BIHUB PATH

March 1, 2021

How to combine match day and non-match day in the business model.

Analysis and Sports Technology

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The state-of-the-art model for stadium management, which is already widely established in the US, has been largely applied to the European market and in the rest of the world. However, despite the progress, it is still far from achieving the results of the North American market. The main idea is to make a huge investment in a venue that holds thousands of spectators in a sustainable way, and this means keeping it active all year round, not just on match days. This generates value for the surrounding community and environment, revitalises the area and gives back part of what it receives from it.

European stadiums involve an investment of 200 million euros to produce venues with an average capacity of 15,000 to 60,000 spectators. Match days only amount to around 7.6% of the year when clubs can obtain a return on the cost and make the venue sustainable over time. That is if we take a typical team, which plays both in domestic competitions and in one of the UEFA tournaments. For the other 92.4% of the time these stadiums are ‘free’, and to a large extent, they can only avoid becoming a ‘white elephant’ if they can make proper use of that time. In other words, preventing the stadium from making a loss due to failing to amortise the investment. This needs to be avoided by developing a 365 stadium, with the aim of keeping it active throughout the year, thus making it financially profitable and fully integrated into the community to which it belongs.

Four stadium business models

To create this, it is essential to begin by defining the right business model based on the kind of ‘users’ (existing and potential fans), the competitive environment, and the social and business climate. Location also matters, whether it is urban or non-urban, as well as accessibility. Not all stadiums are suited for the same business model, and success depends on correctly choosing the right, personalised approach to each venue. The four main types that we find in the market are: Live Sports, Corporate/Business, Events/Shows, and Commercial/Leisure.

The first kind, Live Sports, refers to those stadiums that provide a unique experience to the spectator on match days, and that are highly recognisable for that characteristic. This is the ‘once-in-a-lifetime’ concept, which they achieve through the special atmosphere they generate. This makes them a tourist destination, and they receive visitors all year round, not only on match days, when they are usually sold-out, but also on non-match days. They generate revenue through business lines that are connected to the fans’ desire to visit the stadium, take the tour, go to the museum, and buy a souvenir at the official store. This is the case, for example, with Liverpool’s legendary Anfield stadium, or Borussia Dortmund’s Signal Iduna Park.

The second type, the so-called Corporate or business venue, is focused on providing the ideal facilities for companies to hold all kinds of events, such as congresses, product launches, meetings, commemorative dinners, or serving as studios for media campaigns. These facilities require two highly defined characteristics: they need to be of high quality to live up to the expectations of companies and the competition, and they need flexibility, i.e. to be versatile enough for these spaces to be used both on non-match days and match days. These cases mainly compete with congress centres and hotels, which offer a high-end product, but do not have the competitive advantage of the unique environment that a stadium offers, or the possibilities for backstage actions connected with the team. Atlético Madrid’s new Wanda Metropolitano is a clear example of this kind of stadium.

In the third kind of the business model, that of Events and Shows, certain decisive factors come into play, with geographical location being of particular importance. This is essential for making the decision to implement this kind of stadium design, whose success depends on being on the major event circuit, or being located in a specific setting where medium-sized events happen, and also being able to adapt to host those events that will not fill the whole venue, like the Pierre-Mauroy in Lille, France, with a complex, but at the same time practical, hydraulically engineered system so that one half of the pitch can be moved to convert a 45,000 spectator stadium into a 29,000 seat indoor arena. ​​Lille, being a university city, is ideal for such a model, for it has 1 million inhabitants and is strategically located on the Amsterdam-Brussels-Paris axis, perfect for tours, and the logistics that goes into productions. If such requirements are not met, there is no justification for investing in this model.

Finally, Commercial and Leisure stadiums are able to use their location and potential to attract the general public to a shopping mall, with retail and leisure facilities onsite or adjacent to it. The Alvaláxia shopping centre at Sporting Lisbon’s Jose Alvalade, and Juventus’ Allianz Stadium in Turin, Italy, with its Area12 shopping centre, are two typical examples of this model.

Technology and environmental sustainability as brand positioning

In addition to the aforesaid business models, there are designs that stress certain specific characteristics, and which earn the stadium brand positioning in addition to the model chosen in order to generate revenue.

These positions are promoted by market trends, and over the years have become an essential part of the stadium product, due to the demands of the market itself and of society.

What we are referring to are technology and environmental sustainability. Regarding the former, although some stadiums were already following the growing trend several years ago, today it is a must to have a high standard of connectivity, and increasingly to apply technology to the stadium’s operation to enhance the fan experience.

For its part, environmental sustainability is still at the early stage, just as technology was formerly, and in the next decade it will surely become a mandatory requirement in the design of any venue, for society will demand this. Renewable energies, energy self-sufficiency, water and waste recycling, as well as facilities for fans to use non-polluting transport must be part of the project, and may even be promoted as a business line.

This shift towards more sustainable stadiums will benefit positive implantation in the communities around them, for this will bring acceptance, and the ability to return part of the value that the community gives to the stadium. This is what has happened in the case of the new Tottenham Hotspur Stadium in London, named the most sustainable in the Premier League, and which has achieved a large degree of engagement with its fans thanks to this aspect.

360º vision

All the decisions we make in the design of our stadiums are connected, and have an impact that is going to be reflected in various areas, both operational and commercial. That is why we must have a 360º vision when carrying out the model and the business plan.

For example, no stadium project should consider match day and non-match day activity as two separate parts of its design. There is a clear interrelation in their operation, due to the mixed use of part of the surface, which means certain spaces are used for holding of both kinds of activity.

If we consider the casuistry of the official stores, to mention an obvious area, we often find them at a single location at one point of the stadium. This may be ideal for a non-match day, but not so much for a match day, for it is hard a large number of the spectators to purchase items.

Regarding match day, we must reach the maximum number of potential customer profiles that exist in the market. But we should not make a ticket ‘price list’. We must first design the ad hoc experience for each segment, and once the product is designed, the fan experience should be personalised, with the corresponding price of each experience. This way, we are not conditioning the experience to a pre-established price, but instead are designing what we feel to be the ideal experience for a particular kind of spectator and then deciding on the cost. This will involve decisions that will not only affect the seat, but also other lines of action within the stadium.

Or when designing a food and beverage service, the application of technology needs to be considered, whereby decisions become associated both to matters related to spectator flow, and to decisions regarding the right network density depending on the expected volume of orders in the stadium, among other considerations.

These are just as few examples of the need to establish a 365/360º strategy when it comes to designing a stadium product. This kind of operating model must be implemented today in any stadium in the world. It is not only large clubs that can afford to make massive investments that have the chance to take advantage of this model, but also teams with a lower budget, and that do not usually appear in the biggest competitions. Cases such as the Ghelamco Arena in Ghent, Belgium, the Milton Keynes Dons’ MK Stadium in the UK, and the Jorge Luis Hirschi of Estudiantes de La Plata in Argentina, to cite three examples, have successfully implemented this model and barely seat 30,000 spectators. Undoubtedly, there is still some distance between the optimal operative model in the US and European markets. But the future success or failure of our stadiums will depend on proper development, personalisation and implementation.

 

Javier Doña

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