Facility

Management
Chapter 12

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.

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.

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.

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)

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.

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).

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

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.

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.

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

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 buildings 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

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.

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.

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 governments
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).

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 privateplacement 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).

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 mens and womens basketball
teams and womens volleyball team, and is surrounded by a
TIF district with a 6-square-mile radius.

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).

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.

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).

Why Cities Subsidize Sports

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

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.

Facility Ownership and Management Staff

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

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.

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.

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

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.

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

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.

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

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.

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 facilitys annual expense budget on labor,
maintaining and repairing all equipment, and
purchasing all the necessary supplies
Job requires a mechanical knowledge of a facilitys
inner workings
Must also possess superior people skills

Career Opportunities: Advertising,

Sponsorship, and Signage Salesperson
Responsible for selling signage and event
sponsorshipsan 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.

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

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

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.

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

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.

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.