ABSTRACT
A team and its owner may benefit from a new stadium in numerous ways. A new facility can generate substantial increases in revenues from tickets, concessions, sponsorship, merchandise, personal seat licenses (PSLs), luxury suites, and other premium seating, because customers demand-and are willing to pay for-better seating and atmosphere, food, restrooms, amenities, and access. When NFL teams move into a new stadium, they witness an increase of about 85% in local revenues that are not shared with other teams and see an increase in franchise values of 35% (Brown, Nagel, McEvoy, & Rascher, 2004). MLB teams gain an additional 65% in local revenues in the first year of a new stadium (Clapp & Hakes, 2005). Another advantage is that a new facility can reduce the effect of winning on franchise revenues, by as much as half in the NFL (Rascher, Brown, Nagel, and McEvoy, 2012). This is because wins and losses are less important in getting fans to attend games at the new stadium. Instead, fans care about the experience that the new stadium offers. Fans attend games in a new facility partly because of the facility and not solely because of the team’s performance. This can smooth out overall revenues and budgets for years, lowering financial risk (and borrowing rates).
