1. Facility Management Chapter 12

2. Introduction
Public assembly facilities must be large enough to accommodate large numbers of people.
Facilities include arenas, stadiums, convention (or exposition) centers, theaters (or performing arts facilities), racetracks, and amphitheaters.
International Association of Auditorium Managers (IAAM) is the professional trade association for the facility management field.

3. History: Stadiums
Public assembly facilities have existed since ancient times.
Many facilities today bear the name of an ancient facility.
Gain in the popularity of modern sport, such as professional baseball and intercollegiate football, launched construction of stadiums.
Constraints of urban space limitations dictated the irregular sizes and shapes of the older ballparks (e.g., Fenway Park).
Early NFL teams played in baseball stadiums until new stadiums were built.

4. History: Arenas
1927: Hockey owners followed the lead of baseball owners and built arenas to host their teams.
Needed to fill empty seats in arenas on nonhockey nights: Hosted boxing matches on some nights.
Ice Capades put together to fill nights.
Basketball enters arena picture, and arena owners earn revenue from two tenants.

5. History: Modern Era
Baseball-only stadiums were becoming obsolete during the 1960s.
Team owners could make a great deal of money by having their host city build their stadium rather than building it themselves.
Some cities built shiny new “cookie-cutter” stadiums or arenas to keep sports teams enthusiastic about their hometowns (e.g., Veterans Stadium, Three Rivers Stadium, Riverfront Stadium).
City leaders believed that publicly built stadiums were good investments and added to quality of life.
1990s: Trend toward one-purpose stadiums again
Soccer specific stadiums (SSS)

6. Types of Public Facilities: Arenas
Indoor facilities that host sporting and entertainment events.
Built to accommodate one (or more) prime sports tenant(s) or to lure a prime tenant to the facility.
Intercollegiate facilities are financed by private donations, endowments, student fees, fundraising campaigns, and, in the case of public institutions, public grants.
Public owner may manage its own facility or contract out for private management.
Recent trends in facility construction include adjacent practice facilities for the primary tenants to increase event bookings.

7. Types of Public Facilities: Stadiums
Outdoor or domed facilities for baseball, football, and outdoor soccer teams.
Stadium managers try to maximize bookings, but it is more difficult with a stadium than an arena.
Far fewer non-sport events can play in stadiums, primarily because stadiums are significantly larger than other venues and most other events cannot attract stadium-sized crowds.
Stadium managers have become increasingly effective in creating events for their venues that take advantage of all available spaces (e.g., parking lots for carnivals).

8. Types of Public Facilities: Convention Centers
Almost always built and owned by a public entity
Built to lure conventions and business meetings to a particular municipality
Publicly financed because the rents and fees they charge do not always cover costs
However, the economic impact through local spending during the convention or business meetings can be large

9. Types of Public Facilities: University Venues
Consist of stadiums and arenas that operate under different economic factors.
The market for university and college venues is generally dictated by the student population.
Universities tend to provide the venue with tenant teams as well as a certain amount of content through the university.

10. Types of Public Facilities: Metropolitan
Venues located in large cities such as Madison Square Garden in New York, the Wells Fargo complex in Philadelphia, and the Staples Center in Los Angeles.
Venues like these are generally referred to as a must play based on the size of the potential audience.
Often have large capacities, allowing for greater ticket sales.
Skilled labor in metropolitan venues is almost always unionized.

11. Types of Public Facilities: Local Civic
Smaller capacity and are located in towns or small cities
Sun National Bank Center in Trenton, New Jersey, and the Santander Arena in Reading, Pennsylvania
Provide the public with the desired event at the best time of the year to avoid undue competition with other events that may be occurring simultaneously

12. Types of Events Hosted
Sport: Specific seasons, dates determined by league
Family: Disney, Nickelodeon, and Sesame Street shows; also ice shows
Concerts: Typically booked months in advance
Size, age of the arena, and the building’s technology capacity can dictate the types of performers who will appear.
Trade Shows: Multiday events often in convention centers
Religious Events: Mass worships, often in the summer
Convocations: Graduations, speaking events
Seasonal: Summer tours, holiday shows

13. Facility Financing
Federal government allows state and local governments to issue tax-exempt bonds.
Tax exemption lowers interest on debt and thus reduces the amount that cities and teams must pay for a stadium.
Public vs. private financing?
Convention centers are almost always publically financed.
Often by initiating or raising taxes on the state or local hospitality industry (e.g., hotel room taxes, restaurant meal taxes, and rental car fees).
Building public assembly facilities meant other services had to be neglected.

14. Facility Financing (cont.)
Professional sport venues: Financing not as clear cut
From the 1960s through the early 2000s, professional sport venues of the Big Four (MLB, NHL, NBA, and NFL) have cost approximately $24 billion, with 64% of this being funded through tax dollars (Crompton, 2004; Crompton, Howard, & Var, 2003).
This is available through bonds, hard taxes, or soft taxes.

15. Facility Financing Mechanisms: Bonds
Money to build facilities usually obtained by issuing bonds.
Promise by borrower to pay back lender a specified amount of money, with interest, within specified time period.
Tax-exempt bonds used by government entities are available in two types, general obligation and nonguaranteed.
General obligation bonds: backed by the local government’s ability to raise taxes to pay off the debt.
Funded AT&T Stadium in Dallas, Time Warner Cable Arena in Charlotte, and the Tampa Bay Times Forum in Tampa (Kurilo & Preston, 2012).

16. Facility Financing Mechanisms: Bonds (cont.)
Two types of taxable bonds issued by private entities:
Private-placement bonds
Asset-backed bonds
Both types of bonds are sold by the team, but private-placement bonds provide a lien on all future revenues generated by the team, whereas asset-backed bonds are secured through specific assets (Sawyer, 2006).
Pepsi Center, home of the Denver Nuggets, Colorado Mammoth, and Colorado Avalanche, was financed through asset-backed bonds in the 1990s (Kaplan, 1999).

17. Facility Financing Mechanisms: TIF
TIF stands for tax-increment financing.
TIF is available in a specific square mileage of land around the facility (usually an urban area that has been identified for renewal or redevelopment) where the tax base is frozen and any additional taxes added are used to repay the TIF bonds (Sawyer, 2006).
For example, the KFC Yum! Center is owned by the Louisville Arena Authority, Inc. and is home of the University of Louisville men’s and women’s basketball teams and women’s volleyball team, and is surrounded by a TIF district with a 6-square-mile radius.

18. Facility Financing Mechanisms: Taxes
“Hard” and “soft” taxes
Hard taxes include taxes on local income, real estate, personal property, and general sales, and often require voter approval because the burden of payment becomes that of the public (Sawyer, 2006).
Soft taxes include added taxes to car rentals, taxis, hotels/motels, restaurants, “sin” (alcohol, tobacco, gambling, etc.), and players (additional tax imposed on visiting professional athletes), and affects a much smaller portion of taxpayers, making it easier to levy (Sawyer, 2006).

19. Facility Financing Mechanisms: Private
Many universities across the country go this route through their athletic development and fundraising departments.
Ways to gain private funding for a facility project include naming rights, food and beverage rights, luxury suites and premium seating, and advertising rights.
The University of Maryland was able to pen a 25-year agreement with Comcast Cable for the naming rights of its basketball arena (Howard & Crompton, 2004, p. 277).
Private donors to university athletic departments also will provide funding and have their names placed on the new facilities.

20. Facility Financing Mechanisms: Combined
Opportunities are available to combine private and public funding in order to build a new facility.
Denver voters approved to subsidize $300 million for the construction of a new football stadium for the Broncos while the ownership was required to provide $100 million of their own funds and cover the cost of any overruns (Crompton et al., 2003).

21. Why Cities Subsidize Sports
Sports facilities are thought to improve the local economy in four ways:
Building a facility creates construction jobs.
People who attend games or work for the team generate new spending in the community, expanding local employment.
Team attracts tourists/companies to the host city.
New spending has a “multiplier effect” as increased local income causes still more new spending and job creation.
See New York City

22. Why Cities Subsidize Sports (cont.)
Overstatement of the benefits of stadiums
Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers.
New sport facility: Extremely small effect on economic activity and employment.
Sport facilities attract neither tourists nor new industry.
A professional sport team creates a “public good.”
No recent facility appears to have earned anything approaching a reasonable return on investment.

23. Facility Ownership and Management Staff
Facility ownership generally falls into three categories:
Community or state, which may have a “plethora of regulations and procedures in place”
Colleges, where “funding is based on continued student growth, gifts, and institutional subsidies”
Private facilities, whose motive is solely for profit
(Farmer et al., 1996).

24. Facility Ownership and Management Staff (cont.)
Management Staff Goal: To provide a clean, safe, and comfortable environment for patrons.
Functions: Security, cleanup, marketing and sales, scheduling and booking, operations, event promotions, and finance and box office operations.
Private Management: Provides expertise with dedicated personnel and network of facilities that create leverage in cultivating key event relationships and in-turn event bookings.
E.g., Global Spectrum widened their market reach by acquiring PACIOLAN ticketing and Ovations Food Sys.

25. Facility Marketing: Marketing
Account for location of venue, culture of community, and production of events.
Internet has allowed easier booking of events.
Using online tools, the manager can quickly react to inquiries for available dates and can establish a routing for a program or show.
Saturated markets with several venues in the local vicinity.
Local economy will be driving force for ticket sales.

26. Facility Marketing: Promoting
Task: Keep financial risks low and profit margins high
Copromotional Model: Facility and promoters split the risk and revenue
Rental Agreements: Promoters pay specified amount up front and other costs covered by promoter
Majority shows brought by outside companies
Live Nation, AEG Live, Feld Entertainment

27. Facility Marketing: Facility Revenues and Expenses
Facilities generate revenues from tickets, luxury suites and club seating, concessions, parking, sponsorships, and rentals.
Primary expenses are mortgage and rent, maintenance and repairs, utilities, taxes, marketing and sales, personnel, and insurance (Ammon, Southall, & Nagel, 2010).
Ticket sales represent significant percentage of revenues.
Ticket Rebate: Surcharge on ticket that goes to facility.
Ancillary Revenue: Sale of food, beverage, parking, fees, and sponsorships.
Marketing Fund: Profits from other shows put aside to invest in future programs.

29. Career Opportunities: Marketing Director
Fast-paced, highly stressful, challenging career track
Acts primarily as in-house advertising agent for the various events booked into facilities
Job Responsibilities: Buying media (TV, radio, print, billboards, etc.), coordinating promotions, and designing marketing materials (TV commercials, brochures, flyers, newspaper advertisements, etc.)
Multiskilled performers who possess excellent people skills, sales ability, and written and oral communication skills

30. Career Opportunities: Public Relations Director
A talented PR or communications director can “spin” the news, good or bad, and position a facility in the best possible light.
Forges solid working relationships with TV and radio news directors, newspaper editors, and reporters.
Coordinates TV broadcasts from the facility, writes press releases on upcoming events, and works with the media concerning events and activities in the facility.
Possesses a strong writing ability, creative mind, and the ability to respond while under pressure.

31. Career Opportunities: Event Director
Acts as the point person for the facility during each show
In charge of the safety and satisfaction of all facility users
Supervises a full staff of ushers, police officers, firefighters, emergency medical technicians, and private concert security staff
Must be able to think and react quickly to any problems arising during the event and must be able to deal calmly with show promoters, angry customers, lost children, and other situations

32. Career Opportunities: Booking Director
Position devoted to booking events for the facility
Much time is spent talking on the telephone with agents and promoters, and attending conventions to solicit events.
Negotiating contracts is also part of the job.

33. Career Opportunities: Operations Director
Supervises facility preparation for all types of events
Coordinating, scheduling, and supervising the numerous changeovers that take place each year as one show moves in and another moves out
Spends facility’s annual expense budget on labor, maintaining and repairing all equipment, and purchasing all the necessary supplies
Job requires a mechanical knowledge of a facility’s inner workings
Must also possess superior people skills

34. Career Opportunities: Advertising, Sponsorship, and Signage Salesperson
Responsible for selling signage and event sponsorships—an important source of revenue for facilities.
Most facilities hire sales staff on a commission-only basis as they generate money for themselves and the facility.
Salespeople must possess excellent interpersonal and presentation skills.

35. Career Opportunities: Group Ticket Salesperson
Primarily responsible for selling large blocks of tickets for various events to corporations, charity organizations, schools, Boy Scout and Girl Scout troops, and other parties
Usually paid on a commission basis
Needs to excel on the telephone and in face-to-face presentations

36. Career Opportunities: Box Office Director
Responsible for the sale of all tickets to events as well as the collection of all ticket revenue
The first impression patrons have of the venue
Must be patient, have a calm demeanor in dealing with the public, and possess good supervisory skills

37. Current Issues: Security
Ensure safety and comfort of all spectators.
Increased focus, attention, and resources after 9/11.
Bag checks, pat downs, and metal detectors are now normal, regular functions in day-to-day security operations.
Includes physical barriers to entry, surveillance technology, and an increase in security personnel presence.
Crowd Management Plan: Categorizing the type of event; knowing surrounding facilities and/or environment; being aware of team or school rivalries, threats of violence, the crowd size and seating configuration; having an existing emergency plan, and using security personnel and ushers.

38. Current Issues: Sustainability
Public facilities consume more energy per square foot than any other retail industry.
In response, the facility management industry is working to build green buildings, create “green management teams,” reduce waste, cut energy usage and pollution, and implement recycling programs (Jenkins, 2007; Jackson, 2008).
Makes financial sense
Reduces operating expenses
Builds brand

39. Current Issues: Americans with Disabilities Act
To prevent discrimination against qualified people with disabilities in employment, public services, transportation, public accommodations, and telecommunications services.
Requires new facilities to be accessible to people with disabilities including concession areas, public telephones, restrooms, parking areas, drop-off and pick-up areas, entrances and exits, water coolers, visual alarms, and signs.
In 2011, the ADA was updated with a number of changes directly applicable to stadiums and arenas.

40. Summary
Public assembly facilities provide a site for people to congregate for entertainment, social, and business purposes.
Facilities range from stadiums and arenas to convention centers and theatres.
The key challenges facing facility owners and managers are financing new facilities or renovations, retaining the revenue generated by the facility, preparing fully integrated security programs, retaining tenants, and addressing ADA requirements.