Stadium Design and Trends Quiz

The increase in attendance seen immediately following the construction of a new stadium or arena, often exceeding the attendance before the new facility. However, this effect typically fades within ten years.

New stadiums and arenas often feature a larger number and more expensive luxury seating options, including VIP boxes, club seats, and other premium seating areas.

The revenue generated from selling luxury seating is often kept by the team, unlike other revenue streams like broadcast rights, that are shared within a league.

The initial increase in ticket prices for a new stadium can range from 20% to 30%, with a significant impact on the team's overall revenue.

The value of a team in the market is heavily influenced by the number of luxury boxes available and the revenue they generate.Teams with more luxury boxes tend to be more valuable.

The Dallas Cowboys, with 342 luxury boxes, are the most valuable team in NFL, partly due to their extensive luxury seating options.

The "honeymoon effect" is generally less pronounced and fades faster for hockey and basketball compared to baseball. In European football, this effect diminishes significantly after just two seasons.

Teams that have built new facilities do not guarantee consistently more wins. The impact of new facilities on team performance is complex and multi-faceted.

The net present value (NPV) of a project is the difference between the present value of its future cash inflows and the present value of its cash outflows.

The present value (PV) of a future cash flow is the amount of money you would need to invest today to have that same amount of money at some future point in time, given a specific rate of return.

The formula for calculating the present value of a stream of revenue is 𝑉=𝑅∗(1−(1+𝑟)−𝑇)/𝑟, where 𝑅 is the annual revenue, 𝑟 is the discount rate, and 𝑇 is the number of years.

The value of $1 today is worth (1+𝑟)𝑡 dollars t years from today, assuming a discount rate of r.

The project is profitable if V>C and is not profitable if C>V, where V is the present value of the future stream of revenues and C is the cost of the project.

Team owners consider the NPV of continuing to occupy an existing stadium compared to the NPV of a new stadium when making decisions about facility replacements.

A new stadium can generate more revenue than an existing stadium, attracting more fans and potentially wealthier fans willing to pay more, increasing the NPV of a new stadium.

Even with increased revenue, a new stadium also incurs additional costs, such as construction expenses, impacting the overall NPV.

A strategy used by sports teams to decide when to invest in a new stadium by comparing the potential future revenue stream of the new facility to the cost of construction and the value of the existing stadium.

Stadiums built in the 1960s and 1970s, designed to host both football and baseball, with large circular shapes and a capacity averaging around 52,659 for baseball and 60,380 for football.

From the 1990s onwards, a shift towards specialized sports stadiums. Baseball stadiums became smaller, losing over 10,000 seats, while football stadiums became larger, gaining about 10,000 seats.

The size of multi-purpose stadiums, often too large for baseball and too small for football, leading to compromises and suboptimal viewing experiences for both sports.

The circular design of multi-purpose stadiums, attempting to accommodate both sports but failing to meet the specific needs of either, resulting in poor sightlines and a less engaging experience for fans.

Stadiums designed specifically for football, offering closer seating to the field, minimized seats in the upper end zones, and better sightlines for the action. These stadiums typically prioritize seating in the middle of the field rather than the end zones.

Stadiums designed specifically for baseball, offering a more intimate experience, with fewer total seats and a focus on the diamond field. These stadiums tend to have a smaller footprint compared to football-specific stadiums.

The use of NPV analysis allows sports teams to make informed decisions about stadium investments, ensuring that the financial benefits of building a new stadium outweigh the costs and the value of the existing facility.

The shape and dimensions of a basketball court and a hockey rink are similar, allowing multipurpose arenas to host both sports with minimal adjustments.

Despite the similar playing surfaces, the smaller crowd sizes in soccer matches create a less dynamic atmosphere in large football stadiums.

Soccer teams often prefer smaller, dedicated stadiums, as opposed to sharing larger facilities with football teams, due to the lack of fan support and potential damage to the playing surface.

While team owners mainly focus on profit, governments consider the broader benefits of facilities, including economic impact and community development.

The size and shape of a football field and a soccer field are very similar, potentially making them suitable for dual use.

Soccer fans often criticize the use of football markings on a soccer field, and damage caused by football games can impact the quality of the playing surface.

The NBA teams, typically the primary tenants of shared arenas, have benefited financially, while their NHL counterparts, often secondary tenants, have faced less favorable financial arrangements.

The Toronto Maple Leafs, New York Rangers, Montreal Canadiens, and Detroit Red Wings, four of the most profitable NHL teams, are all primary tenants in their home arenas, highlighting the financial advantage of being the main occupant.

The benefits of constructing a new facility are often offset by the opportunity cost of other projects that could have been undertaken, especially in a fully employed economy.

The overall financial gain from having a team at all depends on the additional spending generated by the team, considering both direct and indirect effects.

If fans would have spent their money locally anyway, even if there was no game, the spending at the facility simply shifts income within the city, not increasing overall income.

The money spent by some people at sporting events can reduce the amount of money other people would have spent, creating a negative impact on the overall economy.

The benefit of construction jobs from building a new facility is only realized if the economy is not already operating at full employment.

Raising taxes to finance facility construction reduces private spending, potentially offsetting some of the gains from the facility.

The benefits of building a new facility may not last forever, and the positive effects can fade over time.

The potential gains from a new facility are only realized if the spending generated by the facility is truly new spending, not just a shift of existing spending.