SUBMISSION REPORT

ON
Pricing and Revenue Management in Sports Stadiums

PREPARED BY:

Group 3
Keyur Patel (2018PGPM034)
Ranju Raju (2018PGPM037)
S Prashant (2018PGPM039)
Utkarsh Sharma (2018PGPM051)
Industry Overview:

Sports is one of the largest growing industries globally in terms of revenue making. The global
sports market reached a value of close to $488 billion in 2018 with a CAGR of about 4.3 % and
a large portion of revenue making happens through sports stadiums fueled by increasing
consumer demand. This multi - billion dollar business in the form of sports stadiums will continue
to show great opportunity and potential with the ever growing experience, entertainment and the
excitement it generates for the billions of fans across a variety of sports and entertainment,
which essentially is important part of these fans lives. A typical stadium is a place or venue for
sports, concerts or any other events and may comprise of a field or stage surrounded completely
by a tiered structure that allows for a spectator to stand or sit and view the event.

Revenue management in this industry would be defined as selling physical space (seats) for a
given length of time (per game, per hour, per unit time) for a variety of prices. The objective is
to maximize the revenue per available seat - game. Apart from revenue generated from ticket
sales, there are other opportunities that may arise with ancillary services like food & beverages,
sale of merchandise, advertising etc.

Managing space:

1)Selling space:

A sports stadium typically sells space in the form of seats, areas for standing, or grass banks or
club suites.

a)Seats based on arrangement, there may be classification that happens based on the distance,
view and angle at which the seat is positioned from the centre of action. A seat that is closer
may be differentiated from the one that is farther away
b)Some of these seats may be present within special hospitality boxes, with comfortable seating
under air conditioned environment. Usually these kind of seats are associated with
complimentary catering service.
c)Seats based on location - those that are present above the pavilion area where players/
athletes come out or seats right above the players home/away sitting area (in case of games
like football), they are usually for customers willing to pay a higher price.
d) Special club/country memberships or VIP boxes to specific set of people with the most
premium offerings. Events like IPL also have these special VIP boxes for those people who win
some specific contests.
e) Many sport stadiums have provisions for grass banks where people can sit on these banks
(these are typically popular during sunny climates when people prefer to sunbath and watch a
long game of say test match cricket). Also some stadiums have provisions for swimming pool
facilities wherein you can watch all the action from the pool.
f) Space in stadium exists for the commentary box and for various media broadcasters
g) Space in a sporting event may have to be differentiated in terms of supporting team and
segregated accordingly to avoid any potential clashes of fans.
i) Many are all- seater stadiums while some others have space for supporters to stand and
support their teams.

2) Inventory types:

a) Different sports stadiums are of different shapes and sizes, right from open, oval, circular to
rectangular and closed rooftops. An important aspect relating to these stadiums is regarding the
flexibility of its use. Some stadiums like baseball stadiums may be limited to use for only that
sport. Most common designs are multi-utility stadiums. A typical example would consist of a
football field along with a running track. And this same field could be made use for various live
music concerts or some cultural programme or fest. The advantage of this type of multi- utility
facility lies in the fact that there is cost reduction due to sharing of infrastructure and real estate
for multiple purposes and reduces idle time as the facility would be rented and remain occupied
for different events generating revenue on continuing basis. However on the downside, there is
task of meeting the needs and requirements of different sports in terms of distance from the
stands or size or shape of the playing field. Another method employed by sports stadiums is to
have multiple sports stadiums located in the vicinity of the other so that some of the common
amenities like parking lots may be shared.

b) Another aspect relating to space configuration relates to the flexibility of the space being
used. Majority of the inventory units like seats installed, suites and boxes or other fixed spaces
may be permanent and not flexible. Some others may allow some flexibility through retractable
seats or modular arenas which can cater to different types of events can open up newer
opportunities for revenue management.
3) Generating additional revenues:

Concert Resto and bars Merchandise & Retail store

Along with the typical usage for the stadium, setting up of ancillary revenue sources is apt for
the stadium as these products and service offerings can offer additional opportunity for revenue
and help in extracting more money from customers.
a) A typical service would be food and beverage stalls. Or even restaurants and bars
b) Merchandise stores or retail shops selling team/sport related souvenirs
c) Revenue Management can come from Parking lots.
d) Some stadiums may have museums and tour facility to go around the facility during non-
event days.
e) Advertising - Is a big source of revenue sold in terms of space and time during live events.
f) Gyms, spas and some indoor games. Also there may be lounge facilities or meeting
spaces.

Managing time:

1)Selling time implicitly: Here the stadium managers sell time implicitly, i.e as a service
experience in the form of a football game or a concert rather than in terms of time by minutes or
hours for which the stadium is used. The disadvantage here is the stadium manager doesn’t
have control over the time for which the stadium will be used, hence this can limit the revenue
generating potential of the stadium.

2) Selling time explicitly: Here the stadium operators sell time on basis of hours or minutes. This
gives them more control over how revenue can be generated from the stadium, as they have
control over the time given to a particular user for a game, concert, etc. Various options to sell
time explicitly are:
a) Advertisement: Mainly for games that are broadcasted on TV. We can gain massive revenues
here.
b) Subletting space to restaurants and bars: This helps attract crowds to stadiums by providing
good ambience, hence incentive to charge based on time period for which space is given to
restaurants and bars.
c) Subletting space to retail and souvenir shops: These shops need not be set permanently.
Depending on season and occasion, these can be of different types. Hence we can charge
based on contract period.
d) Parking lot revenue management: Based on time of day and importance of events, parking
can also be charged.
e) Events such as meetings, conventions, etc: These can be arranged at any point of the year,
and charged according to availability and urgency.

Source: http://blogs.cornell.edu/armapp/

Managing price:
Price is often managed using rate fences. It helps companies justify price discrimination.

1) Physical rate fences: They are characterized by tangible features such as:
● Seat category: We can charge different prices for different types of seats, hence optimize
revenue potential
● Booking time: Charge dynamically which helps exploit peak seasons.
● Type of event: Price depending on demand and importance of the event
● Bundling, e.g. suites with amenities (priority parking passes, in-suite food and
refreshments, in-suite service, private restrooms, flat screen television)
2)Non-physical rate fences: They help to divert high demands towards lower demand periods,
rewards regular customers or loyal customers. Some examples are:

● Duration of desired service

● Guaranteed reservations
● Group memberships
● Season tickets, e.g. tickets for all home games of a particular sport
● Double date, e.g. four tickets to the same game at a discount
● Repeat date, e.g. two tickets and two consecutive games
● Family fun package, e.g. four tickets, hot dogs, and drinks
● Type of opponents and day of week
● Refunds, exchanges or cancellations based on when the reservation was booked

FC Barcelona’s stadium seating arragement for various categories and prices