It’s pretty common to see economic impact studies to show how building a new venue or hosting a large event can lead to an economic windfall for the local municipality. The fundamental concept is that the costs involved are more than offset by the additional money being spent by non-local residents with local businesses. However, until yesterday, I had never seen a report on the supposed economic impact of a scoreboard, but that’s exactly what the Florida Panthers are trying to demonstrate in their efforts to get Broward County to pay upwards of $5 million for a new scoreboard.

Thanks to ProHockeyTalk.com for sharing this story and the link to the spreadsheet itself, courtesy of the The Miami Herald blog. Take a look below, or click on the spreadsheet for a larger view:

Credit: The Miami Herald

Essentially, the team is trying to say that the events listed here would only take place at their arena if they get the new scoreboard, and then shows a rough calculation of what the economic impact for the county would be. I am going to assume/hope there is more math going on behind the scenes in determining these numbers, as the methodology behind an accurate economic impact study is quite detailed. It’s an interesting angle, but I have to believe they’d be able to book some of these events even without a new scoreboard, and they are completely disregarding the potential loss that the team could get in both ticket sales and sponsorship assets if they don’t upgrade it themselves.

I reached out to my friend Brian Connolly of Victus Advisors, who is an expert in this area of research. He said, “Just because a new scoreboard is used during an event doesn’t mean that a) it’s the sole reason that event came to town, and that b) that event is attracting new dollars into the town that wouldn’t have been spent there otherwise. You need to meet both of those criteria to assign economic impact to a scoreboard.”

Ultimately, with the challenges that teams are having getting public money for venues, especially in that market (see the Miami Dolphins), I can’t see this approach working for the Panthers. If anything does happen to their current scoreboard, it will be interesting to see if Michael Yormark follows through with his position that they “just won’t have a scoreboard.”

UPDATE: I guess I was wrong – Broward County approved the measure by a 6-2 vote yesterday. Now I’ll admit that when I originally wrote this post, I thought the team owned the arena, but apparently the County does, so this makes a little more sense. However, I’m still not sure about how the economic impact of a scoreboard can be accurately determined.

Earlier this week, I conducted an email interview with Andrea Pagnanelli, CEO of LeapSeats (and a former colleague of mine) to learn more about her company.

First off, tell us, what is LeapSeats?

LeapSeats is an in-venue seat upgrade application designed to enhance the in-venue fan experience, while also improving the effectiveness of teams’ ticketing departments. LeapSeats focuses on lead generation, retention touchpoints, and maximizing revenue from all attendees through upgrades and selling new game-day inventory. Spectators simply download the app (or a teams’ app), scan the barcode, choose an upgrade, enter payment, and enjoy new seats.

You have a deep background in ticket sales. What from that experience pointed you to the value that LeapSeats might offer?

Working in ticket sales, you are trained to continuously think of new ways to drive revenue and bring more value to fans. With the landscape of technology in-venue changing, it was the perfect time to develop a product that accomplishes both these goals. We are rethinking the way organizations monetize unused ticket inventory, the way attendees purchase tickets, and the way organizations interact with their fans.

Is there a risk that LeapSeats could cannibalize a team’s own ticket sales efforts?

No. LeapSeats only sells any unsold ticket inventory on game-day.

How does LeapSeats compete with secondary ticket options?

LeapSeats does not compete with secondary ticket options; we are not a ticket marketplace. It is simply a tool for fans to utilize come game-day to get closer to the action and purchase unique experiences.

Can LeapSeats be used for teams that are traditionally sold out?

Yes, LeapSeats goes beyond offering seat upgrades. It can also offer unique and one of a kind experiences. We create new game-day inventory that doesn’t exist – think selling tours of an arena on game-day, pre-game field access, post-game photos, or any asset a group sales department does not move by game-day.

How do you see this space evolving over the next 3-5 years?

With the adaptation of Wi-Fi and DAS infrastructures in-venues, the smartphone is providing us with a new way to interact with our fans. I would anticipate more companies will develop technology and applications to capitalize on this market.

You can connect with Andrea via Twitter at @apagnanelli, on LinkedIn or by email at apagnanelli@rseventures.com.

I don’t really want to write much about what happened today, so I’ll keep it really short. First and foremost, my thoughts and prayers are with everyone affected by what happened today. Condolences to those that lost loved ones and a speedy recovery to those that were injured.

It’s really a sad thing that there are people in the world that would want to inflict harm like this on others, and maybe one day, this will change. The unfortunate thing about sporting events is that they can unfortunately present a target to these people, with lots of individuals gathered together in one place on a global stage. This is why security at all sporting events is so important and taken so seriously, from a local minor league game up to the Olympics and World Cup. JW Cannon on Twitter has already brought this up in two tweets:

You don’t know it yet, but your major event experience is about to change DRAMATICALLY from a security standpoint. #sportsbiz

— J.W. Cannon (@cannonjw) April 15, 2013

Always been amazing to me the amount of major events that happen w/ limited incidents like this. But now? Get ready for lockdown. #sportsbiz

— J.W. Cannon (@cannonjw) April 15, 2013

He’s right – in a time where most venues already go to incredible lengths in their security procedures, it’s going to get even stricter and more detailed. So I have messages for two audiences:

1.  To those of you who work in security and facility operations – thank you. I know your job is going to get that much tougher, but these events cannot succeed is a safe manner without all that you do. Take every precaution and tell us what we need to do to keep things safe. We are listening and we need your expertise more than ever.

2.  To fans that attend games – be patient and understanding. Yes, pat downs, metal detector wands and bag checks can slow things down, and if you show up at the last minute, you might not get in on time. But the staff at these venues do what they do to protect everyone. Be calm, wait in line and listen to what they ask of you. And if you remember to think of it, thank them for protecting you.

Again, my thoughts and prayers to those affected by today’s events, and here’s to hoping it’s the last time we see something like this at a sporting event (or any event) ever again.

Today’s post is courtesy of guest blogger Scott Radecic.

The fan experience is evolving and no one can deny it. Survey after survey shows that fans are less likely to attend a game and more likely to enjoy it from the comfort of their couch, where they can keep their eye on their fantasy football statistics and other games at the same time. Why you ask? There are more NFL, MLB, MLS and NHL fans than ever before with more access points- including television, the internet, smartphones and tablets. To be a fan, you don’t have to have season tickets; you simply have to have internet access. While this accessibility has allowed many sports to reach a record-high popularity, it has also left architects, stadium managers and owners exploring how to entice fans to return to the stadium once again. And they’re finding innovative ways to do it.

Now, architects and teams alike are taking cues from what fans enjoy most about the in-home experience – the unparalleled access to information and the comfort factor – and finding ways to transform their live in-game experience accordingly. In response to the current conditions, a number of stadiums have recently undergone large-scale renovations or simply built new, with the primary focus of these facilities being creating an experience that is intimate, driven by access to technology and other fans and in turn, providing clear value for the ticket price.

One of the best examples is at Sporting Park, home of the MLS’ Sporting Kansas City. The facility has become a benchmark for how to create an experience worth leaving the couch …and they’ve done it quickly and for a reasonable price. When Sporting Park opened in 2011, the team’s average attendance per game more than doubled, they went from being last in new season ticket sales to first in the MLS and went from last in merchandise sales, behind even generic MLS gear, to the top five in the league. Part of the success can be attributed to well-contrived rebranding plan and part of the credit should go to a strategic new stadium that encompasses the best in sports technology and creates an environment that is far and above the experience you would get from your recliner. Fans in Kansas City are suddenly re-energized and Sporting Kansas City has sold out nearly every game in their new facility.

The lessons learned at Sporting Park are ones that carry over to every sport- from Major League Baseball to hockey. Stadiums, in many ways, present teams with the opportunity to re-define their organizations and set a clear path toward long-term sustained growth and success. Coupled with the impact of the power of technological innovation on the long-term success of a facility, it is easy to understand teams’ and cities’ desire to renovate or build. They are aiming to create awe inspiring experiences that set a new standard for the fan experience and re-energize their teams. And at the end of the day, we know the intangible quality of experiencing a game among an energized crowd in a facility that offers the best of the best can keeps fans coming back and revenue coming in.

But what does this entail? This conversation is a constant in the lives of sports architects. How do you create that intangible feeling and what do the coming years have in store for the sports stadiums of the future? Sporting Park is a great example of where things are headed and there are a number of key factors that will impact new builds and renovations over the coming decade, including:

1. Fan Engagement

Fan engagement and the evolving expectations of the modern fan are undoubtedly at the core of the innovations we’ve seen in professional sports. We ask ourselves how can we capture the fans’ attention when they reach the stadium? How can we engage them outside of the game? How can we provide a memorable experience that makes it worthwhile to attend a game? There are a lot of ways to answer this, but it comes down to providing exclusive content, exclusive access and exclusive experiences. Architects are planning for bigger scoreboards and videoboards with clearer pictures. Teams are finding ways to improve the WiFi availability within stadiums so fans can stream content, monitor their fantasy football team and share their experience via social media all without losing track of the game in front of them. In addition, fans are looking to feel like they are part of something more intimate. They want to be able to share that they’ve seen or experienced something no one else has, so teams are adding smaller neighborhoods of seats within the stadium, from loge boxes to club seating, and as time and technology progresses, those fans may have access to athletes and to exclusive locker room, pre-game or sideline coverage.

2. Technology

Beyond just the technology being used, the way a fan actually engages with a game socially is becoming essential to the design and renovation of stadiums. Part of this is allowing for an intricate, extensive WiFi system, but it doesn’t stop there. There has to be serious consideration given to the behaviors of fans and how they’ve evolved. Fans now want to share what they are doing simultaneously and there is no indication that this is slowing down; therefore teams will likely adopt systems like the one at Sporting KC, where they are able to share videos and pictures in real-time that stream on one of the massive video boards in the stadium. In addition, access to apps that allow for concierge style service, instant replays and loyalty programs will be key. Further down the line, augmented reality and technology like Google Glass will allow fans to overlay information and perhaps even feel like they are on the field. In turn, specific spaces may be designed to accommodate this and the access to stats and data that fans don’t get at home will be sure to draw fans to the stadium.

3. Social gathering spaces

By repurposing currently under-utilized areas of the stadium, teams can create unique experiences that rival and exceed what you may get at home. This is done in a variety of ways, but most prominently by creating social gathering spaces, branded environments, various premium seating options and engaging sponsor access points. These social gathering spaces become experiences in themselves functioning as destinations within the destination. This may include a full-service sports bar with clear sightlines and a close proximity to the field or a technology hub, where fans can stop in and check stats, plug in their phones, browse the web and monitor other games all without losing site of the game in front of them.

This, of course, is just the beginning. There are no limitations to what the stadium experience may become over the coming decade. One thing is for sure: finding ways to create high-quality, technologically advanced and unique experiences is a never ending quest for architects and teams. Whether through branded social gathering spaces or the integration of the latest technology, creating destinations that draw people together and provide exclusive access will make the in-stadium experience something worth leaving the house for.

Scott Radecic is a Senior Principal at Populous, a global sports architecture firm, and a former NFL linebacker with the Buffalo Bills, Indianapolis Colts and Kansas City Chiefs. He currently oversees collegiate and NFL projects for the firm, providing strategic planning, budgeting and project management services.

Earlier this week, the Association of Luxury Suite Directors (ALSD) released a comprehensive report on The Corporate Ticket Marketplace (click here to download). In the era where corporations needs to make sure they maximize every dollar spent on corporate hospitality and the challenges that face premium sales staff, the information in this report is extremely valuable. It features:

• A detailed evaluation of the changing marketplace by Bill Dorsey, Chairman of ALSD.
• Analysis of what companies are spending on premium seating, by both industry type and company size, compiled by Ron Contorno of Full House Database Marketing and Dr. Heather Lawrence of Ohio University.
• Insights from interviews with 15 Fortune 100 companies on their use of premium seating, put together by Dr. Peter Titlebaum of University of Dayton and Dr. Heather Lawrence, Dr. Christopher Moberg, & Ms. Christina Ramos of Ohio University.
• Summary reports on the size of the premium seating market from ALSD’s research group.
• Changes in the ownership of premium seating as compiled by Dr. Peter Titlebaum.
• Detailed reports on how companies are using sports tickets, from Spotlight TMS.

Here are a few interesting facts from the report and one of the helpful charts provided by SpotlightTMS:

• There are approximately 30,000 suites and 800,000 clubs seats that comprise the premium seat marketplace in North America.
• In terms of dollar volume, the market has been conservatively estimated to generate $10 billion per year which only accounts for sports, not the concert or entertainment side of the equation.
• For a new building in a major market, premium seating now generates nearly 50% of the total ticketing revenue. Much of this income is not considered part of revenue sharing with the league or its franchises.
• The average ticket owned by a business is used to entertain $107,624 in potential or current revenue.
• Fortune 100 companies’ primary objectives for ticket usage include driving business growth and adding new business, retaining and providing hospitality to current clients to nurture an established relationship, and establishing relationships with teams and properties.

Credit: SpotlightTMS (Provided by ALSD)

Click here to download the full report from the ALSD website.

In addition, ALSD has organized a new event called the Corporate Ticketing Impact Conference (CTIC), taking place on April 16, 2013 at MetLife Stadium. This one-day event is designed to bring together buyers and sellers of premium seating so that corporations can share best practices to drive ROI and teams can gain better insight into their customers’ needs. Visit www.ctic2013.com  for more information.

Yesterday, I asked people working in the industry via the Twitter hashtag #gamedayvet to share some quick tips on how staff can improve the fan experience on gamedays. Just like last week, the response has been excellent. Here are all the great tips that people shared, and I will update this if more tips come in. What #gamedayvet question do you want me to ask next week?

Recently, several colleagues in the sports and entertainment industry have forwarded me an article from The Atlantic Magazine that calls into question the economic impact of sports venue projects. If you haven’t seen it, click here before reading on.

I think the author’s point is well taken that sports facility development projects have risks associated with them, as is the case with any large-scale real estate development project that is ultimately dependent on market factors. However, I strongly disagree with the flawed manner in which the writer approaches the concept of “economic impact”. The author’s approach reflects a common mistake that I see all too frequently in public discussion of economic impact reports.

The problem with the author’s approach is that the concept of economic impact is always relative. I often see news headlines that make statements such as, “The Economic Impact of Project X is Expected to be $2 Billion.” But without context, that is a nonsensical statement. In order to reasonably assess the economic impact of a project over a particular period of time, you need to define exactly what economy you are analyzing. For example, Jobing.com Arena in Glendale exists within any number of commonly defined economic areas, including:

• The Westgate City Center entertainment and retail complex,
• The City of Glendale,
• Maricopa County,
• The Phoenix metropolitan area (Maricopa and Pinal Counties),
• The State of Arizona,
• The United States of America, and
• The North American Free Trade Area (Canada, Mexico, and the United States).

Whether or not economic impact has occurred because of Jobing.com Arena is entirely dependent on which economic area you choose to analyze. This is the point that the author overlooks in The Atlantic article, and this mistake is most clearly seen when the writer incorrectly attempts to pit two arguments against each other. First, the author quotes a Glendale representative who cites the arena as an “economic engine for Glendale”. But then the author responds by saying that economists don’t seem to agree based upon the following quote from a Holy Cross economics professor: “It’s not generating new revenue. This is local spending on a local event.” The problem is that these are not actually opposing arguments. In fact, both the Glendale representative and the economics professor are correct.

The reason for this discrepancy is that the two quotes are referencing different economies. The first quote defines the economy as the City of Glendale. Every time a resident of the City of Phoenix attends a Coyotes game in Glendale, they are spending money from their entertainment budget in the Glendale economy rather than in the City of Phoenix’s economy. If Jobing.com Arena did not exist, that person would spend their entertainment budget elsewhere, either in the City of Phoenix or another City within the greater Phoenix area. From the perspective of the City of Glendale, the money that the Phoenix resident chooses to spend in Glendale on a game night is economic impact for Glendale.

At the same time, the Holy Cross professor is also correct, because his statement is focused on the “local economy” as a whole… i.e. the greater Phoenix metropolitan area. When the City of Glendale attracts entertainment spending away from the City of Phoenix, the gain for Glendale is equal to the loss for the City of Phoenix. So from the perspective of the greater Phoenix area as a whole, the two impacts net out. The City of Glendale is seeing a positive impact, the City of Phoenix is seeing a negative impact, but the net impact on the economy of the greater Phoenix area is zero.

So in the bigger picture, what does this all mean? It means your interpretation of economic impact data can vary widely depending on your particular perspective. If you’re a Glendale resident, you can reasonably see Jobing.com Arena as a venue that attracts economic impact to your City. (That said, whether or not the City’s ROI on the project justifies their initial and ongoing investments is another discussion entirely.) If you’re a Phoenix resident, you can justifiably view the Coyotes’ move from US Airways Center in downtown Phoenix to Jobing.com Arena in Glendale as a loss of entertainment spending to the suburbs. And if you live 2 hours away in Tucson, you’re probably wondering why it even matters, since to you it’s just a spending transfer from one part of the greater Phoenix economy to another.

The next time you see a news item that discusses the economic impact of a development project (sports or otherwise), just remember that your first question should always be, “What economy are we talking about?”

Brian Connolly is the founder of Victus Advisors, an independent consulting firm specializing in market research, financial advisory and economic impact analysis for sports franchises, athletic departments and sports & entertainment venues. You can e-mail him at bconnolly@victusadvisors.com or follow him on Twitter at @BrianHConnolly.

Earlier today, I asked people working in the industry to share their best tips for working gamedays via the hashtag #gamedayvet. I have to say, the response has been excellent. Here are all the great tips that people shared, grouped into common themes:

Sold-out premium seating? More of the same isn’t always a good thing

A few years ago, I conducted a premium seating demand study for a BCS-level college football program.* At the time, their football stadium offered two types of premium seating, suites and club seats located on a private level. The private suites had been constructed first and quickly sold out. The club seats were added a number of years later. They also sold out quickly, mainly to buyers from the suite waiting list.

When the athletic department engaged consultants, they were eyeing renovation/expansion of their football stadium to generate increased revenue and enhance their competitive position in their conference. With high-dollar suites sold out for 20+ years running, the first question the athletic department asked was, “How many more suites should we build?” Needless to say, they were shocked when research and analysis suggested they should demolish a number of their existing suites.

Are there any unique market fundamentals that effect demand?

Market research efforts (including interviews, surveys and focus groups) uncovered three underlying issues that were specific to this athletic program and had significant effects on premium seating demand:

1. Seating capacity of all private suites exceeded 20 people;
2. Suites were purchased primarily by individuals and families rather than large corporations, owing to the fact the school was not located within a major metropolitan market; and
3. The athletic department did not control and/or account for the practice of “suite sharing.”

In sum, the stadium was built with a high inventory of suite capacities ideally suited for large corporations. In contrast, these suites were sold to parties lacking the ability to fill the 20+ person capacity on their own. Suite buyers were turning around and selling the excess capacity to other parties desiring smaller blocks of seats.

The main flaw in the athletic department’s way of thinking was defining each suite as a stand-alone product, rather than viewing premium seating inventory in terms of each individual seat. Thanks to this flawed perspective, they failed to recognize that charging $60,000 for a 20-person suite ($3,000 per seat) is actually a loss of revenue relative to a configuration where two 10-person suites could each be sold for $35,000 (or $3,500 per seat).

What is the goal when designing a premium seating program?

The goal in analyzing demand for premium seating is to maximize revenue generated for each individual seat within your inventory. Inventory should be designed and sales packages developed so potential buyers can purchase each seat desired at the maximum price they are willing to pay. In the particular stadium from this case study, revenue potential was not being maximized from three particular types of buyers:

1. Some suite buyers were paying $3,000 per seat to share a suite, when they would have been willing to pay significantly more per seat for a smaller, private space of their own;
2. Some club seat buyers were paying $1,500 per seat for club seats, when they would have been willing to pay significantly more per seat for a private space that could accommodate their entire party; and,
3. Some lower-level season ticket buyers were paying $500 for general admission tickets, when they would have been willing to pay significantly more per seat for the stadium’s sold-out premium seats.

How do you maximize revenue?

The recommendations I provided were three-fold:

1. Reduce the number of 20-person suites to meet only the demand of companies and families that specifically desire suites with an extra-large capacity;
2. Replace the removed suites with smaller suites ranging in capacity from 8 to 12 people; and,
3. Build additional premium seating areas with loge boxes (with seating for 4 to 6 people each) and more club seating.

The following hypothetical chart shows the potential financial impact of re-configuring premium seating to reflect current market demand.

By making the recommended changes the athletic department could increase the total number of seats in their premium inventory by an estimated 1,250 seats while simultaneously boosting revenue per seat by nearly $50. Overall, they could generate approximately $2.7 million per year in incremental annual premium seating revenue.

Conclusion

Properties are often content with what they believe to be acceptable revenues from premium seats. Unfortunately, they may be operating under assumptions made when the facility was originally designed that do not match the nature of current market demand. When considering your next move to increase total revenue, premium seating configuration is often a great place to look.

* Seating inventories and financial figures have been changed for confidentiality.

Brian Connolly is the managing partner of Victus Advisors, an independent consulting firm specializing in market research and financial advisory for sports franchises, athletic departments and sports & entertainment venues. You can e-mail him at bconnolly@victusadvisors.com or follow him on Twitter at @BrianHConnolly. A version of this column also appeared in a previous edition of The Migala Report.

This summer, I have the opportunity to attend and speak at a couple of excellent conferences, one of which has already passed and two more that are right around the corner. I just wanted to take a minute to highlight each of them. Depending on your particular area of focus, I highly encourage you to attend one or more of these. In all cases, you will come away with new ideas and best practices that you can share with your own organization. And of course, the professional networking opportunities that these events offer cannot be undervalued!

- Sports Business Journal’s Facilities and Franchises & Ticketing Symposium

This event covers so many pressing topics for sports teams, leagues and venues, including ticket pricing, mobile, sales culture, social media, emerging revenue streams, facility management, corporate sponsorships and the fan experience.  I had the opportunity to speak about how teams can capture and convert data into ticket sales. While this event has passed, keep it on your radar for next summer, and in the meantime, enjoy SBJ’s blog recap of the conference here. I still hope to write some of my own session recaps in the coming weeks (time permitting).

- Association of Luxury Suite Directors (ALSD) Conference and Tradeshow / Venue Technology Group

For anyone working in a function related to premium seating (clubs, suites, hospitality, partnerships), this is probably the best resource to keep up with what the rest of the industry is doing. The conference offers deep dive sessions into all aspects of premium sales, service, retention, facilities and more, plus the tradeshow is full of new ideas for amenities you can add to your venue. In addition, ALSD has a dedicated IT track called the Venue Technology Group, which covers the infrastructure, application development, sales technology, CRM and more that any modern venue needs to deliver a quality customer experience.

The conference actually starts this Saturday in Minneapolis, so it’s not too late to attend. I will be speaking the last day on the value of CRM for premium sales and service initiatives. If you can’t attend, make sure to follow the #ALSD2012 hashtag on Twitter!

- Sports & Entertainment Alliance in Technology (SEAT) Conference

Finally, for those on the technology side of the business, SEAT is completely dedicated to the IT needs of any sports organization. Topics include digital signage, mobile access, venue infrastructure, data security, social media, application development and more. This year, the conference has also created a special full-day CRM and Database Marketing track, which over the course of the day will cover everything from project planning and vendor selection to leveraging analytics and social media integration. I will be talking as part of this track, specifically on short-term and long-term strategies to maximize the benefits of a CRM deployment.

SEAT takes place August 5-8 in Boston, so there is plenty of time to sign up and attend. In the meantime, you can follow them at @SEATConference on Twitter – I’m sure there will be a hashtag once the event starts!

If you are thinking about attending or going to attend either ALSD or SEAT, please reach out so we can connect at either event!