multiple construction workers, while in the long run, it benefits the local community through increased tourism spending.

Exchange-Traded Fund

The organization can also finance the construction of the new stadium by engaging exchange-traded organizations’ funds with some degree of alliance with sports companies. After creating or aligning with a publicly traded company, the organization can float the shares for the public to purchase (Fried, DeSchriver, & Mondello, 2013). The number of stocks purchased in this manner must be limited so that no single prominent owner can claim control of the facility. The good thing with this form of funding is that there are no dividends or capital appreciation on the funds invested; hence, the stadium does not risk its future bottom line. This financing has a psychological influence since people will purchase the shares to gain bragging rights and pride in supporting a team.

Ongoing Revenue Generators

Advertising

The stadium can leverage different advertising opportunities to create revenue. A common form of advertising in stadiums is signage adverts. Using new technology, the stadium can incorporate Dorna Boards that can hold up to 28 adverts, which are then aired, one after the other (Leeds, Allmen & Matheson, 2018). Other new technology signage advertisements that could create revenue include ad sleeves usually placed at the facility’s entry points. Also, glow benches could make a positive impression. Advertisers will pay thousands of dollars for such ads depending on the camera time allocated and the target audience that views the advertisements.

Naming Rights

Naming rights are another lucrative option for stadiums to create revenue. Here, stadiums make a deal with entities that are looking for publicity by naming stadiums after them. Naming a stadium for agreed time rakes in revenue could be used for various purposes. Naming does not necessarily have to be about the entire stadium, but even terraces and entry points.

Club Seats

Club seats are another innovative way to create extra revenue by adjusting specific seating areas. These sections may have access to a lounge and waiting staff and be fitted with additional comfortable seats. That way, the stadium can charge highly for those willing to occupy such spaces. A good example is the Miami Dolphins, whose revenue has increased significantly due to their use of such areas to create income.

Personal Seat Licenses (PSLs)

A personal seat license is a fee paid annually to give one access to a specific seat for an entire season. One can use their hearts in a particular sport as outlined and not for any other sports event held at the stadium (Leeds, Allmen & Matheson, 2018). The good thing with PSLs is that they enable the facility to collect revenue in advance, such that the facility’s bottom line will not be hurt even when fans decide not to come to the stadium.

 Collaboration with City Administration

A city can collaborate with stadium owners to develop the most effective way of incorporating community interests in the facility. Success in stadium-community relationships can only result from intense planning by the city. Successful relationships are pegged on proper design and implementation, whether the town employs private or public financing.

References

Fried, G., DeSchriver, T. D., & Mondello, M. (2013). Sport finance. Human Kinetics.

Leeds, M. A., Von Allmen, P., & Matheson, V. A. (2018). The economics of sports. Routledge.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

Stadium Funding and Operations

Assume you own a professional sports organization and want to build a brand new $400 million stadium. Write a paper explaining how you will determine the location and amenities for the stadium. What sources of funding/sponsors will you seek for building the new stadium? What are the ongoing revenue generators for the stadium? Describe two ways of getting the city involved and how you plan on supporting each other. Discuss how revenue will be shared amongst investors, teams, city, etc.

Fried, G., DeSchriver, T. D., & Mondello, M. (2019). Sports finance (4th ed.). Retrieved from https://www.redshelf.com

It could sell stock options to the public and allow them to become partial team owners. Example Green Bay Packers