Facility Management – Flashcards

• Gain in the popularity of professional baseball and intercollegiate football launched the construction of stadiums -Constraints of urban space limitations dictated the irregular sizes and shapes of the older ballparks -Early NFL teams played in baseball stadiums until new stadiums were build • Hockey owners built arenas to host their teams in 1927 - Needed to fill empty seats in arenas on non-hockey nights (boxing matches, ice capades) -Basketball enters arena picture and arena owners earn revenue from two tenants • Modern era: Baseball-only stadiums were becoming obsolete during the 1960s -Team owners could make a great deal of money by having their host city build their stadium rather than building it themselves -Cities built shiny new facilities to keep their teams enthusiastic about their hometowns -City leaders believed that publicly built stadiums were good investments and added to quality of life -Trend toward one purpose stadiums again to maximize more revenue by owners

Arenas, Stadiums, Convention Centers, Theaters

-Built to accommodate one (or more) prime sports tenants or to lure a prime tenant to the facility -Intercollegiate facilities are financed by private donations, endowments, student fees, fundraising campaigns, and, in the case of public institutions, public grants -Public owner may manage its own facility or contract our for private management -Recent trends in facility construction include adjacent practice facilities for the primary tenants to increase event bookings

-Outdoor or domed facilities for baseball, football, and outdoor soccer teams -Stadium managers try to maximize bookings, but it is more difficult with a stadium than an arena -Far fewer nonsport events can play in stadiums, primarily because stadiums are significantly larger than other venues and most other events cannot attract stadium-sized crowds -Stadium managers have become increasingly effective in creating events for their venues that take advantage of all available spaces

-Almost always built and owned by a public entity -Built to lure conventions and business meetings to a particular municipality -Publicly financed because the rents and feed they charge do not always cover costs -The economic impact the convention or business meeting has on the municipality can be large

-Public assembly facilities that are primarily utilized for the presentation of live artistic entertainment -House prime tenants such as symphony orchestras, opera and dance companies, and resident theater groups -Profits are rare, but the spinoff business from theater attractions justifies public subsidies -Provide culture and entertainment for a community, enhancing its quality of life

• Federal government allows state and local governments to issue tax-exempt bonds • Tax exemption lowers interest on debt and thus reduces the amount that cities and teams must pay for a stadium • Public vs. private financing • Team owners have had to look for additional revenue to compete for, and pay, their players while maintaining profitability • Building public assembly facilities meant other services had to be neglected • Team owners look for a city or state willing to build a new facility but let the team control the stadium revenue streams, thereby allowing the owner to maximize revenue without heavy debt service expenses • Bonds: promise by the borrower to pay back the lender a specified amount of money, with interest, within a specified period of time

backed by the local governments ability to raise taxes to pay off the debt (safe)

backed specifically by the facility;s ability to generate revenue (risky)

-Property taxes: paid by homeowners, who are often long-term residents of a city -Occupational tax: anyone who works in the community; more likely to pass in vote -Hospitality tax: forces visitors to pay directly for the facility -General sales tax: affects both local residents and out-of-town visitors

-Sale of naming rights for stadiums and arenas is a current trend -Facility pouring rights: being the facility's exclusive soft drink or beer distributor -Outright corporate donations: defray costs in exchange for the publicity and public relations benefits that may result from such a donation

-Personal seat licenses (PSLs): down payments on luxury suites and club seating -Ticket tax -Revenue from other sources (parking, rent, concessions)

• Sports facilities are thought to improve the local economy in four ways: -Building a facility creates construction jobs -People who attend games or work for the team generate new spending in the community, expanding local employment -Team attracts tourists/companies to the host city -New spending has a "multiplier effect" as increased local income causes still more new spending and job creation

-Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers -New sport facility: extremely small effect on economic activity and employment -Sport facilities attract neither tourists nor new industry -A professional sport team creates a "public good"

-Goal: to provide a clean, safe, and comfortable environment for patrons -Functions: security, cleanup, marketing and sales, scheduling and bookings, operations, event promotions, and finance and box office operations -Private management: provides expertise with dedicated personnel and network of facilities that create leverage in cultivating key event relationships and in-turn event bookings

Marketing, promoting, and facility revenue

-Account for location of venue, culture of community, and production of events -Internet has allowed easier booking of events -Saturate markets: markets with several venues in the local vicinity -Local economy will be driving force for ticket sales

-Co-promotional model: facility and promoters split the risk and revenue -Rental agreements: promoters pay specified amount up front and other costs covered by promoter -Majority of shows are brought by out side companies

-Ticket sales offer lion's share of revenues -Ticket rebate: surcharge on ticket that goes to facility -Ancillary revenue: sale of food, beverage, parking, fees, and sponsorships -Marketing fund: profits from other shows put aside to incest in future programs

Security -Ensure safe environments after 9/11 -technology is HUGE -crowd management plan: know surroundings and team environment of rivalry Sustainability -More energy per square foot Americans with Disabilities Act -Prevent discrimination against qualified people with disabilities Cutting edge facilities -Estimate nearly 6 billion dollars spent on facility renovation in 2009