With thousands of screaming fans donning their team’s colours, team banner, and flags, a stadium on a match day becomes home to people who share their heart with a team to show support. From the roaring atmosphere at a colosseum to the singing and chanting fans at Signal Iduna Park, stadiums have always been an important part of any sporting event or organisation. Not only do they serve as a platform for the team that puts on a display at the arena, but also a major source of revenue for the respective establishments. But many do not realise that building and maintaining a stadium is not as easy as one thinks.

Stadiums nevertheless have also evolved to earn more than just ticketing revenues, although this is where the largest chunk of money comes from. With the evolution of ticketing and hospitality, stadiums have raked up newer and larger sources of revenues over the years. However, major sources of revenues for a stadium could include the following:

2.Hospitality Services – A large chunk of the revenue earned on a match day also include the sale of food and beverages at the venue. Although European stadiums are quite far off from the American counterparts that offer anything from a pint of cold beer to a lobster meal, sale of food and beverage makes up for quite a sizeable portion of the revenues earned in a stadium. The German club Schalke 04’s Veltins-Arena reported that some of their games sell close to 50,000 litres of beer on a single match day, courtesy of the vast 5km long beer pipelines that run under the stadium.

3.Other Events - A majority of the stadiums nowadays have transformed from a sole football oriented venue to a multipurpose facility. With large music concerts, other sporting events such as ice hockey, basketball, and monster truck shows just to name a few. Tottenham Hotspur which is currently building its new stadium has a 10-year agreement with NFL to play at least two games a season at their stadium, which is sure to bring in a lot of revenue for the club.

Stadiums are an expensive affair, most teams that build and own a new stadium go through extensive periods of cash crunches and debt repayments during which their performances may be affected drastically. Take Arsenal for Example, the team spent a whopping £ 390 million pounds to construct the Emirates Stadium that took close to two years to complete. This impacted the bottom-line (profit/loss) of the club twofold. Not only did they have to lay out vast amounts of money for the construction, they also had to spend on maintaining their old stadium Highbury, where they played their home games, until the new stadium was ready. With close to £ 130 Million funded by the club internally, the balance £ 260 million would have to be borrowed from banks, with interest rates at around 10% and including principal payments, the club would have to spend approximately £ 30-35 million per year on repayment of the debt. With the lender having the right to receive the payment as per law, Arsenal had to go through a transfer market drought to settle their dues and opt for low-cost players or academy graduates. Although this did unearth some talent from their workshop, it took them through a 9-year trophy drought as they were unable to keep up with other teams.

Stadiums on Rent

From the point of view of the team, a rented stadium is advantageous for them, as they only have to set out a rental expense every year towards the use of the stadium. Any other decisions and expenses that need be incurred have to be borne by the owners of the asset. This, however, has an adverse effect on the clubs. They do not have a supplementary source of income from the stadium on non-match days and for fans of teams sharing the same stadium, they do not feel the same attachment to the stadium as much as they would have had their club owned the property. This is one of the reasons why the Italian clubs stand in their debt-ridden poor financial status.

Capacity utilisation

In the accounting world, an asset is any instrument or property owned by an organisation that enables it to earn income. Over the years, teams have studied this and realised the need to use a stadium not only for the sole purpose of football, but also utilise the asset to squeeze out every ounce of revenue in the stadium.

Many stadiums in today’s world opt to modify their surface to accommodate other sports so as to allow them to earn more ticketing revenues from their premises. The Vicente Calderon is an excellent example of the same. They made a lot of money after allowing AC/DC to conduct a concert in their stadium.

Schalke’s Veltins-Arena is one great example of how a stadium increases its utilisation. With a moveable pitch, the stadium authorities can host a series of various events without having to worry about any damage to the pitch. With the pitch retracted, the Veltins-Arena has been home to boxing, ice hockey, and even car rally races. Coming back to the Metlife stadium, one of the reasons the NFL stadium made a lot of money was due to the fact that it hosted a whopping of 22 non-NFL related events, which significantly increased its utilisation and revenues.

Stadiums are evolving with every new design being constructed. The United States of America leads the way in this front with the likes of NFL teams, NBA teams, and even big college football teams building the state of the art multipurpose facilities. Their whole concept is to increase the time spent by a fan in the stadium and also to ensure that maxim revenue is earned from the facility. Ideas such as installing couches with video game consoles and swimming pools facing the pitch enable fans in the USA to arrive and spend time at the stadium, thereby participating in the various products and services available at the location and in turn increasing revenues for the stadium.

It’s only a matter of time until people start using holographic projections of the game on their dining table, or watch replays through a virtual reality glass, where they can walk around the pitch in which the great moment occurred. However, none of these new trends will ever replace the atmosphere and the joy a stadium gives, when watching a game. Watching a live game in a stadium is the pinnacle of a fan’s sporting experience and will be for the years to come. It is one of the main reasons fans become loyal to a certain club. Hence no matter the cost or revenue, stadiums will always be a necessity for every sport.