Interview Transcript

A famous football stadium is currently experiencing stagnation. As a consultant, your role is to provide strategic recommendations for the same.

 So just to clarify the objective, a famous football stadium is experiencing no growth and ways need to be figured out to increase its growth rate? 

Yes, you are right.

 Is the stadium targeting short-term growth or long-term growth? Additionally, When was the stadium established, and is it home to a legacy club? 

The objective is to develop a strategy that would help in increased returns over a longer period. Yes, it is a legacy club operating on a large scale for the past 20 years.

 Alright. Could you tell me about the maximum seating capacity and occupancy? 

The maximum seating capacity is 100000 and the occupancy rate during a high-stakes match is about 95% and in general, it is about 85%.

 Are there any expansion plans on the horizon for the stadium or any changes in the operational frequency? 

No, as per the current regulations and league commitments, we cannot do that as of now. Try to navigate through a general football cycle. 

Considering a general football cycle, about 3-4 months are utilized for intra-league practice matches or intra-league sessions. The remaining 5-6 months are peak match seasons wherein the stadium is being used for different tournaments. That leaves us with 3 months when there is uncertainty about stadium utility.

 Yes, in the 3 off-season months, utility is approximately 20-30% only, owing to only tourist visits. 

To ensure maximum utility, could we repurpose the stadium during these months? 

Yes, please go ahead and explore options for alternative utility in these months.

 For repurposing, we could separate the stadium’s identity from the club. Various avenues could be explored, a few of them being:

1. Concerts can be a major revenue source for a football stadium with the right sponsors and ticket pricing.
2. Iconic bars can be set up in and near the stadium to generate user traction & increase the LTV of the attendees.
3. Since it is a legacy club, exhibitions will be a very suitable option to increase footfall & utility in the off-season phase.
4. Pre-season events are a great way to increase the interest and anticipation of matches as well as to generate some additional income in the off-season phase. 

Out of these, two of the ideas: concerts and pre-season events could be incorporated. Throw some light on the concert element. Explore if this avenue is financially feasible and economically viable.

I would like to begin by enlisting the various costs involved in conducting a concert. These would include stage construction costs, backstage set-up costs, sound systems costs, seats, and acoustic improvements. Additionally, there would be some logistical costs like security and crowd control, electricity and utility, ticketing systems, vendors, maintenance & marketing. Do we have any information about these expenses? 

Yes, refer to exhibit 1 for the expenses.

 So to check this idea’s financial viability, we would need to do a guesstimate to estimate revenue per concert. Shall I proceed? 

Yes, you can proceed with the guesstimate

. So for the total revenue earned by a concert, I will be adding up the 5 major sources of revenue for a concert-hosting stadium. They are: Ticketing revenue, revenue from stalls, revenue from brand sponsorships, revenue from parking, and revenue from the artist. Does this approach work?

 Yes, continue with this approach.

 So for ticketing revenue, we will take a 10-30-60 divide for the proportion of high, medium, and lowpriced tickets, with their respective prices being 500$,300$, and 150$. We will be taking the occupancy for a concert to be 80,000 i.e. 80%. Are these numbers fair?

 Yes, you can go ahead with these numbers.

 Okay, so the ticketing revenue comes up to be $4 million from high-priced tickets, and $7.2 million each from medium and low-priced tickets. Total ticketing revenue comes out to be approximately $18.4 million. Now we will be paying a major share of the ticketing revenue to the artist. Assuming the industry average which is about 30%, revenue left for us comes out to be $5.52 million.

Fine, you can explore the other sources now

Coming to stalls, there can be 2 types of stalls, food and games. Assuming that 40% people grab something to eat and that the average ticket size is 15$, and 20% people pay for games at an average ticket size of 10$, revenue from stalls comes out to be $640 K. If the stadium charges them 25% of revenue, revenue for us remains $160 K. Now for revenue from brand sponsors, assuming a 30% revenue of ticketing sales to be received from brand deals, the number comes out to be $5.5 million. Are these assumptions fine?

Yes, these assumptions are valid, you may proceed.

Now, for parking, assuming 20% of people come by their vehicles and that the parking ticket is 5$, revenue from parking comes out to be $80 K. For revenue from artists, since the stadium is of a legacy club with high occupancy, I believe charging artists $10 million for renting the stadium for a concert is a fair ask.

 That is a fair assumption. So what is the final annual revenue the stadium can expect?

 Adding all these up, the stadium can expect a revenue of $21.28 million per concert. How many concerts per year can we expect to have, to come up to a yearly revenue figure?

 We can have these concerts once every two months, so 6.

 So the projected annual revenue from these concerts comes up to be approximately $127.68 million. Coming to costs, our per concert cost stands at $9 million, which comes up to be an annual cost of $54 million. Return on investment for hosting such concerts comes out to be $127.68 million/$54 million * 100 = 236.44%, giving the stadium an annual profit of $73.68 million. Therefore, in conclusion, hosting concerts would be an economically viable and financially lucrative idea for utilizing the stadium for the three off-season months.

 Good job on the financial aspect! You are now required to provide a few more suggestions for marketing purposes.

For marketing, the stadium can inculcate these activities: 1) Fan meet-ups: People who come to the concerts get a chance to meet with their favorite players of the club. 2) Guest appearance: The special appearance of some prominent football players in between the concerts would boost its popularity. 3) Direct marketing: Since the tickets for football games are almost always sold out, directly marketing the concertsto them would be a good idea. 4) Social media: Leveraging the large following of a legacy club, we can create hype and teasers about an exciting project. 5) TV advertisements: Running the concert advertisements while a home game is being aired would directly aim at our target audience.

Great, thank you for your time.

Case Facts

• Famous football stadium experiencing constant growth. 
• Football stadium belongs to a legacy club.
• The occupancy rate is 80%.
• The number of matches or seats cannot be increased.
• Stadium faces utility issues in the off-season (only 20-30%).