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If You Build it, They Will Come… Unless They Cannot


(SoFi Stadium in Los Angeles)[1]

By: Tyler Kaestner

Modern day stadium building is somewhat of an art form. Traditional architectural aesthetic is still a valid focus in design prospects, but, perhaps moreover now, the overall entertainment value that a sports facility can bring to its fans is the critical aspect in decision making.

The trend towards grandiose projects really took off with the construction of the current Dallas Cowboys home field. In 2005, owner Jerry Jones broke ground on what would come to be known as the AT&T Stadium.[2] That stadium would go on to bear roughly a $1.15 billion a price tag .[3] A state of the art facility at its time, catching fans’ eyes with its infamously gigantic video board, it would soon be matched and outdone in terms of overall cost. The next six new stadiums have exceeded that $1 billion standard set forth by the Cowboy’s grand investment.[4] From relatively smaller markets, such as Minneapolis, Minnesota (home of the Vikings), to the emerging, big city markets of Las Vegas (new home of the Raiders) and Los Angeles (hosting both the Chargers and Rams), these costs are being set forth as the new normal in NFL stadiums. The most remarkable of the new bunch is, by a wide margin perhaps, the SoFi stadium, which just opened for the current NFL season to host those LA teams. After all was said and done, this stadium saw a bill for a whopping $5 billion.[5] How could a football field possibly cost that much you might ask? The answer is in the fact that it is not just a football field. A quick visit to their website will reveal some of the massive plans they have for the “Hollywood Park” district that is located on site. They plan to build “an unprecedented and unparalleled sports and entertainment destination,” featuring retail and office spaces, a hotel, a residential area, and, most fittingly, a true outdoor park space.[6] With such lofty pursuits, such stadiums would be betting on hosting events and selling tickets to start recuperating the costs laid out in the investment of building these megaplexes. In the classic move “Field of Dreams,” Kevin Costner’s character tells us “if you build it, [they] will come.” Clearly, this film did not foresee the events of 2020, where, unfortunately for the owners with expenses to recover, the COVID-19 pandemic would keep fans from coming to their stadiums.

With the NFL season proceeding amid the current health crisis, one of the ways this season will differ from any other is the lack of fans. While NFL Commissioner Roger Goodell has deferred to teams to accommodate local guidelines concerning public gatherings, only three teams were allowed to welcome fans in week one of the season, which kicked off on September 10th.[7]This included games hosted by the Kansas City Chiefs, Jacksonville Jaguars, and Denver Broncos.[8] This is due to the fact that those local state or city allowed them to, under specific guidelines. As there have yet to be nation-wide controls for sporting events, and only CDC guidelines to help create rules, states are going to have the power to implement laws or orders they see fit for their state of affairs. Jacksonville, for example, with Florida being among the states with the loosest restrictions, will be able to host fans a 25% capacity.[9] Additionally, they have had to hire extra staff to enforce their guidelines, as well as sanitize high traffic points, install hand sanitizer stations, and put up signs to remind attendees to wear masks (which are required at all times, except when eating) and socially distance.[10] For those that will not be able to allow fans, an immediate concern is the loss of ticket revenue. Figures presented from the 2018 season suggest the NFL could about $5.5 billion in revenue from stadiums across the league, a chunk that makes up about 38% of their total revenue.[11].Of course, this will vary between teams, with some, like the Cowboys, losing over half their total revenue without ticket sales ($621 of $950 million in overall revenue).[12]

Therein lies the unsavory position some teams will find themselves. Billions of dollars have been invested into the newest stadiums and billions of dollars stand to be foregone in the coming season. This has left owners of some of the teams in need of unique ways to capture some of that revenue that may otherwise not be taken in, between pure sales from each seat, luxury suites, and concessions.[13] Owners and league officials have already agreed to allow the sale of sponsorships via tarps that will cover portions of the now-empty seats.[14] There are also discussions to potentially allow the owners to spread financial losses over the next few years by limiting the salary cap over the next few seasons.[15] As we have seen other sports, they may also soon want to consider selling seats virtually, where a fan can appear via video in the stadium, or having fans have the opportunity to place cardboard cutouts in the seats to represent fans.

The season will go on, with or without fans, and it is now up to the owners to continue to build new marketing strategies in the face of one of the most peculiar sporting seasons in history. Whether the trend of building stadiums as large complexes continues also remains to be seen. One thing is for sure, fans will never truly be replaced, but the owners certainly need to replace their financial investments.


References:

[1] https://www.sofistadium.com/

[2] Staff, The 10 Most Expensive Stadiums In Sports, Seat Geek (August 7, 2017), https://seatgeek.com/tba/sports/the-top-ten-most-expensive-sports-stadiums/

[3] Id.

[4] Id.

[5] Jay Paris, Costly SoFi Stadium Gets A Financial Handout From NFL, Forbes (May 20, 2020), https://www.forbes.com/sites/jayparis/2020/05/20/costly-sofi-stadium-gets-a-financial-handout-from-nfl/#436ca82a5e38

[6] https://www.sofistadium.com/

[7] Kevin Seifart, What's next for the NFL after getting through Week 1? Fans at games, other looming concerns, (September 18, 2020), https://www.espn.com/nfl/story/_/id/29907827/next-nfl-getting-week-1-fans-games-other-looming-concerns

[8] Kevin Seifart, What's next for the NFL after getting through Week 1? Fans at games, other looming concerns, (September 18, 2020), https://www.espn.com/nfl/story/_/id/29907827/next-nfl-getting-week-1-fans-games-other-looming-concerns

[9] Sky Lebron, Jaguars Will Be One Of The First NFL Teams To Play In Front Of Fans, (August 29, 2020), https://news.wjct.org/post/jaguars-will-be-one-first-nfl-teams-play-front-fans#:~:text=The%20Jacksonville%20Jaguars%20will%20be,the%20spread%20of%20COVID%2D19.

[10] Sky Lebron, Jaguars Will Be One Of The First NFL Teams To Play In Front Of Fans, (August 29, 2020), https://news.wjct.org/post/jaguars-will-be-one-first-nfl-teams-play-front-fans#:~:text=The%20Jacksonville%20Jaguars%20will%20be,the%20spread%20of%20COVID%2D19.

[11] Mike Ozanian, The Stadium Revenue Each NFL Team Will Lose If Games Are Played Without Fans, (May 18, 2020), https://www.forbes.com/sites/mikeozanian/2020/05/18/the-stadium-revenue-each-nfl-team-will-lose-if-games-are-played-without-fans/#4907baba691a

[12] Mike Ozanian, The Stadium Revenue Each NFL Team Will Lose If Games Are Played Without Fans, (May 18, 2020), https://www.forbes.com/sites/mikeozanian/2020/05/18/the-stadium-revenue-each-nfl-team-will-lose-if-games-are-played-without-fans/#4907baba691a

[13] Ken Belson, N.F.L. Owners and Players in Talks on How to Offset Loss of Fans, (July 2, 2020), https://www.nytimes.com/2020/07/02/sports/football/nfl-salary-cap-no-fans.html

[14] Ken Belson, N.F.L. Owners and Players in Talks on How to Offset Loss of Fans, (July 2, 2020), https://www.nytimes.com/2020/07/02/sports/football/nfl-salary-cap-no-fans.html

[15] Ken Belson, N.F.L. Owners and Players in Talks on How to Offset Loss of Fans, (July 2, 2020), https://www.nytimes.com/2020/07/02/sports/football/nfl-salary-cap-no-fans.html

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