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Originally Posted by marsplasticeraser
Jeez! I hope they have nothing to do with it.
Saying the flames should be involved in the real estate aspect of new arena is as logical as saying they should be involved in the roadworks on the project.
The Flames have no expertise in real estate development. What they’ve shown so far is embarrassing to be the work of an adult, let alone a company valued at $500mm.
The flames struggle with doing a mediocre job of putting on a Good fan experience for a flames game. Let’s have them focus on getting that right before we add more complexity.
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We are witnessing first hand a microcosm of the decline of growth in the professional sports business model. The professional sports business has basically reached the apex of how much revenue it can generate on its own in North America.
Ticket pricing
Tickets are optimally priced to maximize profit for an organization. You see this with dynamic pricing (the Flames do this now by not publishing their Face value for tickets, they adjust them according to demand.) So there is not much more room to grow on that front. Once the Flames have a new building there won't be any more incremental revenue opportunities for premium tickets / suites etc.
Television / Streaming Rights
With how cable cord cutting is accelerating across North America, the long term value of TV rights deals will no longer be subsidized by other channels and cable packaging. Sports rights and the valuation of TV / streaming rights will fluctuate with actual eyeballs watching. This can only mean the value will go down and require growth in other aspects of the business model to recoup this decline.
Arena naming rights
Teams already all take the maximum value available from any company willing to purchase them. No growth here
Expansion to other markets
North America is almost saturated. There is only and handful of markets left to expand to. Expect the NHL to show up in Houston and maybe Kansas City and/or Quebec City, but at that point there will still be problem franchises that would need an alternate city to threaten their local politicians with. Growth longer term will have to come from international expansion and that opens up a number of other practical issues, such as travel, rest time, different (more punitive if it's Europe) income and business tax structures.
Merchandising
How many new jersey styles can a team release before it starts to canibalize sales? It's already customary for everyone to wear a team branded jersey, hat and/or shirt to a game when that never was the case before. How much more money can be squeezed? Maybe following the NBA and adding corporate sponsors to the kit. After that basically not much more growth.
Other Sources
This is where the real estate angle comes in. Teams are arguing that their product allows a concentration of foot traffic near their venues over a certain number of nights that theoretically support businesses that pay local taxes. In all new arena negotiations there seems to be a real estate angle to play because quite frankly the sources for incremental growth in the business does not support the historic growth arc of the business.
Below is an article about the Atlanta Braves. It outlines how they basically hose local governments for new venues / real estate and play them against each other for consistently better deals at every level they play at: Rookie league, low A, advanced A, AA, AAA, Spring Training facilities and even at the big club level (New ballpark in an Atlanta Suburb after only being in Turner Field for 20 years). There's even a quote in the article that the organization isn't a baseball team, but a real estate corporation.
Quote:
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During a question-and-answer with shareholders in April, Malone shrugged off the Braves’ slow start. “Keep in mind,” he said, “the Braves now are a fairly major real estate business as opposed to just a baseball club.”
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https://www.bloomberg.com/features/2...raves-stadium/