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Does silverware pay the bills?

Does silverware in the trophy cabinet equate to a healthy bank balance? How are sports venues affected when results aren’t going their way? Steve Cameron reports

 

I t’s probably the oldest cliché in sports: “Winning solves everything!” Perhaps that’s true in cases of squabbling teammates or tyrannical managers. But what about venue owners and operators? If you’re counting receipts and expenses at a stadium or arena, and income depends on a sports club as your primary tenant, how important is winning?

There seems to be an easy answer. Trophies and titles surely make for happier supporters, larger crowds, sale of additional shirts and assorted trinkets, etc. That much we know.

What isn’t as clear, however, is whether or not winning makes a truly critical difference – and we’re talking about venues here, not those crazy cases where owners toss out salaries like drunken sailors and promptly go bust.

How truly important are victories to profitability with your facility? Certainly there are some obvious cases, both ways. In any country where soccer clubs live with promotion and relegation, income streams naturally will be affected massively if you’re on the verge of going up or down. It has become fashionable in England, for instance, to call the play-off match determining the third and final team to be promoted to the cash-rich Premiership “the ₤100 million game”. No one is actually sure if that might be an exaggeration – particularly if a team drops straight back down into the Championship after a single season playing at the high-stakes table.

Support network

Unless a venue is far too large for its market, many of these places tend to stay full – or close to it – through generations of unshakeable support. For instance, the general perception is that the fan base didn’t run away when English giant Newcastle United suffered a shock relegation – even though St James’ Park is one of Europe’s larger-capacity venues at 52,387. But yes, there was a drop in attendance for 2009-2010 – to an average of 43,384 – as Newcastle competed in the Coca-Cola Championship. Newcastle’s attendance dwarfed its Championship competitors, but the club’s bean-counters nevertheless had to deal with pretty much the same payroll and about 9,000 fewer in attendance. Plus fewer sales of shirts, scarves, flags, etc.

Meanwhile, America’s major-sport clubs need not fear relegation, but that assurance doesn’t necessarily translate into guaranteed income from your venue. Remember all those glittering baseball stadia that were built in the 1990s – and then were filled every night through seasons that stretch to 81 home games? You couldn’t find an empty seat in Baltimore, Cleveland or Denver.

Purchasing decisions

Oh, how that has changed. Fans in those places have got used to their glitzy palaces, and now apparently they make ticket-purchasing decisions – at least in part – on how well their teams are playing. And yet… “I’m not really that bothered by the wins and losses,” insists Alan Ostfield, CEO of Palace Sports & Entertainment, parent company of the Detroit Pistons of the NBA. “In reality, you’re selling a good time at an event, and no matter the score, you can still make sure the beer is cold and the hot dogs are warm. We have 250 people on the payroll, and only 20 of them have anything to do with wins and losses on the court. So we have to focus on making sure those other 230 are doing a great job for our fans.”

Ostfield faced a double whammy this year, when the Pistons missed the NBA play-offs for the first time since 2001 and the state of Michigan was hit hard by the US recession. So ticket prices were lowered, concert business was increased, and profitability maintained.

The bottom-line message: there are winners and losers on the scoreboard, but also in how clubs handle their business. Winning on both fronts is the dream – but since it’s impossible to bank on that, make absolutely sure you’re victorious with your customers. 

Steve Cameron is a regular contributor to Stadia and is currently working on a book Cathedrals of Sport: Venues for the 21st Century

 

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