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Barclays Center

Barclays Center. Barclays (Multi-National Corporation). Personal banking Credit cards Corporate & investment banking Wealth & investment management. International presence in Europe, North & South America, Africa & Asia Located in 50 countries 140,000 employees. 2001.

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Barclays Center

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  1. Barclays Center

  2. Barclays(Multi-National Corporation) • Personal banking • Credit cards • Corporate & investment banking • Wealth & investment management • International presence in Europe, North & South America, Africa & Asia • Located in 50 countries • 140,000 employees

  3. 2001 Bruce Ratner – NYC real estate developer • 22 acres at the corner of Atlantic & Flatbush Ave • Vacant land, tenements & warehouses • Walking distance from 4 gentrified Brooklyn neighborhoods • Above a Atlantic Yards (railway yard) • All of Manhattan & a large part of Long Island was a 20 min ride away

  4. Kelo vs. New LondonOld Dominion Land Co vs. United StatesRindge Co vs. County of Los Angeles • Permissible to seize private property in the name of economic development • Public use as defined by US Supreme Court Justice Sandra Day O’Connor includes a stadium

  5. 2003-2004 • NJ Nets sold to Bruce Ratner • Nets + Jay-Z + Kelso et al + Olympic bid for 2012 + nostalgia (pro sports in Brooklyn again) = the arena gets built

  6. This Was a Business Decision, Not a Basketball Decision • Ratner’s purchase of the Nets • Not a stand alone commercial enterprise • (ticket sales + revenue) > (player salaries + administration costs) • Eminent domain insurance • Ratner’s sale of the Nets to Mikhail Prokhorov • Recession in 2009 • General purpose real estate bailout

  7. Ratner and the Arena • This was the asset he wanted out of the deal • Naming rights = $400 million • Annual revenue = $120 million • Operating costs = $30 million • Mortgage = $50 million • $35 million profit on an initial investment of $350 million (annual return of 10%)

  8. Prokhorov Take • This project has “explosive profit potential” • Capitalization of the team will earn $700 million more after the move to Brooklyn • Nets approximate annual earnings = $30 million • Arena is worth $1 billion (owns a 20% share)

  9. In Sum • Man buys basketball team as insurance on a real estate project • Franchise is flipped to Russian billionaire • Both parties count their money Next on the Agenda • Move the New York Islanders to Brooklyn

  10. The Art of the Sellout Case Study: Citizens Bank Park

  11. Philadelphia Phillies • 3 years of consecutive sellouts • 268 games (as of July 23, 2012) • Typically draw 44,000 to 45,000 fans per game • Eventually attendance will decline • 38,000 to 40,000 according to John Weber, Phillies VP

  12. Citizens Bank Park • 43,651 seats • 43,300 to 43,400 paid fans is considered a sellout • Standing room sales are added to the total • Brings attendance to over 100% capacity • 2011 season • Phillies won 102 games • Averaged over 45,400 per game (104% capacity) • 2012 season • Still over capacity • Selling 600-700 less seats per game

  13. This is a sellout? Empty Seats

  14. Sellout Math • Calculated by tickets sold • Not the actual number of people who come through the turnstiles • No shows count in attendance • Complimentary tickets are not counted • Tickets available in secondary markets (ex. StubHub) • Approx 5,000 per game (June 2012 data) • This market is softening for certain non-rivalry games • Many tickets are sold below face value

  15. Current Attendance • Through 28 home games in 2012 • 44,980 paying customers per game • Lead the Major Leagues in average attendance • As of 2012 only the Phillies & Red Sox average over 100% capacity

  16. 2012 Ticketing • 28,000 season tickets sold • Began selling single game tickets in February • Unload this inventory as early as possible • “you never know how a season will go” Weber • The walk up market • At least 500 tickets are available on game day • Can be upwards of a few thousand  based on supply and demand

  17. Ticket Sales Challenges • Perceived scarcity • 15 games in 18 days, 19 games in August  going to one game is not perceived as scarce good • Weather • Early season in Philadelphia  cold • Schedule • 19 games in August  family vacations

  18. Factors the Contribute to Sellouts • Size of the stadium • Veterans Stadium seating capacity was 62,382 • Aesthetics of Citizens Bank Park • Servicescape • The Phillies have been winning

  19. Plenty of Good Seats Were Always Available at the Vet

  20. Drop Off in Ticket Demand • New stadium loses its novelty • Novelty of a new stadium lasts 3-7 years • Citizens bank Park was opened in 2004 • The team begins to struggle • See 2012 – 2014 Phillies

  21. Secondary Ticket Market • Key indicator • Typically starts slow (April & May) • Picks up in June, July and August

  22. StubHub • Subsidiary of ebay • Official secondary ticket market for MLB • Has access to all MLB team websites including ticketing • Estimated annual revenue of $325 million for baseball tickets • 8 million tickets sold • Market presence has led to an increase in revenue for teams • making it easier to sell season tickets to fans who know they can easily sell tickets they cannot use • Teams generate revenue twice • Initial sale • Via agreement with StubHub MLB gets • $60 million annual payment • 12.5% of total ticket price

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