Written by Umberto Pelà (07.04.2024)
To the average fan, owning a stadium might not seem like a box to check off early on in a club’s development. After all, games are won solely on the field; it is the players that do it all. Right?
I’d beg to differ. As the world of football becomes more global than ever and clubs are run more like businesses, financial components come to play instrumental roles in club’s success. Stadiums, nowadays, are much more than just a venue for fans to gather and cheer on their favorite teams. When built to fit the modern-day requirements, stadiums can be utilized year-round to generate a myriad of benefits.
Above all, financially, a new stadium owned by the club represents an increase in a tangible asset. Owning a stadium, if paid for through healthy debt and backed by strong business plans that will allow for the club to repay the debt efficiently, will create an increase to the asset side of a club’s balance sheet, thus increasing the club’s value (in the long-run, once the liabilities such as debt and interest are repaid).
Furthermore, being a piece of real estate, stadiums are likely to appreciate in value over time. While this is arguably dependent on various factors such as location and demand for a stadium in its geographical location, stadiums can be an important piece of real estate to own as they enhance the club’s financial stability and potential borrowing power. This is because, when asking for liquid cash from banks, for example, clubs will have some substantial form of collateral to offer. If we then consider that stadiums are pivotal assets (and machines) in revenue generation for clubs, it seems logical that a club would want to maximize their chances of generating revenue with a modern, attractive stadium. Ticket sales, concessions, merchandise, and parking fees are all forms of matchday revenue which bring in substantial revenue for clubs. In 2023, for instance, Manchester United brought in “$173M in matchday revenue”.
On top of that, when stadiums are built for full-year use, non-matchday revenue also becomes an important stream of revenue. Take the newly-built Tottenham Hotspur Stadium in London: the stadium is used 365 days per year for concerts, fan experiences, and much more. Being able to generate revenue through non-matchday activities was monumental in Tottenham Hotspur’s 24% increase in revenue from 2022 to 2023. On top of that, the intangible package that comes with the activities is an aspect that must also be taken into consideration. By allowing everyone to connect with the Tottenham Hotspur brand – whether that is through club-related activities such as Stadium Tours or extra-club activities such as concerts – the club is automatically increasing the level of prestige that is associated with its name.
How does a fan that travels across the world to see their favorite team and their stadium feel when they see such state-of-the-art facilities? In turn, what does this do for the club? It creates greater brand awareness and fan loyalty — which will likely eventually lead to extra revenue through commercial revenues (tickets for games in the future or apparel, for example). Finally, a stadium also offers potential for additional revenue through naming rights and sponsorships. For example, “according to football finance expert Łukasz Bączek”, champions of England Manchester City receive £15 million a year from Etihad Airways for the naming rights to its stadium. Not exactly pennies.
The business of football presents such a fascinating landscape to me for one simple reason. It is exactly like every other business, yet the fact that fans are so heavily involved makes sure that the decision-making process of people high up within organizations takes into consideration what the fans truly want. When I say stadiums are important for clubs, it is because they are built to serve the fans who crave engagement with their favorite clubs. In the long-run, this will always lead to financial benefits for clubs, too. It’s a win-win situation.
On top of what you see on the balance sheet, stadiums are important for a variety of other reasons. First of all, they allow clubs to enhance fan experience massively. Seating comfort, acoustics, distance to the pitch – these factors all add up in improving fan loyalty as they enjoy their times and create environments that are dreaded from opposition teams. On top of that, stadium development projects often incentivize state-funded or city-funded development. Mayors and politicians would hate to be scrutinized by fans — especially in countries like Italy, where football is on par with religion. That form of city-funded development may come in the form of public transport – which is always a plus – or construction of parks, for example, which in turn can lead to general appraisal in value of the real estate surrounding the stadium.
Owning a stadium also allows a club to tailor the fans’ experience to develop their brand image and expand their fanbase. Modern stadiums are symbols of development, embodying the club’s heritage and becoming landmarks associated with their forward-thinking identities. Being able to decide “where stuff will go”, in simple terms, is also a great chance for marketing departments to thrive. As of recent, for example, premium hospitality experiences within stadiums from Europe’s top 5 leagues have fans walk on the field and enjoy the match from just a few yards of distance from the players. Owning a stadium also allows for the club to explore opportunities of involvement within the community. Facilities can be utilized for community events or eventually become symbols for tourism, integrating the stadium within the culture of the city it finds itself in. Finally, and most relevantly to the Italian landscape, clubs earn a great deal of strategic flexibility. Event hosting, training and development, and no concerns in regards to sharing the grounds are just some of the ways in which clubs are able to execute their plans with no issues. Inter and AC Milan, for example, spend significant amounts of cash to restyle the stadium every weekend to their preferred colors, and have to plan around their rivals’ match days if they want to host any events.
Intuitively, one may ask, why doesn’t every club in the world own a stadium? Why are there only 7 club-owned stadiums in Italy?
First of all, it isn’t cheap. Stadiums and their prices can range immensely depending on their geographical location and size. Lower.com Field (20 000 capacity) of the Columbus Crew in the MLS, for instance, cost a reported $314M with construction being completed in July 2021. For comparison, Juventus’ Allianz Stadium (40 000 capacity) cost a reported €125M and it was completed in 2011. Costs like these can be prohibitive for the majority of clubs around the world — not just Italy. Plus, even if those costs weren’t considered to be prohibitive, financing constructions like these can be stressful. Lack of assets or low credit scores won’t facilitate obtaining loans, and oscillating, high interest rates make it unappealing for many. If on top of that, you consider the socio-political factors that characterize the Italian landscape, it is easier to paint the picture as to why the majority of Italian clubs do not own stadiums.
In Italy, when it comes to building stadiums, many hurdles need to be overcome before a stadium is physically built. Regulations on zoning laws and environmental impact assessments, for example, are the first of many obstacles. Local, regional, and national approvals come next, as their requirements are a necessity before construction plans are allowed to start. Further, each of these governmental levels have their own procedures and timelines, and, as a result, delays are very frequent. This slows progress massively and often creates frustration, which in turn makes the process of obtaining all the necessary permits painfully slow. Finally, even if all of the permits were to be obtained, stadiums need to be accepted socially. Italy and Italians have had a notoriously tough time accepting radical change. The ‘San Siro’ Stadium in Milan, a historic yet decaying landmark, is considered by a significant portion of the population as a stadium that shouldn’t be taken down for a rebuild. Keep in mind, this same stadium has had structural issues for over 5 years now, with its third ring “oscillating up to 5 cm as the crowd jumped” celebrating a goal. The nostalgic factor often plays that role with Italian fans — halting development, too.
A model that for me, should be followed by all Italian clubs, is Juventus’ and their now-Allianz Stadium. As briefly mentioned, the stadium was built in 2011 and cost the club approximately €125M. Seating 40,000 fans, the stadium brought all of the benefits discussed throughout the article. Unlike rivals Inter and AC Milan, Juventus makes money off of their stadium. The Milanese clubs, instead, have to pay each year a sum reportedly close to €8M to play at the San Siro. Folly.
Unfortunately, for now, Italy and Italian clubs will continue to stagnate in environments that do not promote modernity. And the worst thing is that, because it’s about socio-political dilemmas, that won’t change any time soon.
Now ask me what I would change about Italian culture.
Sources Cited:
Football Italia. “San Siro Third Tier Oscillated.” Accessed April 7, 2024. https://football-italia.net/san-siro-third-tier-oscillated/.
TeamUES. “Lower.com Field.” Accessed April 7, 2024. https://www.teamues.com/project/lower-com-field/#:~:text=Construction%20began%20in%20October%202019,fans%20closer%20to%20the%20pitch.
Transfermarkt. “Juventus Stadium.” Accessed April 7, 2024. https://www.transfermarkt.us/juventus-turin/stadion/verein/506.
Money.it. “Stadi di Calcio di Proprietà in Italia: Quali Sono e Perché Sono Pochi.” Accessed April 7, 2024. https://www.money.it/stadi-calcio-proprieta-italia-quali-sono-perche-pochi#:~:text=Come%20detto%20in%20Italia%20la,Italia%20di%20propriet%C3%A0%20dei%20club.
Statista. “Revenue Segmentation of Manchester United.” Accessed April 7, 2024. https://www.statista.com/statistics/267743/revenue-segmentation-of-manchester-united/.
Reuters. “Spurs Revenue Crosses Half a Billion Pounds for the First Time as Club Posts Loss.” Last modified April 3, 2024. Accessed April 7, 2024. https://www.reuters.com/sports/soccer/spurs-revenue-crosses-half-billion-pounds-first-time-club-posts-loss-2024-04-03/.
Forbes. Garner-Purkis, Zak. “Manchester City’s Infamous 10-Year Deal Enters Its Final Chapter.” Last modified July 27, 2020. Accessed April 7, 2024. https://www.forbes.com/sites/zakgarnerpurkis/2020/07/27/manchester-citys-infamous-10-year-deal-enters-its-final-chapter/.