Stadium Shrinkage En Vogue as “Time Has Become More Valuable Than Money”

JohnWallStreet

Pro sports venues are shrinking. The Braves, Marlins, Twins and Yankees have all downsized since ‘09 and the Tampa Bay Rays plan to reduce seating at Tropicana Field from a league low 31,042 to between 25,000-26,000 this season. The Falcons, Vikings, 49ers, Colts, Cardinals and Rams (+Chargers) all opted to go small (71,000 seats or less), as well, with their new venues and the 65,000-seat building that the Raiders are building in Las Vegas will be among the league’s 5 smallest; only the Cowboys and Jets/Giants have built stadiums with more than 80,000 seats this millennium. It’s not just American franchises looking to create a more intimate environment for their fans, either. Italian rivals AC and Inter Milan have signed a memorandum of understanding to either modernize the 80,000 seat San Siro or build a new venue; either way, the clubs plan to reduce capacity to 60,000 seats.

Howie Long-Short: Shrinkage is en vogue because fewer people are going to games. Advancements in the in-home viewing experience (everything from HD to VR) have made it more difficult “for the clubs to attract fans to the stadium” - as has the increased competition (see: esports) for fans’ time, money and attention. Those dynamics won’t be changing, so pro sports venues will continue to get smaller and more efficient. Raiders President Marc Badain insists there’s an NFL “team who is looking to build a stadium in the next 10 years, talking about going to 50,000 seats.” That’s a shocking low figure when you consider that no team (playing in a permanent home) seats less than 61,500 (Bears).

To draw fans, pro sports teams are going to need to create an in-stadium experience more rewarding than what a fan receives on their couch. Andy Dolich, president of the sports consultancy Dolich Consulting, explained that “time has become more valuable than money, so fans simply aren’t going to attend as many games as they used to - and when they do visit the ballpark, they expect an incredible experience.” Creating that memorable experience begins with bringing fans closer to the action, but it also must include better service (think: food options, parking), access to mobile technology (think: sufficient Wi-Fi) and non-traditional seating (think: social spaces); Millennials and Gen-Z's with shorter attention spans aren’t going to sit in a seat for 3+ hours, they want to interact with each other.

Event psychology has also begun to play a larger role in consumer decisions (like buying tickets), so it’s crucial that teams treat each game as a marquee “event”. Andy says “show fans that what you’re offering is special and they’ll be back - if it feels routine, they won’t. Fans want to go - and will go - to the biggest games and the biggest events.”

Moving to a smaller venue doesn’t necessarily hurt a team’s bottom line. For NFL clubs that will take in $255 million in broadcast revenues in 2019, selling fewer tickets will have little impact. Ticket prices will rise - to help off-set losses - in leagues where clubs are more dependent on gate receipts (+ food, beverage and parking), but Andy said that teams will make up most of the lost revenue from “all of the digital applications that enhance remote game viewership and with the proceeds from the commercial components (think: retail space) of these stadium real estate plays.”

Speaking of real-estate, the trend of teams moving away from multi-purpose suburban venues to downtown stadiums is another factor contributing to the shift in building sizes - there’s simply less property to work with in the city.

I asked Andy for his thoughts on how large the next generation of NFL stadiums, NBA/NHL arenas and MLB parks would be. He told me that, “baseball will likely drop down into the mid-30s, perhaps a little bit less. The indoor winter sports venues will probably cut seating down to between 14,000 and 15,000 and I think the outdoor stadiums will be cap capacity around 50,000.”

Fan Marino: There’s a case to be made that shrinkage has been a critical factor in MLS’ success. When the league launched in 1994, 80% of the league played in venues with 60,000+ seats (Spartan Stadium in San Jose and RFK Memorial Stadium in Washington were the outliers). By 2002, the league was contracting teams and on the brink of failure. It wasn’t until the LA Galaxy introduced the soccer-specific Dignity Health Sports Park (then the Home Depot Center) in 2003, did the league’s fortunes begin to change. Since that time 14 other clubs have built 25,500 seat (or less) venues and league expansion fees have risen from $10 million in ‘07 to $150 million in ‘18.

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