BIHUB PATH

15 March, 2021

The Stadium as the Core of 21st Century Clubs’ Projects

Analysis and Sports Technology

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“Stadiums have a soul, and they are the heart of the teams. And from their stands come the heartbeats that keep clubs alive… both sentimentally and financially.” This quote by Javier Doña sums up his conception of stadiums as the cornerstone on which a club is built. Especially in the 21st century, by maintaining the limelight and image impact, not only through matchday broadcasting, but also on social media, and being drivers of fan engagement almost as much as a star player. But in order to modernise facilities and change the management model, it is essential to put aside ideas inherited from the past. Doña, a certified professor in Management of Sporting Facilities, provides us with some key ideas to achieve this, focusing on the business model, product design, fan experience and the architectural and technological adaptation to these concepts to achieve revenue maximisation of the venue operation both for matchday and non-matchday.

Another Business Model Conception

According to his vision, the objectives for the next 50 years will depend greatly on how the stadium projects are addressed. Refurbishment, extension, or construction of a new venue will only work successfully in the long term, allowing its full operation if the architecture studio has enough information about what the club wants to do, and how it seeks to achieve it. An absolutely detailed business plan. Otherwise, there is a risk of creating “white elephants”, or that the commercial team will find it extremely difficult to exploit the direct revenue generation lines of the stadium. The architectural design, which contributes to creating a sign of identity, should be based on the business plan and business model drawn up by the professionals who manage the club. Plus, monitoring how this model is implemented in design, so that it adapts to the club’s requirements and needs.

Broader View on Income Sources

Javier Doña proposes to consider the stadium as one of the pillars that allow clubs to grow and be financially sustainable. This view forces us to rethink the idea that the building only generates revenue from direct business lines of the stadium and matchdays (ticketing, premium seats, concessions…). This has always been contemplated in the reports of the audit firms, where between 10 and 12% of the club’s total income is attributed to the venue. Direct revenue generation lines of the stadium are not considered in this percentage, such as Naming Rights or revenues from the use of the stadium during non-matchday (usually allocated to the commercial department). Besides, we must consider the impact the stadium has on other clubs’ revenue generation lines, such as content broadcasting rights, attracting sponsors and strengthening the brand as an asset. Once all this analysis is done, we can see that the revenue percentage that depends on the stadium in the market average is increased to approximately 30%. Assuming importance in the club’s project.

Financial Balance: Between Building and Signing Up

A relevant aspect in any project is to remain balanced between revenues and indebtedness. This is quite clear when it is a matter of investing in the stadium. A very powerful example could be Arsenal, with the defunct Highbury and the construction of the new Emirates Stadium, which almost doubled its capacity, from 37,500 to 60,000 spectators. A risky venture but that achieved selling out from day one. However, it also generated a 500M-debt for the club that forces Arsenal to focus on paying this off, weakening the possibility of having great signings for a while. Perhaps with the risk of worse team results in the long term, but ensuring the club’s financial viability and with great growing possibilities in the medium and long term.

Operating Models: The Type of Stadium

Javier Doña also reminds us that the project of the stadium must be focused on the non-matchday even if it is not its core business. And which accounts for 92,4% of annual occupation on average. Although, if considered additional income for the club, they might support its growth and business model, as Wanda Metropolitano has successfully shown, the new Atlético de Madrid’s stadium, to which it moved from its former home, Vicente Calderón. With daily activity throughout the year, hosting both private and public events, after having designed the stadium with two very defined business model profiles: corporate and events. This move to the new stadium is the club’s cornerstone in its strategic objective of climbing to the next level of revenue to be in the top ten of European clubs, in order to become more competitive in the long term. It has not achieved the environment of its former stadium on matchdays yet, similar to that of the reference stadiums, such as Anfield or Bombonera, although it is working towards it, but this does not prevent it from continuing to make progress in its business plan. This is, of course, another key aspect for the 21st century, that a unique stadium model does not exist, and that the implementation of more than one business model profile should be contemplated for its mixed use, whether it is live sport, events, business or corporate, or leisure and entertainment, always in a personalised way and according to the club’s characteristics, abilities, and objectives.

Knowing Who We Are Competing Against

To fill the stands, the ultimate objective of each stadium, we should also understand who our external and internal competition is. The external competition is any leisure and entertainment experience that we can find in the market, from the cinema or Netflix, to dining out at a restaurant, going shopping, or going on a weekend holiday, and of course, other events locally. The fan has to choose what they spend their money on, and they will do so based on these options, since what they are looking for now is different, which are unique experiences. If the game is conceived as such, as a 360º experience, beyond just attending a football, basketball, or any other sport game, we are not only attracting those who already have sport as their main leisure activity, but all potential clients’ profiles, who feel attracted by the unique experience of attending our stadium.

Today, the club also generates its own “internal competition” that can affect the success of the stadium product. The streaming of content, which clubs are increasingly generating through their own platforms, or as a concession to third parties, facilitates an immersive experience. You can watch it whenever you want, share it with your friends on social media or watch the games alone, freeing up the rest of the game time. Why attending the stands, having to travel from home, with the risk of getting stuck in traffic, that it is rainy or cold, or waiting in queues to enjoy the experience, if you can comfortably enjoy the content offered by broadcasts or streaming? This trend affecting the fans’ profile is actually the new generations observed trends, such as Generation Z, the youngest. In order to physically attract them to the stadiums, clubs will have to meet their expectations, adapting to the way they understand and consume sport and to their use of technology in the physical experience inside the stadium.

A very clear example of the market in relation to this is the European stadium model, which is still light years behind the United States. American stadiums and arenas have an immersive experience with many resources inside and outside the site itself, which allow you to generate a commercial and leisure offer that covers both the pre-game or tailgating as they call it, the game itself, and even the post-game. In this way, they firstly ensure the fan spends much more time in the stadium, and secondly, that the expenditure per fan increases. Demand already exists, in Europe fans attend restaurants, bars and stores around the stadium up to two hours prior to the event, and at least one hour after the game. Clubs should claim that part of the business they generate and provide their fans with the opportunity to consume and be entertained inside their stadiums.

 

Javier Doña

 

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