Sport Management

1. Sport Management Facility Management

2. History of Public Facilities • Stadiums • Professional Baseball became popular in the early 1900’s • Open fields and parks were inadequate • Team owners began to construct stadiums • Since owners paid for them…teams stayed in their home cities for years • Era of team movement didn’t begin until the late 1950’s and 1960’s. • NFL founded in 1923…increase in popularity…need for larger stadiums grew

3. History of Public Facilities • Stadiums (cont.) • MLB and NFL became partner tenants in stadiums originally built for baseball. • Quirks for football - • End zones too short • Poor sightlines • Today stadiums also host – • Concerts (big enough to fill a stadium) • Use Parking Facilities for… • Fairs/Carnivals • Drive and Buy Car Shows • Circuses

4. History of Public Facilities • Arenas • NHL started in 1927…became very popular • Hockey owners followed baseball owners and built arenas for their teams. • NHL season 1/3 the length of baseball (back then 50 games per season compared to baseball’s 154) • Dark Nights! – empty nights in an arena • Hockey owners had more empty nights to fill their arena with events.

5. History of Public Facilities • Arenas (cont.) • What filled dark nights? • Originally, boxing (but occasional fights were not enough) • NHL owners founded Ice Capades – skating variety show (still not enough) • Basketball • Originally capitalized on college basketball • Then the NBA came along… • NBA and NHL became partner tenants

6. History of Public Facilities • Arenas (cont.) • Today arenas also host – • Indoor soccer • Arena football • Lacrosse • Concerts • Ice Shows • Family Shows (Circus, Wiggles, Sesame Street) • Graduation (like PHS uses Stabler)

7. History of Public Facilities • Arenas (cont.) • Recent trend in arena construction  adjacent practice facility for prime tenants • Availability of the main arena is critical for maximizing revenue because it increases the ability to book events! • Nationwide Arena, Columbus, OH (home of NHL’s Blue Jackets) opened in 2000 with an attached NHL practice rink • FedEx Forum, Memphis, TN (home of the NBA’s Memphis Grizzlies) opened in 2004 with an attached basketball practice facility

8. Modern Era of Public Facilities • 1960 and 1970’s • Baseball and football team owners realized they could save money by having their host city build their stadium rather than building it themselves. • Cities complied to keep teams enthusiastic about staying in their city. • Cities still built for 2 prime tenants  justified the investment.

9. Modern Era of Public Facilities • 1960 and 1970’s (cont.) • Civic Centers and Arenas also sprang up • Cities competed for sport teams by building new facilities • Summary: City leaders believed publicly built sport facilities were a good investment. • Contributed to the city’s quality of life by providing entertainment to the citizens • Spin off benefits to the local economy

10. Modern Era of Public Facilities • Today • Trend over the last decade  Single Purpose Stadiums • Specialization has extended into soccer • Besides the design benefit, teams want single purpose facilities for their REVENUE! • Revenue from single purpose facilities do not have to be shared – desirable!

11. Modern Era of Public Facilities • Today (cont.) • Team owners seek lucrative stadium leases to provide revenue from sources like.. • Preferred Seating (PSL’s, luxury seats, club seats) • Parking • Concessions • Sponsorships (signage, naming rights) This revenue helps teams compete for free-agent players and boost their own profits!

12. Modern Era of Public Facilities • Today (cont.) • The lore of lucrative stadium leases has resulted in “Franchise Free Agency” • Cities often entice teams to leave one city for another promising stronger revenue streams through lucrative lease terms.

13. Facility Financing (Public vs. Private) Will The Facility Be Financed Publicly or Privately? • Argument #1: Any “for profit” enterprise, like a professional sport team, should build its own facility. • Argument #2: Sport facilities provide significant economic benefits, and teams are a source of civic pride and community spirit.

14. Facility Financing (Public vs. Private) • Financing has fluctuated between public and private over the years • Early years – team owners built their own facilities • Public building boom of multipurpose facilities in the 1960’s and 1970’s • Recently – single purpose facilities – some funded privately, and some publicly

15. Facility Financing (Private) • Joe Robbie Stadium, now Dolphin Stadium, is a good example of private funding of a single purpose facility • 1980’s - Joe Robbie, owner of the Miami Dolphins • Unhappy with the Orange Bowl, proposed a new stadium • Not approved for public financing by Florida voters • Novel solution – pledged stadium revenue as collateral to bankers and privately funded the stadium • Other’s followed, even with privately funded arena construction • Palace at Auburn Hills – Detroit Pistons

16. Facility Financing (Private) • But private financing is not a perfect world for owners  it takes revenue away from profits  remember, teams need more revenue to pay the high salaries that resulted from Free Agency • So…to maximize revenue, owners pushed for public financing of single purpose facilities The idea was that the team controls the facility revenue without the heavy debt of financing building

17. Facility Financing (Public) • The cities of Baltimore and Cleveland are good examples of public funding of single purpose facilities • Both cities decided to construct in downtown areas to attract teams and revitalize decaying areas of their cities • Both were successful and benefited economically!

18. Facility Financing (Public vs. Private) • Summary • Today the trend is public funding of single purpose facilities. • Owners push for it to maximize revenue that doesn’t have to be shared with another tenant. • This revenue is used to pay athlete’s expensive salaries, which ensure a winning a team. • Winning teams attract fans, which keeps the revenue flowing in.

19. Private Financing Mechanisms • Facility Revenues (like Joe Robbie did) • Preferred seating… concessions… parking... rent from other tenants • Corporate Sponsorship • Naming Rights • Pouring Rights • Outright Donations

20. Public Financing Mechanisms • Bonds • The most typical way of obtaining public financing • Issued by cities, counties or states • Promise by the borrower (bond issuer) to pay back the lender (bond holder) a specified amount of money, with interest, within a specified period of time. • General Obligation Bonds – backed by the local government’s ability to raise taxes to pay off the debt (very safe for investors) • Revenue Bonds – backed by the facilities ability to generate revenues, which must cover annual operating expenses and debt repayment (riskier)

21. Public Financing Mechanisms • Taxes • Imposed on local residents • Property Taxes • Occupational Taxes • Imposed on visitors • Hospitality Tax • Rental Car Tax • Taxes affecting both local residents and visitors • General Sales Tax • Sin Tax • Meals and Transportation Tax

22. Private Management Companies With most facilities owned by the local government, would you want your facility run by government employees, who know nothing about sport management? • Facilities are meant to be run profitability, so management is crucial. • Most large facilities use Private Management Companies • Spectacor Management Group (SMG) • Global Spectrum – subsidiary of Comcast Spectacor

23. Private Management Companies Benefits of Private Management Companies • Dedicated Corporate Staff – otherwise staff would have come from municipal departments • Network of Facilities – • Makes it easier to cultivate relationships and increase bookings • Provides purchasing leverage for supplies and maintenance items • Career Opportunities – growth and advancement for employees willing to relocate

24. Current Issues • Security • Has become a big issue since 9/11/01. • Bag checks, pat downs, and metal detectors are now normal. • Barricades or fencing around the perimeter of facilities are used to create a “moat” effect. • Every event must be evaluated for security risk. Consider… • Who the performer is • Crowd profiles • Anticipated media coverage

25. Current Issues • Americans with Disabilities Act (ADA) • Enacted in July, 1990 by President George Bush. • Intended to prevent discrimination against people with disabilities in employment, public services, transportation, telecommunications services, and public accommodations. • ADA requires new and renovated facilities must be accessible to people with disabilities.