STADIUM ECONOMICS: SPENDING BILLIONS ON EMPTY SEATS

CHRIS BEATTIE

Division Manager Venues & Facilities

in Sport

December 12, 2017

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When it comes to stadia, bigger doesn’t necessarily mean better. Governments and taxpayers can save hundreds of millions of dollars by ‘right sizing’ venues to match the needs of sports and fans.

The NSW Government decision to invest approximately $2 billion in the bulldozing of Allianz Stadium and ANZ Stadium has come with significant public criticism.

At last count, a public petition launched by former Wallaby Peter FitzSimons against the decision had over 135,000 signatures.

Now I’m not here to argue the merits of building stadiums over investment in community facilities, schools and hospitals. That’s a fool’s game. It’s an unwinnable argument.

What I will say is that major venues like ANZ Stadium and Allianz Stadium play an important role in our society. Like art galleries, museums and other cultural infrastructure, they enhance the livability of NSW and generate considerable economic and social benefits. In Australia, it’s largely the role of governments to fund stadium development, amongst many other competing priorities.

Despite what some in the media are stating, the Sydney venues in question aren’t in great condition. They are aging design and build are not meeting current needs or contemporary expectations of a Sydney that wants to be a world-class sport and major event city.

Granted, ANZ Stadium was only opened in 1999, however it was purpose built for the Sydney Olympics; its oval configuration was retrofitted in an attempt to meet needs post the Olympics. Allianz Stadium, opened in 1988, is now old and tired. It was once Sydney’s (and Australia’s) premier venue for rectangular sports. Those who have visited recently understand that it is a far cry from that now.

Like everything else in modern society, the lifespan of a major venue is getting shorter, with the need for major refurbishment and redevelopment materialising quicker than ever before. Interstate and international competition for major events is increasing, and combined with recent developments in South Australia, Western Australia and Queensland, the need for the NSW Government to act becomes clear. Regardless of whether it’s major refurbishment of the existing venues or complete new builds, significant investment is required.

In Australia we appear to have an infatuation with maximising capacity. Governments (and some sports orgnisations) want big stadiums with massive capacity to cater for one-off or irregular major events. “It needs to be 60,000”, they say.

Really? Perth Stadium will be a world-class venue when it opens next year. That is undisputed.  However, at 60,000 capacity, they’ve overshot the mark. AFL is ‘the biggest game in town’ in the West. But the average crowd at the 43,500 capacity Subiaco Oval over the past five years is approximately 35,400. The new stadium will no doubt generate renewed interest and the average crowd will likely increase (as has occurred with AFL at Adelaide Oval), however I can’t see that 60,000 is justified.

When planning a new venue or redeveloping an existing one, determining optimal capacity is critical. Why not ‘right size’ venues based on need? Why not build a venue with a capacity that is closer to the regular average attendance and have it full more often, rather than a venue that is half empty (or less), most of the time?

Seats cost money. By right-sizing stadiums, governments would reduce the upfront capital costs, plus ongoing operational and maintenance expense, therefore lessening the burden on venue operators. This will benefit end users; the teams, members, supporters etc. through reduced pressure on hire fees, ticket prices, cost of food and beverage etc.  It’s also going to help the taxpayer.

It’s not just economics. Optimising venue capacity will also create more intimate environments for fans, lead to enhanced atmosphere both live in venue and broadcast, as well as improve the overall match day-experience.

Once redeveloped, ANZ Stadium will be the premier rectangular stadium in Australia. At a capacity of 75,000 (presently 83,500), and with all the bells and whistles intended, it will eclipse all other rectangular venues in the country. But is 75,000 really justified? Aside from State of Origin and the NRL Grand Final, the existing venue rarely sells out. A 60,000 capacity venue makes much more sense, or 65,000 at most, from an economic and a need perspective. The venue is cheaper to build and maintain, and would barely lose any of its appeal for events globally or domestically.

Based on a rough ‘cost per seat’ calculation, a 75,000 capacity ANZ Stadium at $1.25 billion, equates to $16,667 per seat. Let’s say the proposed venue capacity was reduced to 60,000. Using the ‘cost per seat’ methodology, that would be an upfront capital saving of approximately $250 million, before even considering the ongoing operational and maintenance savings.

Now let’s look at Allianz Stadium, with a current capacity of 45,500. In the most recent seasons of A-League, NRL and Super Rugby, including finals, average crowds were approximately 17,900, 15,700 and 14,500 respectively across 37 events. Only three of these events attracted more than 40,000 fans; the A-League Grand Final, a Sydney FC v Wanderers Derby and the Roosters v Dragons ANZAC Day NRL match. The two most recent Wallabies’ games at Allianz Stadium attracted crowds of 30,721 (versus Scotland in June this year) and 44,063 (versus England in June 2016). The most recent Socceroos game, versus UAE in June this year, attracted a crowd of 27,328.

So, of the nearly 40 sporting events above, only four demanded a venue capacity of 40,000+. So why is a new 45,000 seat venue proposed for Moore Park?  Why not 35,000, or even 30,000, given that the venue will be less than half full most of the time?

Again, based on the ‘cost per seat’ methodology, a venue of 35,000 capacity could save the Government in the vicinity of $150 million that maybe could be invested elsewhere.

I understand that some people will make an argument for the proposed capacity numbers…  Like “What if we host the World Cup? What about Adele? Coldplay pull a massive crowd!” Sure, but these rare events are not an excuse for over-investing in essentially temporary infrastructure. With finite resources and competing government and community priorities, the case for building and maintaining stadium seats that will rarely have a bum sitting on them is questionable at best. Let’s right size our venues and strike the right balance between capacity and economics.