Chapter 11 Traditional Revenue Generation in Sport and Recreation

Chapter Objectives 1.Identify the types of revenues available in spectator sport, participation events, and recreation facilities 2.Differentiate between methods of revenue generation in a variety of facilities and venues 3.Consider how to utilize different facilities for revenue-producing events 4.Articulate the strengths and weaknesses of the various revenue production strategies 5.Identify multiple revenue opportunities for facilities

Importance of Identifying Sources of Revenues Improve the facility’s financial stability Facilities have the ability to host numerous types of events Temporary nature of use – An empty facility produces zero revenue

Ticket Sales Most common revenue stream for facility and events – Gate receipts: Total amount of money received for tickets at a certain game

Ticket Sales Strategies Differential or variable pricing – Quality: Reputation, strength, and of the opponent – Time: Day of the week, time of day, or part of the season – Place: Location of seat Flexible ticket pricing – Partial season plans – Voucher programs – Ticket exchange

Ticket Sales Strategies (cont.) Money-back guarantees – Example: Jacksonville Sharks Web-based tickets – Primary tool used to purchase tickets – Increases challenge of secondary ticket market Electronic ticket delivery – Example: FanPass (MLB), Flash Seats – Provides ticket security (e.g., counterfeit or lost tickets) and expedited entry

Luxury Suites and Club Seats Primary reason for the stadium boom of the 1990s and 2000s – Houston Astrodome first to use luxury seats – Palace at Auburn Hills first to add suites Luxury suites – Provide a room and seating – Commonly sold for multiple seasons Club seats – Provide a prime view of the game

Personal Seat Licenses First employed by Royal Albert Hall in London in 1871 In the United States, the seat license gives the holder the ability to purchase a specific seat in a stadium – Used by college and professional teams as a source of additional revenue – Assist in the financing of new construction or renovation projects

Promotions Bill Veeck – Known as one of the most innovative promoters and credited for many commonly used promotions today Free product or souvenir giveaways – Used to increase attendance Halftime or on-field entertainment – Used to enhance the quality of the event experience Promotional days – Target specific groups to enhance attendance

Ancillary Revenues Income generated from goods and services that enhance the primary product or service – Concessions and food operations – Alcohol sales – Parking – Merchandise

Ancillary Revenues (cont.)

Alternative Uses for Sport-Specific Stadiums Baseball has limitations of what it can host because of its design Examples of events: – International soccer matches – College bowl games – Concerts – Large speaker events – “Winter Classic” – State/regional championships – Hospitality events

Multipurpose Sport Facilities Used for spectator sports, participatory events, and physical fitness May include hockey rinks, indoor turf fields, sport court buildings, swimming pools, weight rooms, and training centers Types of events offered in these facilities include team practices, swim meets, track and field meets, youth and AAU basketball, road races, among other possibilities

Participatory Events Revenues Entry fees Exhibitor fees Common ancillary revenues – Concessions – Merchandising Sponsorship