Monday, August 13, 2007

New stadia deliver revenue boost to English clubs

English football clubs that move to a new stadium see turnover increase by an average 66 percent in their first season at the new ground, a study by accountancy firm Deloitte has suggested. The two thirds increase in earnings does not take into account income clubs make from their share of media broadcast rights. English clubs have spent £2.2 billion on new grounds since 1992/3 of which about £500 million was invested by clubs outside the Premier League, such as Hull City and Stoke City.

Higher attendances and greater income from corporate hospitality are the main drivers boosting revenue, the report said but it warned that without a good performance on the pitch the "new stadium effect" often wore off quickly. "The club's performance on the pitch has to measure up to the quality of the new facilities to maintain attendance at the new, higher, levels particularly among the recent converts to following the club live," said Mark Roberts, senior consultant at Deloitte's Sports Business Group.

Deloitte said average attendances increased by an average of 51 prercent when teams moved to a new ground. Middlesbrough made the most of its switch to the Riverside Stadium with crowds surging by 146 percent when it first moved. Arsenal and Manchester City are among the teams that have recently moved to new grounds, while clubs including Sunderland and Wigan Athletic have also uprooted in the past 10 years.

The catalyst for building new all-seater grounds came from the Taylor Report, commissioned in the aftermath of the 1989 Hillsborough disaster. But while this had provided the impetus, the levels of revenue growth "illustrate the fact that stadium investment can deliver significant element of a successful club business strategy," Roberts said but warned it was important for clubs to research proposed developments fully to ensure that there was a genuine need for a new stadium, and that the move would generate a financial return.

"Unfortunately, we have seen some clubs press ahead with stadium development plans without the evidence to substantiate the proposed development," he said. "In these cases development plans often tend to come unstuck when funding for the plans is sought, or, worse still, a white elephant is born."

HOW STADIA BOOST REVENUE

Increased attendances
More room for corporate hospitality
Better experience for fans
More areas for retail and catering
Non-match day facilities including hotels, conference facilities, fitness centres
Giving club positive momentum - creating a "feel good factor"

Source: Deloitte

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