The Future of Stadium & Arena Profitability
Billion dollar investments, years of planning, and revolutionary technology are just a couple ingredients of arenas and stadia of the future. The traditional idea of arenas being outdoor facilities for sporting events that operated dependent on the weather is a thing of the past. Many stadiums and arenas are only used during the seasons of the hosted sports teams, therefore, many venues are looking for new ways to fill the space and generate additional revenue. Technology and an emphasis on fan experience and interactivity are hot new trends in the stadium and arena industry. The traditional sports-centric arena model is being rewritten to include more transformable and multi-functional spaces.
Increasing Demand for New Revenue Streams
With investments of millions (and billions in some cases!) of dollars going into the renovation and construction of arenas, the venue needs to be able to bring in revenue for the city and return on investments. In order to support these highly technologically advanced stadiums’ price tags, they must be versatile entertainment venues rather than strictly sporting venues. Many venues are consciously thinking of how the public will interact in the space, and creating accommodating spaces for those types of interactions. With advancements in home-viewing sports, venues need to create value in the in-person experience that fans can’t get at home. Arenas and stadiums are creating unique lounge spaces with multiple opportunities for engaging experiences, new food options, and entertainment within and around the arena or stadium.
Methods of Creating New Streams
In order for arenas and stadium to generate more revenue, they must operate even when there are no sporting events. It can be done on a very simple scale of opening a venue for rental for events such as weddings or corporate parties or offering luxury seats or VIP options. Another option is to add variable unique hospitality offerings that give fans the freedom to choose how to interact with the event. For example, many venues offer club seats, VIP rooms and other unique seating areas with different package prices that offer different amenities for a choice in experiences. Though this isn’t a new concept, the packages being offered have non-traditional benefits: pre-game field access, stadium tours, etc. Some arenas offer pre-booked food dining options and activities before and after the main event to encourage fans to arrive earlier and leave later.
However, some venues are looking to invest in more profitable and long-term revenue streams. Many brand new arenas and stadiums are being built with multi-functional designs that are meant to embed the venue into the community, allowing it to become an active entertainment hub. Many arenas and stadiums have included additions or renovations to their spaces to make the existing venue more versatile and accommodating for events other than sporting events.
For example, the University of Notre Dame realized that the area around their stadium was a high traffic area and the stadium wasn’t used except during the football season. They needed space for their expanding research programs and they could utilize some space from the stadium more efficiently. Notre Dame is in the process of adding stadium enhancements and three more buildings onto its original stadium that include student lounges, the anthropology, psychology, and music departments, a media center, meeting rooms, food courts, classrooms, a performing arts center, and more.
Turning Arenas and Stadiums into Destinations, not Venues
A truly innovative approach to generating stable future revenue streams is to include opportunities for the community to feel connected to the venue in more ways than as fans of a sports team. Many cities are investing in mixed-use developments in downtown areas surrounding arenas and stadiums providing other entertainment opportunities within the community, all revolving around the arena or stadium.
For example, in Los Angeles, the new Rams stadium set to open in 2019, and will be the NFL’s largest stadium in reference to square footage. The stadium is going to be unlike any venue. It’s designed to be a destination. The stadium has the shiny price tag of $2.6 billion, and a unique design. It will have an indoor/outdoor atmosphere with a curved, transparent roof that will catch the California breeze and allow for year-round usability but still give the fans in the crowd some shade. The venue is designed for fans to be fully-immersed in media with advanced Wi-Fi networks and video board viewing from every seat.
Outside of the stadium, it will be connected to the community with sculpted, park-like grounds surrounding the venue with paths leading throughout the area. The complex will sit on 300 acres and will include housing, office spaces, retail shops, a hotel, and a lake. The 80,000-seat stadium will be part of a huge development project that includes over 800,000 square feet of retail space, 780,000 square feet of office space, 2,500 residential units, a 300-room hotel, a 6,000-seat performing arts venue, and 25 acres of outdoor public park space.The investment into the Rams Stadium was not simply an investment in a venue, it was an investment in a community to act as a catalyst for neighborhood redevelopment.
Arenas and stadiums don’t have to be built from the ground up in order to become integrated with the community, additions can be built within the area to create opportunities for unique social experiences. For example, our hometown stadium of the St. Louis Cardinals has been going through a developmental process to become more integrated into the surrounding community.
In the recent years, the area has developed into a vibrant entertainment district around the stadium. You no longer need to be in the stadium to experience the feeling of being a fan in the crowd. Ballpark Village in downtown St. Louis, directly across the street from Busch Stadium, opened in 2014. It is a sports anchored, multi-phase mixed use development that includes dining, nightlife, retail, parking and in future phases will include luxury residential and office spaces. The entertainment district will have something for everyone including multiple sports viewing areas, live music, the Cardinals Hall of Fame and Museum, and more.
Reasons for Arena and Stadium Growth and Evolution
As urban populations increase, the need for event related venues will increase concurrently. A recent report stated that urban areas will see a $2.8 billion increase over the next 30 years. Many cities are already seeing this growth and have begun building new arenas and stadiums in high population locations such as Los Angeles, Indianapolis, Dallas and New York. There is quite a movement in building brand new stadiums and arenas, especially in the NFL.
These new arenas are structured and designed to be part of the vibrant surrounding community, not just a building in the downtown area. Many new stadiums are part of mixed-used projects that are becoming the foundation of urban entertainment districts. The spaces in, and around, the venue have become as competitive as the event it is focusing on. Arenas and stadiums are stretching beyond the typical open-seated, public spaces.
Gone are the days of stadiums and arenas being single-purpose, open-seated spaces. Stadiums are becoming more technologically advanced and receptive to the population growth in urban areas and are adapting accordingly to the changes. In any place where there is an increase in population, the number of entertainment businesses and venues will also increase. Many stadiums and arenas have recognized this trend as a continual trend and are planning for the future by imbedding the venue into the community to open up a wide array of potential new revenue opportunities.