Why Stadiums Are Increasingly Crucial to Football Clubs' Commercial Strategies

Use your ← → (arrow) keys to browse more stories
Why Stadiums Are Increasingly Crucial to Football Clubs' Commercial Strategies
Yadid Levy/Robert Harding/Associated Press
Munich's Allianz Arena

The Santiago Bernabeu revamp, the Etihad Stadium and the Anfield regeneration—it’s been a busy few weeks for high-profile stadium projects for high-profile football clubs.

From rebranding, modernization to capacity increases, stadium refurbishments and new stadium projects are becoming headline hitters for the amount of money they involve and the scale of commercial ambition they suggest.

The three examples above are some of the biggest news involving football stadia in recent weeks, but are by no means isolated cases: A big part of the discussions involving New York City FC and David Beckham’s fellow new Major League Soccer venture in Miami also revolve around the kind of venue and arena they select and subsequently develop.

It’s not just about Real Madrid, Manchester City and Liverpool: A look across the top clubs in Europe shows that besides stadium capacity and modern architecture, stadium experience also matters to fans and, increasingly, football clubs.

We’ve always known that the live experience of a football match inside a stadium is a defining part of being a football fan, and one of the key factors that continue to pull in match-day revenue despite rising ticket prices, especially in the Premier League.

But now we’re seeing that football stadia are increasingly crucial to the commercial strategies of football clubs for a variety of different reasons. Let’s explore some of them with a few brief case studies.

 

Matt Dunham/Associated Press

Corporate Sponsorships: Arsenal’s Emirates Stadium

The first example that comes to mind is Arsenal’s move from Highbury to the Emirates Stadium in 2006.

Known as the “Home of Football” previously, Highbury was famous for its small pitch and the proximity of the pitch to the stands, and thus for its atmosphere.

While its peak capacity was in excess of 70,000, Highbury had to be reworked due to the Taylor report on the Hillsborough disaster in 1989, which recommended that football stadia in England become all-seaters. For the majority of the Premier League era, Highbury was known for being one of the most compact stadia for a top football club: They only seated around 38,000 fans every week.

Naturally, this posed problems for the Gunners, especially as they were building their fanbase and were looking to challenge Manchester United on the domestic front. While Arsenal were scraping by with gate receipts from 38,000 fans a week, Old Trafford had expanded to 55,000 seats by 1996, which meant a corresponding increase of matchday revenue for United.

With Arsenal’s decision to move into a new stadium at Ashburton Grove, so they leapt forward into the 21st century and fully embraced any corporate sponsorship and strategic partnerships as they came forward.

Not only did they start fully adopting a transfer policy of buying young and cheap and selling high to maximize financial return—helped by the astute Arsene Wenger, who holds a degree in economics—but they also explored commercial initiatives to alleviate a significant potential burden in financing their new stadium.

Granada Media took a 5 percent stake in the club by investing £47 million, as reported by the Guardian, while Nike signed a new shirt sponsorship deal with Arsenal for a reported £130 million, according to the BBC. (Puma have since replaced Nike as kit makers in a lucrative deal announced this January by the BBC.)

In 2004, Arsenal added to their coffers with a £100 million naming rights deal with Emirates Airlines, which at the time was reportedly “by far the biggest deal ever undertaken in English football,” according to the BBC.

Out of the total £390 million that the Emirates Stadium cost, three major sponsorships footed at least £277 million, and in January last year, Arsene Wenger publicly stated that Arsenal had finally finished paying off their loans for their new stadium and would be ready to finance big-name signings, as reported by the Daily Mail. He stayed true to his word by smashing the Gunners’ transfer record with the deadline-day signing of Mesut Ozil.

As seen from their stadium move, Arsenal transitioned into the corporate age of football and became a commercial giant in the process. With their existing deals set to end and new, lucrative partnerships about to kick in, the Gunners may finally realize their full potential on the pitch with their advances off the pitch. The Emirates Stadium provided a platform and opportunity for Arsenal to become a modern, commercial organization.

 

Jan Pitman/Getty Images

Tournaments and International Prestige: Bayern Munich’s Allianz Arena

This January, Bayern Munich revealed plans to increase its Allianz Arena home stadium from its current capacity of 71,137 to 75,000, as reported by ESPNFC.

The expansion plans will only boost Bayern up the stadium capacity ranks in Germany by one position, above Hertha Berlin’s Olympiastadium and behind Borussia Dortmund’s Signal Iduna Park, but Bayern’s ambitions, as we saw from their summer appointment of Pep Guardiola to take over from treble-winning Jupp Heynckes, aren’t limited to domestic triumph.

Consider the stadium’s use planned from the get-go: Since opening in 2005 with one of the most widely recognized exterior stadium designs in world football, it has been the home stadium of both of Munich’s professional football clubs, Bayern Munich and TSV 1860 Munchen, as well as a frequent host of the German national team.

Then there are the finances. In this 2013 article by the Economist, Bayern’s total revenue in 2012 was the fourth highest in the world, after Real Madrid, Barcelona and Manchester United. The nearest challenger from within Germany was Borussia Dortmund with €189.1 million, about half of Bayern’s €368.4 million.

Yes: The same Borussia Dortmund who finished second to Bayern in both the Champions League and the Bundesliga in 2013 had just half the total revenue of Bayern.

Having conquered home soil, Bayern are going after world domination, and with a new stadium, they can place themselves at the forefront of German football—if they weren’t there already.

They have 2020 in their sights. Named as Germany’s candidate city for the 2020 European Championships, which will be taking place across European cities, Munich will be bidding for “Package A,” which includes three group-stage matches and one last-16 or quarterfinal fixture, and “Package B,” which includes both semifinals and the final.

The problem at the moment is that UEFA’s requirements are that stadia must meet 70,000 seats to qualify to host matches in the tournament: As Allianz Arena’s capacity is reduced to 67,812 for international games and UEFA competitions, it currently falls just shy.

Of course, there’s no stadium expansion or corporate super-club that doesn’t have its fair share of commercial deals and strategic alliances: The Economist article quoted above has plenty of coverage of Bayern’s considerable financial might as a result of their sponsorship deals, all the while operating in the Bundesliga context that mandates not more than 49 percent of football clubs can be owned by corporations.

 

Denis Doyle/Getty Images

The Next Level: Real Madrid’s Santiago Bernabeu

For around just £60 million (lower than what Cristiano Ronaldo cost) less than what Arsenal’s Emirates Stadium cost to build, Real Madrid are redeveloping their iconic Santiago Bernabeu stadium for a whopping £328 million (€400 million).

According to the Guardian, Real Madrid president Florentino Perez didn’t mince any words in his proclamations for his club’s goals: “It’s time to face another challenge; we want to make the Santiago Bernabeu the best stadium in the world.”

Currently seating 81,044, the Bernabeu is already one of the biggest in world football, but with the planned redevelopments, according to Marca, it will become the third-largest five-star stadium in the world with 93,000 seats, behind Barcelona’s Camp Nou and the Azteca Stadium.

But it’s not purely about capacity expansion: A quick look at the mockups shown by the Mirror shows the sheer scale of Los Blancos’ ambitions. They will be building an entirely new exterior and adding a retractable roof, in addition to expanding the lucrative VIP areas and corporate box offerings like those at the new Wembley, which Marca say generate at least €10 million a year alone.

As ever with football stadia these days, the Mirror claim that Real Madrid are looking to negotiate a lucrative naming rights partnership, with Microsoft and Coca-Cola as strong contenders to land a potentially record-breaking deal.

In a league where Real Madrid and Barcelona dominate television revenues due to a lopsided arrangement that earn them about 6.5 times the smallest team in La Liga, according to Bloomberg, despite an impending law that is expected to reduce this inequity, the dominance of Madrid will continue to hold when their redeveloped stadium opens for use.

The politics and implications of reducing the financial duopoly of the el Clasico teams are best left for another article to dissect, but while Madrid may not be able to recoup their eye-watering TV revenues in the short to medium term, their new stadium may provide a very comfortable cushion.

Not that Barcelona will be left behind, though. They’ve already put their own stadium expansion proposal to a vote this April: The upgraded Camp Nou would seat 105,000 fans, surpassing the Azteca Stadium’s capacity and becoming the biggest football stadium in the world. It would cost a whopping €600 million, according to ESPNFC.

The duopoly goes on.

 

Sharon Latham/Associated Press

A Footballing Empire: Manchester City’s Etihad Stadium

Football clubs don’t seem to be content on just winning on the pitch anymore. Our last case study will be on Manchester City, who have caught the eye not just with their achievements in the Premier League and their star-studded squad, but also with their remarkable expansions across the globe.

Their entry into Major League Soccer with New York City FC has already been well-publicized and much anticipated, and just this January they extended their already considerable footballing might into Australia with their acquisition of the A-League’s Melbourne Heart, as reported by the Guardian.

With their tentacles spreading across the globe, City are well and truly building a footballing empire, and right at the middle of this are a few architectural projects back in Manchester.

If Arsenal, Bayern Munich and Real Madrid have all capitalized on their existing fanbases and historical success and catapulted into the 21st-century super-club, Manchester City have broken emphatically into that category in just a few years.

According to the Manchester Evening News, City’s commercial deals in 2012 helped them to increase revenue by 51 percent to become the seventh highest-earning club in the world, behind Arsenal, Chelsea and the aforementioned big three.

Besides City’s well-regarded social media campaigns and money-spinning world tours, they are also going ahead with plans to increase the capacity of their Etihad Stadium from 48,000 to 62,000, which would make it the second-largest stadium in the English top flight and take them into the realm of the European footballing elite.

And just like Florentino Perez of Real Madrid, City’s power brokers have been vocal in their ambitions for their team: Chief operating officer Tom Glick claimed that Manchester would have two of the top-five clubs in terms of worldwide revenues by the end of 2014.

If, as reported by the BBC, the Etihad expansion will be completed by the 2015-2016 season, then City will have with them a mighty financial arsenal in just a couple of seasons’ time. A far cry from its initial capacity of 38,000, and a development fit for an empire.

By that time, however, they might have a new competitor to deal with: Liverpool, who have continued to be a fixture in the top 10 of Deloitte’s Money League for the past few years, despite being the only club there without Champions League football, look ready to return to the European big time.

And, according to the Telegraph, they are planning to submit their own redevelopment proposals for Anfield by the end of the 2013/14 season.

 

Follow @vincetalksfooty

Load More Stories

Follow B/R on Facebook

Team StreamTM

Out of Bounds

MMA

Subscribe Now

We will never share your email address

Thanks for signing up.