WHAT PROMPTS THEM TO BUILD NEW STADIUMS?
Prologue: It is increasingly becoming tougher for the owners to ask for more. The compensation packages of players are skyrocketing. Teams today are looking up to stadium owners for redressal. Stadium owners have limited options. They cannot raise the gate ticket pricing for it is already high. The only option for stadium owners is either completely remodel their existing stadium with facilities that guarantee income generation, or, look for an appropriate site for building a new stadium with exceptional facilities.
A stadium with top drawer facilities attracts only top teams and top teams with icons playing for them are a sure shot for good income generation. Let us now see what are the economic considerations in building a new stadium. Identification of a teams need for a stadium is the first criteria. Is the team suffering because of the inadequacies of the existing stadium? Is the most gainful luxury and corporate seating cubicles or arrangements missing? Does the team get increasingly decreasing revenue from the stadium? Decide. If your SWOT analysis reveals the need for a new stadium is very real and urgent, proceed.
Ideal Location: A location, which is seen as a catalyst for further economic development in that area is the one you should opt for.
If it is a suburban location fans drive in and out and it means good parking facilities. If it is downtown, the location should be in the central part with restaurants, bars, parks, hotels, shopping arcades etc.
Feasibility Study: An in-depth study of cost benefit analysis should be made. For a stadium with exceptional facilities what would be the total cost and whether the revenue generation is sufficient to embark on the project. Study these aspects. Today stadiums with very good facilities cost anything between $250 to $600 million. Do you want an open arena or a retractable roofed stadium? Decide. Money costs you. Cost of money should be inbuilt into your calculation.
a) General Public: This is done by imposing, or, raising the existing duty, or tax structure by a pre-determined percentage point.
b) Fans: Seats are sold in the form of personal seat licenses
c) Private Funds: The stadiums are built using private funds and owned by private parties. Roads and other infrastructural facilities are provided by the State.