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Stadia should be key revenue-generating assets for football clubs, says KPMG
Operating and developing stadia with a clear business focus on commercialisation and attention to long-term sustainability may improve football clubs’ matchday revenue, a comparative study by KPMG’s Budapest-based Sports Advisory Services Practice has revealed. The European Stadium Insight 2011 reviews stadium development trends in Europe and explores the role of stadia as a key factor in generating club revenues. Although team performance and economic conditions will always remain critical, the analysis demonstrates that scenarios repeatedly arise in which state-of-the-art new- build facilities assist football clubs to discover and activate latent demand. This can create additional revenue- generating opportunities and serve as a robust platform for the sustainable business growth of the clubs.
Clubs of the ‘big five’ leagues (England, Spain, Italy, Germany and France) generate over a fifth of their revenues from matchday receipts. In contrast, due to low attendance figures, the lack of modern stadia and relatively low ticket prices, matchday revenues in Eastern Europe often account for a significantly smaller portion of total revenues – often below 10%.
Matchday revenues can be maximised through better utilisation of stadia through careful analysis of the specific market demand, calibration of stadium size, and mix of facilities and amenities, often with multiple-use potential.
Although operational models differ from country to country, some trends are common. The stadia used by the top clubs are large, with an average capacity of approximately 60,000 seats and rarely with capacity of less than 40,000 seats. The largest stadia, above 80,000 seats, are in Spain and Italy, though top English and German clubs are not far behind. Most of these mega stadia, however, were constructed over 50 years ago. Hence, their revenue-generating ability is compromised by their basic structure, developed without contemporary business priorities in mind.
If size exceeds market demand, a big stadium may become a burden. Larger stadia tend to cost more per seat to develop, due to the increased cost of the structural support, as well as the supporting infrastructure required. Additionally, by creating excess supply of seating, fans may become reluctant to buy season tickets as they can always buy matchday tickets at the gate. Furthermore, the price of tickets on the top tier of larger stadia are generally sold at a discount to reflect the poorer visibility, such that marginal revenues decline while marginal costs rise as stadium capacity increases. If new stadia with contemporary design and facilities replaced the old ones, the revenue generation of clubs in these leagues could be improved. In general, larger and older facilities tend to be less utilised than smaller and newer ones. Quality of the game, the country’s economic strength, size of population, its discretionary income for leisure activities and stadium ownership also affect financial performance.
Most of the stadia in Europe are publicly owned. However, top European clubs tend to own their stadia and generate a larger share of revenues compared to the rest of the clubs across Europe. Even clubs that have not won trophies for several years, but own their own stadia, often outperform championship teams playing in publicly owned stadia in terms of matchday revenue generation.
The ‘big five’ leagues generally have high-capacity stadia with over 60% utilisation. Some smaller but developed Western European countries, such as Austria and Switzerland, form another group, with generally fewer than 25,000 seats, but over 55% utilisation (and with Holland showing an impressive 90% utilisation).
The central Eastern European countries, as well as a few underperformers from Western Europe (e.g. Greece and Portugal) form a third group with much lower average capacity and below 50% utilisation. These facts also highlight the socio-economic constraints these countries face: smaller populations and less discretionary income for leisure activities. However, with competitive quality of play and efficient stadium management, they may achieve better utilisation of their stadia – that of the level of the second group of countries.
Recently, enthusiasm for multi-use and mixed-use stadia development is becoming widespread. However, an assessment of these trends is in order, as development of ‘multiple-uses’ further drives up capital costs, with event promoters capturing a substantial share of additional revenues brought in by non-football-related events. Mixed-use developments can potentially benefit from a stadium development, with increased footfall to drive the retail, cross-sale of corporate hospitality to tenants of office space, and a lifestyle play to attract young professionals to nearby residential developments. Furthermore, potentially higher returns from the real estate development may assist in financing the capital costs associated with a stadium, whose revenues may be more variable.
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