Topic: 70,000 seats my arse

[ultimatewarrior]

I care because we are all paying for empty seats one way or another.

I dont know a lot about the whole seat pricing but why dont cinemas charge £25 quid to see a film. rarely have i been to the pictures and seen it full and i go regularly?
I dont think the fan will pay the price for the new stadium because the fan doesnt take the loan. There are no rules to say any fan MUST go to watch their team in their stadium , its a choice, and if a fan thinks the price of a ticket is to high , he/she simply chooses not to go. The icrease in ticket pricing is leveling out now and will probably drop in the next 10 years , especially with new technology being introduced by sports media companies.

[Peter McGurk]

If you designed a traditional 60K stadium which left the quadrants empty, how much expansion could you get later from filling them in? From a ley person's perspective, it appears to be the cheap expansion plan that does not compromise the design in a 60K configuration, and allows cheaper expansion if required.

I haven't got it to hand mate but you can get to about 58,400 by filling in up to the height of the Centenary all round.  But the corners aren't necessarily cheap on their own (because of the existing roof supports).

[LiamG]

Construction activity is still dropping but prices are still going up, particularly for stadia which are high risk.

Gone are the days of building a top class stadium with 75k seats for less than £150million

[conman]

Gone are the days of building a top class stadium with 75k seats for less than £150million

Its relative though, isn't it..?
What is £150 worth in today's Economy?

[Peter McGurk]

I dont know a lot about the whole seat pricing but why dont cinemas charge £25 quid to see a film. rarely have i been to the pictures and seen it full and i go regularly?

I dont think the fan will pay the price for the new stadium because the fan doesnt take the loan. There are no rules to say any fan MUST go to watch their team in their stadium , its a choice, and if a fan thinks the price of a ticket is to high , he/she simply chooses not to go. The icrease in ticket pricing is leveling out now and will probably drop in the next 10 years , especially with new technology being introduced by sports media companies.

Cinemas (and stadia) work out an occupancy rate that works.  I don't know what cinema construction costs per seat to the occupier are (and it's complicated because they are normally in a mixed use development - maybe why stand alone cinemas have died) but I expect they are lower than a stadium and so the occupancy rate can be lower.  Also not sure whether Odeon for example run as a franchise or network.  In the latter case, the occupancy rate could be worked out across all Odeons - perhaps.

At the end of the day the fan pays.  Assuming the club's not doing it to lose money, who else is going to pay??  If the club has to charge too much for the fan and the fans doesn't come, the club will lose money and no doubt the team will go down the nick.  And you're right, ticket prices are stalling which makes it all the more important to keep costs down.

[ultimatewarrior]

If you designed a traditional 60K stadium which left the quadrants empty, how much expansion could you get later from filling them in? From a ley person's perspective, it appears to be the cheap expansion plan that does not compromise the design in a 60K configuration, and allows cheaper expansion if required.

I did a break down of a new stadium with a design to accomadate 80,000 fans with a single Kop and 2 rows of exec boxes around the other 75% of the stadium. Its possible to build an 80k seater but only open 60k seats by closing the away end upper tier and the last 20 rows of the upper tier on both side stands and quadrants. The away end empty space could be sold for advertising and sponsored upright cladding or drapes could cover the other 20 rows from the last row to the roof. As infrastructure improved more rows could be opened saving on construction cost and stand closure. If the money is available to build in this way the its a good plan , but if the money isnt there then its just another idea.

[Alan_X]

I dont know a lot about the whole seat pricing but why dont cinemas charge £25 quid to see a film. rarely have i been to the pictures and seen it full and i go regularly?
I dont think the fan will pay the price for the new stadium because the fan doesnt take the loan. There are no rules to say any fan MUST go to watch their team in their stadium , its a choice, and if a fan thinks the price of a ticket is to high , he/she simply chooses not to go. The icrease in ticket pricing is leveling out now and will probably drop in the next 10 years , especially with new technology being introduced by sports media companies.

You are paying for empty seats at the cinema. I assume you'll be at a multiplex with multiple screens all run off digital projectors with no projectionist. The screens will be sized to run at a profit even when not at maximum capacity. They're also pretty simple construction - just a whole load of acoustic plasterboard boxes in a single watertight envelope. Catering and toilets are all centralised with access to all the screens running off it. Ticket sales are by machine/over the internet etc... Staff and running costs are tiny for a cinema compared to a football stadium.

[LiamG]

Its relative though, isn't it..?
What is £150 worth in today's Economy?

No idea

[Peter McGurk]

Its relative though, isn't it..?
What is £150m worth in today's Economy?

A redeveloped state of the art stadium at Anfield!!!   

[LiamG]

The Nou Mestalla (Valencia's new ground) will hold 75k and construction costs are estimated between 250-300million euros

[Peter McGurk]

The Nou Mestalla (Valencia's new ground) will hold 75k and construction costs are estimated between 250-300million euros

Sorry LiamG but there's no sense in that kind of comparision.  Every stadium is different, has different content and different circumstances and supporting factors and circumstances.  And every country's construction industry works under different conditions of cost, risk, opportunity...

[Alan_X]

The Nou Mestalla (Valencia's new ground) will hold 75k and construction costs are estimated between 250-300million euros

The unfinished Mestalla has taken 18 months to get to it's current state and has been stopped because the club can't afford to continue construction - it'll need another year or more to complete and I'll guarantee it will end up costing a lot more than 300 million

[LiamG]

Sorry LiamG but there's no sense in that kind of comparision.  Every stadium is different, has different content and different circumstances and supporting factors and circumstances.  And every country's construction industry works under different conditions of cost, risk, opportunity...

Maybe we should get spaniards or germans to build it then? Allianz arena cost 350million also (according to wickipedia)

[conman]

The unfinished Mestalla has taken 18 months to get to it's current state and has been stopped because the club can't afford to continue construction - it'll need another year or more to complete and I'll guarantee it will end up costing a lot more than 300 million

looks like the bloody Colosseum... that didnt cost 300mil either

[ultimatewarrior]

You are paying for empty seats at the cinema. I assume you'll be at a multiplex with multiple screens all run off digital projectors with no projectionist. The screens will be sized to run at a profit even when not at maximum capacity. They're also pretty simple construction - just a whole load of acoustic plasterboard boxes in a single watertight envelope. Catering and toilets are all centralised with access to all the screens running off it. Ticket sales are by machine/over the internet etc... Staff and running costs are tiny for a cinema compared to a football stadium.

And with a tiny fraction of the capacity, but i know what your saying. The only thing i wonder about is. If a cinema is open 7 days a week, 10 hoursa day , including all out goings , bills, wages etc, would it make more money per seat than a football stadium?

[Alan_X]

And with a tiny fraction of the capacity, but i know what your saying. The only thing i wonder about is. If a cinema is open 7 days a week, 10 hoursa day , including all out goings , bills, wages etc, would it make more money per seat than a football stadium?

Probably on a basic ticket price plus catering calculation. Football grounds make a lot of additional income through indirect sources like TV deals and kit sales.

[SP]

Probably on a basic ticket price plus catering calculation. Football grounds make a lot of additional income through indirect sources like TV deals and kit sales.

The film companies are complete bastards. Most cinemas make no money from the films at all - it is all from the concessions. The studios take most of the ticket revenue.

[ultimatewarrior]

That Nou Mastella looks like a very complicated design with a lot of concrete. If we stuck to the more traditional design of 4 individual 2 teird stands and then filled in the corners ,it would be a lot cheaper than that thing. Plus i am not a fan of these super modern facades that have no real purpose other than to be easy on the eye. I quite like the red brick effect that Anfield has and i'm sure that red brick mixed with some cladding would be sufficiet for most LFC fans. I have no doubt that we could build the shell of an 80000 seater stadium wit cantilever roof and minimal changes to the original Anfield for less the £300m.

[Mad Men]

Did Valencia really need to build a new stadium?

[Peter McGurk]

looks like the bloody Colosseum... that didnt cost 300mil either

You're right - I like it; a modern gothic ruin (or 'folly').

[ultimatewarrior]

The film companies are complete bastards. Most cinemas make no money from the films at all - it is all from the concessions. The studios take most of the ticket revenue.

Thats my whole point. The guys are saying that the fan pays for empty seats. Its not true. IF a game doesnt sell out the club doesnt charge the fans more. For example , if the club think we wont sell out the QPR game this season do they put the price up for that game? If Ryanair dont sell out a flight before it takes off, do they automatically charge the flyer more? Is it more expensive to eat in a half full restaurant? In my opinion , no its not! Each company has a business plan, if they are not meeting the requirement then they close down. If a restaurant is not doing well, it doesnt put prices up. Please teach me if i'm missing the valid point here.

[Peter McGurk]

Maybe we should get spaniards or germans to build it then? Allianz arena cost 350million also (according to wickipedia)

Doesn't work.  Anybody coming in has the same 'uphills' - ask Multiplex (although it seems they shot themselves in the foot).  The Germans had a pre-cast idea going at one time (Made in Germany) but it never took off.

[Peter McGurk]

Thats my whole point. The guys are saying that the fan pays for empty seats. Its not true. IF a game doesnt sell out the club doesnt charge the fans more. For example , if the club think we wont sell out the QPR game this season do they put the price up for that game? If Ryanair dont sell out a flight before it takes off, do they automatically charge the flyer more? Is it more expensive to eat in a half full restaurant? In my opinion , no its not! Each company has a business plan, if they are not meeting the requirement then they close down. If a restaurant is not doing well, it doesnt put prices up. Please teach me if i'm missing the valid point here.

Everyone works out how many people are going to come (and how many might come) and prices accordingly.  You think you don't pay for the food Asda or Tesco throws out??  And you're right; if they get it wrong, they go to the wall - that's not what we want (but I'll stretch the point to Tesco!)

[ultimatewarrior]

Everyone works out how many people are going to come (and how many might come) and prices accordingly.  You think you don't pay for the food Asda or Tesco throws out??  And you're right; if they get it wrong, they go to the wall - that's not what we want.

So at the moment Ian Ayre and  co think we can fill 60000? And At what price? Peter we are not talking about breaking even here, we are talking about how many millions profit we make. Should the club put prices just to make millions in profit. I think thats wrong. If we want to build for the future of the club , build big and take a hit now.

[LiamG]

Doesn't work.  Anybody coming in has the same 'uphills' - ask Multiplex (although it seems they shot themselves in the foot).  The Germans had a pre-cast idea going at one time (Made in Germany) but it never took off.

Is it all down to  just brittish labour costs? (i.e would our stadium cost less if it was built abroad)

[Peter McGurk]

So at the moment Ian Ayre and  co think we can fill 60000? And At what price? Peter we are not talking about breaking even here, we are talking about how many millions profit we make. Should the club put prices just to make millions in profit. I think thats wrong. If we want to build for the future of the club , build big and take a hit now.

I originally thought they'd go for OT prices (an average of £1430 per seat across all seats including boxes, food and drink an' all) but judging from what they've said and working in between the lines a bit, I think they're going for about £1200 per seat.  That's pretty much based on today's prices but with more premium seats, more corporate wing-dings in two stands and maybe under 60 boxes.  They would also assume a modest decrease in percentage occupancy, which would still cover costs and create a surplus.

That would be a conservative and sensible plan.  If they can get more from there in terms of prices or get back to 97% occupancy (ie., full) - great.


I think the club will make millions primarily to benefit the future of the ‘business’.  The benefits are to the team and to us.  If we (continue to) take a hit now and can’t invest in the team (“we will only spend from revenue generated” JWH) , mate we’re going to slide away.  Fringe interest will drop off, even harder to get quality players, lower TV revenue...

[Alan_X]

Thats my whole point. The guys are saying that the fan pays for empty seats. Its not true. IF a game doesnt sell out the club doesnt charge the fans more. For example , if the club think we wont sell out the QPR game this season do they put the price up for that game? If Ryanair dont sell out a flight before it takes off, do they automatically charge the flyer more? Is it more expensive to eat in a half full restaurant? In my opinion , no its not! Each company has a business plan, if they are not meeting the requirement then they close down. If a restaurant is not doing well, it doesnt put prices up. Please teach me if i'm missing the valid point here.

Jesus are you in business?... Are you aware of the principle of fixed costs and variable costs. Building a ground or a cinema is a fixed cost that's amortised over a set period. Some running costs will be constant regardless of the number of customers - heating, lighting, cleaning, staff costs etc. And some costs will be variable depending on the number of customers such as catering supplies. 

But in any business someone somewhere is paying for the empty seats. In a restaurant you size it to take account of the number of covers you expect to serve at peak times but then price accordingly to spread the cost of the fixed costs per cover.

The price of a ticket is calculated in exactly the same way. You make an estimate of the average expected ticket sales over the year and make an allocation to cover a proportion of the fixed costs within the price of each seat. If you expect an average take-up of say only 85% you make your fixed costs allocation per ticket on that figure. If you don't you go out of business. If you exceed that you make clear profit.

It's basic, fundamental pricing strategy and sorry, but if you don't understand the concept then I'm not sure you have a lot to contribute to the discussion.

[ultimatewarrior]

I originally thought they'd go for OT prices (an average of £1430 per seat across all seats including boxes food and drink an' all) but judging from what they've said and working in between the lines a bit, I think they're going for about £1200 per seat.  That's pretty much based on today's prices with more premium seats, more corporate wing-dings in two stands and maybe under 60 boxes.  They would also assume a modest decrease in percentage occupancy, which would cover costs and create a surplus.

That would be a conservative and sensible plan.  If they can get more from there in terms of prices or get back to 97% occupancy (ie., full) - great.


I think the club will make millions primarily to benefit the future of the ‘business’.  The benefits are to the team and to us.  If we (continue to) take a hit now and can’t invest in the team (“we will only spend from revenue generated” JWH) , mate we’re going to slide away.  Fringe interest will drop off, even harder to get quality players, lower TV revenue...

I know what you are saying , i understand the risks but isnt the plan to take advantage of our worldwide fanbase and increase our merchandising and other money spinners, if their plan comes off we will be making similar amounts to United but we wont be paying back a massive debt United have. I just think that if FSG invested 66% of the cost of a new stadiun and Naming rights paid for 33% (£200m:£100m) it would wipe out any interst payments and the members of FSG could take the ample amount in profits each year to repay themselves back instead of huge bank interest. I know thats hard for a businessman to do but its the most logical. And for the next few years until the stadiumis built , let the merchandising take care of the transfers.

[Peter McGurk]

Is it all down to  just brittish labour costs? (i.e would our stadium cost less if it was built abroad)

There's a thousand differences (efficiency, profitability, established relationships/ confidence in the 'supply chain', attitude to risk, regulations, industrial relations, adapatability, methodology, skills base, management capability, business culture, accepted working practice...)

And yes, it would be cheaper elsewhere.

[ultimatewarrior]

Jesus are you in business?... Are you aware of the principle of fixed costs and variable costs. Building a ground or a cinema is a fixed cost that's amortised over a set period. Some running costs will be constant regardless of the number of customers - heating, lighting, cleaning, staff costs etc. And some costs will be variable depending on the number of customers such as catering supplies. 

But in any business someone somewhere is paying for the empty seats. In a restaurant you size it to take account of the number of covers you expect to serve at peak times but then price accordingly to spread the cost of the fixed costs per cover.

The price of a ticket is calculated in exactly the same way. You make an estimate of the average expected ticket sales over the year and make an allocation to cover a proportion of the fixed costs within the price of each seat. If you expect an average take-up of say only 85% you make your fixed costs allocation per ticket on that figure. If you don't you go out of business. If you exceed that you make clear profit.

It's basic, fundamental pricing strategy and sorry, but if you don't understand the concept then I'm not sure you have a lot to contribute to the discussion.

No i'm not in business but i'm not thick either. Your above post is just wishful thinkin man. Tell me one thing , why do restaurants , cinemas , pubs etc. close down all the time? Is it because they dont know how many seats they have to fill?

[west_london_red]

Surely you would get loads of glory hunting fans like Man U do who would travel to Liverpool.

In Birmingham loads of people support Liverpool, especially Indians.

But then again they are not the match-going type fans.

But maybe they don't go because they can't get a ticket at Anfield.

Maybe they would go if you had loads of seats available?

Well im Indian, and its not that we are not match going its that we suffer the same difficulty in getting tickets as everyone else.

[Alan_X]

No i'm not in business but i'm not thick either. Your above post is just wishful thinkin man. Tell me one thing , why do restaurants , cinemas , pubs etc. close down all the time? Is it because they dont know how many seats they have to fill?

Sorry mate... nothing personal but I'm out of this conversation. I don't have the time or the interest to explain basic business principles to you. Do a bit of reading and get back to us when you have a bit of a clue what you are talking about.

[ultimatewarrior]

Sorry mate... nothing personal but I'm out of this conversation. I don't have the time or the interest to explain basic business principles to you. Do a bit of reading and get back to us when you have a bit of a clue what you are talking about.

Nice one man , I forgot this forum was only for Businessmen/Architects.

[CraigDS]

No i'm not in business but i'm not thick either. Your above post is just wishful thinkin man. Tell me one thing , why do restaurants , cinemas , pubs etc. close down all the time? Is it because they dont know how many seats they have to fill?

Because their % occupancy doesnt cover their fixed costs.

Much like if we built an expensive 70k seater and for the majority of the time we didnt get enough to cover the fixed costs, we'd be running the stadium at a loss.

[SP]

No i'm not in business but i'm not thick either. Your above post is just wishful thinkin man. Tell me one thing , why do restaurants , cinemas , pubs etc. close down all the time? Is it because they dont know how many seats they have to fill?

Knowing how many seats you need to fill at what cost, and actually filling them is very different.

[ultimatewarrior]

Because their % occupancy doesnt cover their fixed costs.

Much like if we built an expensive 70k seater and for the majority of the time we didnt get enough to cover the fixed costs, we'd be running the stadium at a loss.

Thanks man , I understand that part but my whole point is if FSG decided to match Uniteds £1430 average ticket price and only 30000 people can afford that price , where does the rest of the money come from? As i said i'm not a businessman but nothing is for certain in life and noone can say that 70000 or even 60000 LFC fans will pay an average of £1430 for a ticket.
Thats why i'm saying unfortunately we might have to take a hit now in order to prosper in the future.

[west_london_red]

Because their % occupancy doesnt cover their fixed costs.

Much like if we built an expensive 70k seater and for the majority of the time we didnt get enough to cover the fixed costs, we'd be running the stadium at a loss.

You need to cover your variable costs too mate

[ultimatewarrior]

Knowing how many seats you need to fill at what cost, and actually filling them is very different.

Thats my point.

[Alan_X]

Nice one man , I forgot this forum was only for Businessmen/Architects.

Grow up. It's not but if someone knows what they are talking about and you don't it's common sense to read what they say rather than argue the toss. There are other topics and forums on this board where I take a back seat and respect the views and opinions of people who know more about particular subjects than I do.

This thread is about assessing the business case for the size of any stadium redevelopment. That means the discussion will focus on the economics (fixed and variable costs vs likely ticket revenue) and architectural/construction issues as well as the wider discussion of demand (historic, current and projected).

I'm not saying you're thick - I'm saying you're ill-informed and if as you say, you aren't thick the sensible thing would be to follow my suggestion and clue yourself up about how businesses calculate the price of their services or products.

[Peter McGurk]

I know what you are saying , i understand the risks but isnt the plan to take advantage of our worldwide fanbase and increase our merchandising and other money spinners, if there plan comes of we will be making similar amounts to United but we wont be paying back a massive debt United have. I just think that if FSG invested 66% of the cost of a new stadiun and Naming rights paid for 33% (£200m:£100m) it would wipe out any interst payments and the members of FSG could take the ample amount in profits each year to repay themselves back instead of huge bank interest. I know thats hard for a businessman to do but its the most logical. And for the next few years until the stadiumis built , let the merchandising take care of the transfers.

FSG don’t say a lot but what they do say is worth listening to.  They’ve said that global revenue is their focus and that a stadium must have stand alone viability ie., the one will not pay for the other.  I’m not sure you’re suggesting that but it does follow from what you say.

FSG have also said (as any businessmen would) that any expenditure must have a good ‘return on capital employed’ ie., if I put my money in, the business (or I) want a good whack back.  This is potentially more expensive than bank interest, which is fair enough because they could just leave it in the bank and take the interest due to them.

So investment is just another form of debt.  It has to be paid back, and some; and so it will not help to ‘wipe out debt’.

If we manage the golden grail of huge naming rights, we might manage £15m a year.  the repayments on a new stadium would be coming up for £40m.  Naming rights help to ‘pay’ yes (and that’s why they out there looking - but personally and I’ve always said, that if a development needs naming rights to go, it’s struggling and too reliant on a fickle income) but naming rights still don’t do as well as keeping costs down.  The only way to do that at present is to redevelop.