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In-Depth

Road to Revenue

Colleges continue to milk football for more money and exclusive fan experiences as they reinvent tailgating.

Tailgaters outside Ben Hill Griffin Stadium are steps away from greeting Florida players as part of the Gator Walk.University of florida

From the University of Texas’ new Bevo Blvd. to UCLA’s chic wine gardens, schools are investing in fan activities and entertainment outside the football stadium as much as they are inside.

 

Florida State is introducing three areas where fans can tailgate before a game, each with a different price point and experience. Across the state, Florida is lining up its tailgating tents right next to the path where the players and coaches enter Ben Hill Griffin Stadium. Well-heeled Gator fans are so close to the team they can flip burgers with one hand while high-fiving their favorite players with the other.

Beer gardens, live music and food trucks combine to create festival atmospheres on campuses across the country for fans who want an alternative to the traditional tailgate.

“It’s the Disney concept — it’s about more than just the rides,” said Chris Del Conte, Texas’ athletic director. “We’re all asking how we make the most of our home games.”

What’s evident in the weeks leading up to a new college football season is that two themes are top of mind for collegiate marketers — choice and exclusivity. Choice in the form of tiered pricing or getting closer to the action. And by keeping it exclusive, they can command larger donations.

Schools are clearly looking beyond the one-size-fits-all solution of suites and club seats, which are prevalent across so many stadiums and still serve as a reliable method of driving revenue. But do they fit into the fan experience of the future, a future that exists as much outside the stadium as it does in it?

Michael Thompson, Ole Miss’ deputy AD, external relations and business development, said the focus on entertainment and social areas rather than traditional tailgating is the schools’ way of trying to adapt.

“What we’re doing is creating new inventory — big new experiences — that are exclusive,” Thompson said. “We have four club areas, not including suites, and each one has a different vibe, a different feel. They’re essential for the high-level donors.

“But when you look at how we generate the same attendance and ticket sales from the audience that’s growing up now, and what they expect from their sports experience, I’m afraid it won’t match up well with how we’re operating. Does it keep me up at night? Yeah, sometimes.”

‘Finding that next source of revenue’

Football already accounts for 70 percent to 75 percent of athletic revenue on most campuses, and school officials don’t think it’s tapped out yet. When they strategize about ways to drive more revenue, it’s not unusual for them to go back to the same well.

But as revenue from traditional clubs and suites matures, money from ticket sales and donations has begun to flatten, while attendance nationally has endured historic declines.

IMG Live offers customizable tailgate packages for members of Georgia’s Tailgate Club.IMG Live

In a snapshot of the last five years, many of the schools among the top 20 in revenue have seen huge gains in media income from the most recent round of TV contracts. That’s especially true of the SEC and Big Ten, which account for 15 of the top-20 revenue-producing athletic departments (see chart).

A closer look at the ticket sales line, however, shows modest increases for many of those same schools over the last five years. 

“Finding that next source of revenue is everyone’s challenge,” said Rob Rademacher, chief operating officer at Michigan, where club seats and suites annually are sold out. “Most schools are just a couple of down years from demand dropping and the bubble bursting.”

In best-case scenarios, schools are able to retrofit under-utilized spaces into premium areas with minimal effort and expense, like North Carolina’s exclusive field-level terrace called the Touchdown Club, where 250 donors can almost reach out and touch players in the end zone. 

Revenue from the Touchdown Club, a weight room that transforms into a field-level club on game days, helped the Tar Heels set a school record for ticket revenue in 2017-18 at $25.9 million, up from $23.8 million the year before.

Short of discovering that kind of untapped space, though, schools are looking outside the stadium’s perimeter to craft new revenue-producing experiences through concerts, street festivals, outdoor clubs or nontraditional forms of tailgating that keep fans entertained beyond the three-hour game.

“We’re all dealing with a changing consumer, so how do we make that connection with the next generation in new and different ways,” Oregon AD Rob Mullens said. “We have to move beyond the transactional and deliver more experiences. It’s not just a game, it’s a huge social activity.”

All about the experience

At Texas, that means turning a street next to the stadium into a five-hour festival with live music, the Longhorns’ marching band, live mascot Bevo, food trucks, beer gardens, merchandise sales and sponsored games with giveaways.

The street festival isn’t necessarily a new concept for sporting events, but like everything else in Texas, the Longhorns are doing it a lot bigger than most schools.

“It’s a street festival that very much fits the vibe of Austin,” said Drew Martin, executive associate AD at Texas. “We’re asking fans to spend a Saturday with us. We’ve got to give fans a reason to do that.”

Blockparty provides turnkey tailgating for Temple fans outside Lincoln Financial Field.Blockparty

On most campuses, the hard revenue from fan areas comes from alcohol, food and merchandise sales, and sponsorships. But even if there’s not an immediate return on investment, enhancing game day translates into season-ticket holders who are more likely to renew and perhaps increase their giving.

“Ticket sales will always be your bread and butter, along with donations,” said Josh Rebholz, UCLA’s senior associate AD, external relations. “But with everything we introduce now, we’re asking if this is something the fan can get at home. These high-end social spaces are something different for us.”

Two of the choices UCLA donors will have this season are the Stella Rosa wine garden and the TCL Lounge, a pair of new clubs outside the gates of the Rose Bowl. The city of Pasadena keeps all of the premium seating revenue inside the stadium, so the Bruins have to look for other ways to generate new revenue.

A $5,500 donation is required for admission into Stella Rosa on the west side, while TCL on the east side demands a $1,700 gift. Levy Restaurants, the Rose Bowl’s concessionaire, will manage the wine gardens.

“We’ve created these thresholds for donations that will encourage people to give more so they can have access to the wine garden,” Rebholz said. “It also gives the development staff the opportunity to engage with donors in a social setting.”

Tailgating made easy

Evolving from this pursuit of a different type of game day are tailgating specialists such as Blockparty, IMG Live and Tailgate Guys. They’ve built significant businesses by providing tailgate experiences for fans who don’t want the headache of setting up and cooking, or the hassle of breaking everything down.

As schools have watched their peers generate new money from this kind of turnkey tailgating, they’ve begun to hop on board. Some of the best-performing schools are now seeing $500,000 to $600,000 in annual revenue from partnering with these businesses.

Tailgate Guys provides tents and tailgating space for Penn State around Beaver Stadium. Tailgate Guys

Blockparty and Tailgate Guys have been around the longest. Tailgate Guys leaped from 16 college properties in 2017 to 27 schools this season and touts that it has paid out $4.2 million in revenue to its schools in the last seven years, said Parker Duffey, president and CEO.

Blockparty has grown to 14 universities for 2018, while also shifting into new lines of business, like organizing the new party deck at SMU, concerts at Missouri and Tulsa, and the beer garden at LSU, in addition to selling tailgate packages.

“All of the revenue that can be generated inside the stadium can be generated outside too — concessions, beer gardens, more elaborate retail, live entertainment,” Blockparty CEO and co-founder Adam Ward said. “Schools are tapping into that pregame hospitality and it has become a natural revenue stream. 

“There’s just more time being spent outside the stadium.”

That message hasn’t been lost on the schools. Colorado State is opening the Coors Light Ram Walk tailgate, a new club space close to Canvas Stadium.

If Ole Miss fans don’t arrive early enough to claim a spot in the Grove, they can purchase a spot in an exclusive new tailgating zone in the shadows of Vaught-Hemingway Stadium. Only 22 spots are available at $17,500 each for the season.

There will always be a place for the Grove, but on a lot of campuses these days, game day is beginning to look a lot different.

“The goal is not just the revenue,” said Arizona State’s Dave Cohen, senior associate AD, who has overseen revenue generation on the new Sun Devil Stadium. “It’s more affinity-based. Are we able to use these experiences to build affinity with alumni, students, the community? That’s the goal. And if we do a good job, the revenue will be a byproduct.”  

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