SBJ/Jan. 31-Feb. 6, 2011/In Depth

Stadiums review options for event dates

An NFL lockout would deliver a financial punch to the gut for stadiums, taking away their chief source of revenue.

Depending on the deals in place between teams and municipalities, both public and privately managed facilities would feel substantial pain from the absence of 10 pro football games, resulting in game-day employees losing their jobs and forcing stadiums to cut operational budgets and defer capital improvement projects.

GREEN BAY PACKERS
The Green Bay Packers say lockout threat or not, they continually look for events they could add at Lambeau Field, such as the Frozen Hockey Classic held in 2006.
Sources in the facility business say an NFL stadium can easily earn revenue of $50 million in a 10-game season, including ticketing, concessions and other key revenue streams.

In Baltimore, Indianapolis, New Orleans, St. Louis and Tampa, five NFL markets where teams play in publicly owned facilities, the clubs capture 100 percent of game-day revenue.

“It won’t be business as usual, that’s for sure,” said Roy Sommerhof, the Baltimore Ravens’ vice president of stadium operations. “We are watching budgets closely and pulling back. Everyone with the Ravens knows what the situation is.”

The Ravens play at M&T Bank Stadium, a public facility owned by the Maryland Stadium Authority. The team and the authority, partners for maintaining and upgrading the facility, shared the $7 million cost to install two new end zone video boards before the 2010 season. In addition, the Ravens invested $1 million on their own to put down a new Sportexe artificial field in May 2010.

The Ravens and the authority most likely would not have pulled the trigger on those expenses this year in the event of a lockout, knowing there would be no game-day-related revenue to help pay for those projects, according to Sommerhof.

“With no capital to spend, we would do what we need to do … at a bare minimum … to maintain the building,” he said.

The tricky part with the labor negotiations is that a resolution could come at any time, said Doug Thornton, SMG’s senior vice president at the Louisiana Superdome. SMG operates the Superdome and four other NFL facilities.

“If there is a lockout and staff is laid off, you have to be ready to quickly ramp back up,” Thornton said. “You don’t want to reduce in those areas when you can’t rebuild on demand. The issue is how to operate efficiently if there is a work stoppage.”

In St. Louis, the Rams are a tenant at the Edward Jones Dome at America’s Center, an NFL stadium attached to a convention center. Considering the league’s labor situation, the timing could not have been better for the St. Louis Convention and Visitors Commission, the team’s landlord, to spend $2.5 million last year for new Magic Carpet AstroTurf and a changeover system that allows stadium officials to quickly remove the artificial surface used for Rams games and store it in a pit behind one end zone.

The new system provides greater flexibility for concerts and trade shows and other non-NFL events, said Nick Langella, the dome’s senior vice president and general manager for facilities. The speedier process for conversion could come in handy to fill the need for more dates and on shorter notice if a lockout occurs, Langella said.

In Indianapolis, Lucas Oil Stadium sits next to a downtown bar and restaurant district. The local Capital Improvement Board owns and operates the facility, but its lease with the Colts has the team collecting all game-day revenue, said Mike Fox, stadium director.

“Big picture, the city loses money from not having 65,000 people coming downtown,” Fox said. “We employ 3,000 people on game day, including 1,500 volunteer concessions workers — the Boy Scout troops and high school bands. They’re working for free but their group receives the benefit” of sales commissions.

A few teams and facilities have adjusted their business model to pursue stadium concerts to offset the potential loss of game-day income from a lockout, said Jeff Apregan, a consultant for the Gridiron Stadium Network, a group of nine NFL stadiums and one MLS venue that works together to bring events to its buildings. Some are taking financial risk to buy a touring act and gain a greater share of the overall revenue compared with handing the event to a traditional third-party promoter and restricting its share of event-related income to parking and concessions.

“This would be the year clubs [and facility operators] are less risk-averse at a time when we all need content,” said Mark Donovan, president of the Kansas City Chiefs. The Chiefs are partnering with tour producer Louis Messina to bring Kenny Chesney and Taylor Swift to Arrowhead Stadium, the facility’s first summer concerts in 10 years.

The Tampa Sports Authority weighed the benefits of booking non-NFL events with a lockout in mind. In Florida, it’s also a matter of generating revenue in a still-wavering economy without affecting taxpayers, said Eric Hart, the authority’s executive director. His group runs the stadium and invested more than $3 million to bring Chesney to Tampa for a March 19 performance.

As of mid-January, more than 35,000 tickets were sold and the authority feels comfortable the numbers will result in a profitable venture on its end. “Our break-even point was 32,000 and it is still selling very well,” Hart said.

In Green Bay, Lambeau Field plays host to Chesney on June 11, the stadium’s first concert since Survivor played a small show in 1985. PMI Entertainment Group, the private firm that runs Resch Center, a 10,000-seat arena down the street from Lambeau, bought the Chesney date from AEG Live/The Messina Group, said Jason Wied, the Packers’ vice president of administration and general counsel. The team will pay its normal game-day employees to work the concert and will receive a share of revenue from concessions and parking.

For the Packers, the concert is not tied to the lockout. The issue was having enough time to get the playing field back in shape for football after a concert, Wied said. In the past, the Packers passed on a few concerts because they cut too close to the NFL season. For later in the year, the team would like to book more outdoor hockey games after the success of the Ohio State-Wisconsin match in 2006, as well as a college football game, an event the Packers have not had to date in Lambeau’s 54-year history.

“We were going to do what was good for the community and good for the Packers regardless of a labor situation, so for us we considered it a nonfactor,” Wied said. “We think this is good practice for the Packers to go through, to understand other events that we can host here long term.”

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