40 Ways in 26 Categories to Generate Revenues
May 2001
Introduction: In general terms: according to the 9-18-99 issue of “Sporting News,” a football team brings $1 billion/year in direct benefits to the team’s community, and an additional $1 billion/year in indirect benefits. This includes but is not limited to: hotels, restaurants, travel industry, nightclubs, department stores, convention center events, tourism, etc., and all of the 3rd and 4th tier companies making money by printing/making/ selling licensed programs, figurines, memorabilia, etc., whether related to the team or not, etc.
The 40 in 26 are (with the all important #40 “etc.”)
1. Permanent seat licenses
2. Luxury boxes
3. Luxury suites
4. Club seats
5. Ticket sales
6. Parking
7. Signage (space for signs of corporate advertisers)
8. Concessions
9. NFL shared common revenues from TV and licensing ($65 million in 1999).
10. Example: The new Cleveland Browns cover annual debt payments in just TWO ways. The cost of their stadium was $280 million. The cost of their annual debt payments is $8 million. This is covered by just TWO revenue categories: $30 million, through (1) 148 luxury boxes and (2) signage
11. Use of Stadium as Center of ongoing revenue generation outside tickets and signage
a. Retail stores
b. Sell merchandize over the Internet
c. Beverage maker “pouring rights”
d. Establish an official “charge card”
e. Corporate logo’s displayed on stadium
f. Outside promotional deals
12. General Co-branding benefit for corporate partners (alliances): the opportunity to get their message out on both the grounds as fans/visitors come and go and on TV through signage inside.
13. Specific Co-Branding: As noted above, when Jerry Jones took over the
Dallas
Cowboys, they were losing $1 million/month when he took over). Next is
a list
of some of the new methods he introduced to generate on-going income (See
9/20/00 issue of “Forbes”):
a. Chain of retail stores (Dallas has chain of 12; sold $15 million of goods last year)
b. Selling Cowboy merchandise on the Internet
c. Wiring his training camp with cameras to provide real time Internet coverage of preseason practices for the team's fans
d. "Pouring rights" to Pepsi at Texas Stadium
e. American Express as official Cowboys charge card
f. $20 million deal with Nike to display its logo in Texas Stadium
g. $24 million/year from outside promotional deals, more than three times as much as any other team
h. Leads the league in stadium gimmicks that lie outside the league's revenue-sharing agreement
i. As a result, Jones added $100-200 million value to team's worth
Note: This article was entitled: COWBOY CAPITALISM. And although the sub-head read “The NFL owners are playing fast and loose with debt. Will your team win -- or get knocked out of the game?” It points out exactly how to play solid and profitably, and makes our case for the need to develop new revenue streams. As the article points out, “the new breed” is dancing on the graves of the old “socialist” sports ownership model. Whether this is a correct interpretation or not is up for dispute. What is not up for dispute is the dollars generated. It can be done. This would work for any team in any city.
Also note these key points from the article:
(1) The dollar amounts will get greater, not smaller
(2) Many teams are carrying staggering mortgages without corresponding revenue streams to generate payments. These new ideas are providing significant new revenues.
(3) Six more teams to have new stadiums by 2002
(4) "To those who can't generate new revenue streams or get taxpayers to help, the only options may be to move or sell.” Why go through all of that when this Model gives what owners need and want, without that debt?.
In specific terms: in stadium complex but not in the stadium itself: itemized sources for further expanding the mixed-use base for revenue/profit generation
14. A full service studio (film, video, DVD, TV, multi-media)
a. broadcast capability
b. recording studio
c. sound stage/shooting capability
d. Others as later identified, which would generate additional revenue for the team in the same space,
e. These would occur simultaneously, if need be, with other events
15. With all of the electronic gear, etc., the professional recording studio can generate revenues as a recording venue.
16. The professional broadcasting studio can be used to produce and broadcast sports programs for syndication on cable TV. Stations need content. The team can be a content provider.
17. The sound stage can be used to shoot theatrical, TV, music video, and advertising film.
18. The full service aspect allows the facility to generate revenues by serving as a pre- and post-production facility for film, TV, and music projects.
19. Given similar facilities in other cities, the stadium facility can engage in partnerships and alliances with other facilities.
20. Partner with a world-wide communications company, especially one with many TV and radio stations, to serve as a broadcast center (an excellent candidate would be any such company owned or participated in by the owner).
21. Build an office building as part of the new complex, whether above ground or under ground. Many companies would enjoy the prestigious location. This would also be a good location for businesses of the owner, partners, and/or investors. If built by a partner or in alliance, the partner firm or company in alliance would finance the construction.
22. A commercial/housing/shopping complex:
(a) Stores for shopping
(b) Restaurants and upscale bars
(c) Office tower (or underground)
(d) Entertainment centers/venues
(e) Condominiums above stores and offices
(f) Moderate priced housing on fringe areas as trade off for tax benefits
(negotiate such that this housing is to be for workers at the complex)
(g) Incubation of new businesses
(h) Parking, etc.
NOTE: tenants would finance their own areas.
23. A movie theatre multi-plex (possibly closed on game day Sunday afternoons)
In specific terms: Stadium area NON-TEAM transient users whose use of
the stadium will generate more revenue/profit generation (to be coordinated
with the previous venue, if the previous venue is not owned by the team,
if the previous venue is not torn down or until it is torn down):
24. Any number of sports shows could originate there, both for local TV/cable as well as nationwide and satellite worldwide.
25. Large show productions such as touring, including but not limited to:
• Rock, pop, and other music concerts
• Touring shows such as Ice shows, Circuses, and Rodeos
• Prestige sports events such as Super Bowl, Final Four
• Community gatherings, including occasional or scheduled college and high
school sports
26. Etc. "Etc" is an important concept for it leaves the door open to new ideas and new understanding of the situation as it unfolds in real time, in real life.
PUBLIC-PRIVATE PARTNERSHIPS
1. A public facility, with use to be determined, with such candidates (who finance their involvement) as
(a) A community center
(b) A zoo annex
(c) An aquarium annex
(d) A high school
(e) A training/trade/electronics/Internet school
2. Involve a wide range of business groups, including Minority Business Enterprises, both for their expertise and for their extension of the fan base. For example, there are currently 2 million minority-owned firms generating more than $205 billion annually, who represent a non-white demographic that will become over 50% of the population by 2060, which will have a collective spending of $3 trillion in disposable income over the next 45 years.
3. Involve the non-profit community of schools, community centers, and the faith community, by arranging participation by players, not only because it is the right thing to do (giving back to the community is only fair), but because it enhances the brand image and corporate bottom line by generating free publicity, reinforcing the high status of the sport, and keeps the community favorably disposed towards the team and its organization.
4. Etc. "Etc" is an important concept for it leaves the door open to new ideas and new understanding of the situation as it unfolds in real time, in real life.
EXECUTIVE SUMMARY
This model is applicable to any major stadium/arena project: professional football, professional baseball, professional basketball, professional hockey, etc., as well as for major universities. Most examples used are from professional football and baseball.
1. This multi-use Combining Sports, Entertainment, Real Estate, Communications, Investment, Public Space MODEL outlines how to raise $800 million to $1Billion in non-debt investment, with LITTLE OR NO public funding (only for infrastructure (site preparation, streets, sewers, hookup, etc.), normal to any large-scale development.
2.The estimated Revenues of this model are projected to be over $200 million/year, to start, through synergies for generating on-going revenues/profits/fan support, utilizing 40 ways to generate revenue in 26 revenue generating categories, including private and public space. This model includes the outline of a strategic plan for securing the funding.
3. Professional sports has become a large part of four major, emerging and enormous growth industries, (1) learning/edutainment, (2) high tech business solutions, (3) spin-offs from space exploration, and (4) tourism, totaling a combined size of $3.245 Trillion.
4. The Stadium Complex would be (1) a destination and a gathering place for fans, visitors, tourists, consumers, and sports/entertainment/real estate/business people, as well as (2) a business, real estate and communications hub. These two together will generate profits in the near term and long term, year around.
5. Sports re-enchant Modernity. Thus, even if it wanted to be “pure,” sports cannot, for it is entertainment and escapist fare also. And it provides couch potatoes physical feats to wonder in awe about while also providing a sense of common community for all and one topic all can talk about. This is what generates profits, but is now endangered by rising salaries, not to mention rising ticket and food prices and volatile athletes, which this model also addresses.
6.This is a "Big Picture" Vision. It takes elements of various traditional financing plans and combines them into a new financing configuration for a multiple use sports-entertainment property that relate to all types of stadiums, even if they are in the same city or region.
7.This model provides a 12-part compensation package for players that is structured to make money for both players and owners in an executive relationship between them.
8.This model discusses how to maximize both internal and external communications, including the use of the Internet and a team navigational and informational web portal, as well as outlines a PR program for use in the city/state/region/nation/world, as well as 14 models of conflict resolution for use in getting all of the business/governmental/fan stakeholders in agreement.