Round 2 : Sale of the team

[bbb]

The sense that people will get is that "their seats" are being raised. We went through it ion a small scale here when we added more floor seats. The benefits increased tremendously (free high end food, private club, etc..) and some people couldn't get past the price of their seat getting raised (one grown man actually cried). There is a certain sense of ownership associated with people's seats. You hear people all of the time say that "I sit in section x." If you start over with a new stadium there isn't that sense of your ticket getting raised. It is totally different.

 

I don't disagree with BBB that a new stadium will negatively impact the atmosphere and he gives some great examples. With that being said it is coming because revenue trumps atmosphere in today's NFL. That is reason #2 that the retrofit isn't a realistic option in my opinion. They need to shift the whole dynamic of what it means to attend a Bills game.

 

Our routine for about the last 15 years has been to go at about 10 AM, park on Southwestern, we meet two other groups there, drink 4-5 beers in the parking lot and start walking at about 12:15. Think about how many revenue opportunities are there alone? 3 cars at $15, pizza for 8 people $30, and 36 beers $36. That is the price that we pay. If the new stadium had more on stadium parking at $20 a car (still cheap), maybe only 5 of the people will eat at $8 each ($40), and pregame beers at a stadium bar maybe 3 each at a special $5 price ($120). That's $220 from that group alone in revenue. I apologize if this is a long drawn out email but these are the kinds of conversations going on behind closed doors. This is the reason that you are seeing things like La Nova and Duffs. It isn't to be more fan friendly (even though they have that hide behind) but it is to get a larger piece of the pie.

 

I get your point, but I think the league has to tread carefully. After decades of there never seeming to be a breaking point in rising ticket prices, etc., almost all sports have now hit it.

 

The league really makes it's money on TV. They know their TV product is so good now that people are staying home (look at this board - where only a surprisingly small % actually go to the games).

 

You turn on a Yankee game now and you feel like why am I watching this, this is small time with all these empty seats............The NFL needs people in the stands to make the TV product good.

 

Squeezing out every last dollar at the stadium will eventually screw up their total product.

[Mike in Horseheads]

 

I get your point, but I think the league has to tread carefully. After decades of there never seeming to be a breaking point in rising ticket prices, etc., almost all sports have now hit it.

 

The league really makes it's money on TV. They know their TV product is so good now that people are staying home (look at this board - where only a surprisingly small % actually go to the games).

 

You turn on a Yankee game now and you feel like why am I watching this, this is small time with all these empty seats............The NFL needs people in the stands to make the TV product good.

 

Squeezing out every last dollar at the stadium will eventually screw up their total product.

Your Yankee point is spot on. The Stanks when they built the New Palace came up with the high priced seats and then built a moat around it. It's always full of empty seats (the propoganda machine says the $1,000 seat holders are inside eating and watching the game on TV.LOLOL) so when you watch on TV it's like WTF did it rain? It's a joke.

Go Orioles!

[Kirby Jackson]

 

 

I get your point, but I think the league has to tread carefully. After decades of there never seeming to be a breaking point in rising ticket prices, etc., almost all sports have now hit it.

 

The league really makes it's money on TV. They know their TV product is so good now that people are staying home (look at this board - where only a surprisingly small % actually go to the games).

 

You turn on a Yankee game now and you feel like why am I watching this, this is small time with all these empty seats............The NFL needs people in the stands to make the TV product good.

 

Squeezing out every last dollar at the stadium will eventually screw up their total product.

I don't disagree but the Bills aren't near that tipping point yet. I suspect that they will be with the new stadium. It will probably be 65,000 or so seats and if I had to bet they can come in over 150% of their ticket revenue (which I believe it is 40% that is shared). If the average ticket is now $50 (just for round numbers sake) that's $3.5M per game (at 70K). If the average slides to $85 and 65K seats (not unreasonable at all) that's $5.25M per game. If my numbers are right the Bills are keeping another $1.25M a game or about and additional $12M a year in their cut of ticket revenue from games played in Buffalo. (Disclaimer: I don't remember the % shared on tickets).

 

p.s. I miss the old Yankee Stadium too. I wish that this place retained more of the character.

Edited August 20, 2014 by Kirby Jackson

[bbb]

Your Yankee point is spot on. The Stanks when they built the New Palace came up with the high priced seats and then built a moat around it. It's always full of empty seats (the propoganda machine says the $1,000 seat holders are inside eating and watching the game on TV.LOLOL) so when you watch on TV it's like WTF did it rain? It's a joke.

Go Orioles!

 

I saw them say that even during the World Series people were doing that! Hahaha What a joke...............But, now it's not just those seats. The place is half empty all over.

[ICanSleepWhenI'mDead]

There were many options but he seemed clueless to the reality.

The current lease is a publicly available document and does not prevent the team from being moved to Toronto in 2020. The trust document is not a public document. Until reputable journalists reported leaks concerning the trust's preference for bidders who will keep the Bills in Buffalo after 2019, EVERYONE was clueless about the reality.

 

It's easy with the benefit of hindsight to say that it was clear all along that only bidders who would commit to keeping the team in Buffalo after 2019 had a chance. There was always speculation to that effect, but nobody really knew.

 

Even today, the terms of the trust are not publicly available. We are all hoping that the un-named sources leaking information to sports journalists know what they are talking about. There have been enough similar reports by different reporters that I tend to believe what has been published in the media about the trust's preference for an owner who will give some type of assurance (even if it isn't a legally binding commitment) to keep the team in Buffalo after 2019.

[bbb]

I don't disagree but the Bills aren't near that tipping point yet. I suspect that they will be with the new stadium. It will probably be 65,000 or so seats and if I had to bet they can come in over 150% of their ticket revenue (which I believe it is 40% that is shared). If the average ticket is now $50 (just for round numbers sake) that's $3.5M per game (at 70K). If the average slides to $85 and 65K seats (not unreasonable at all) that's $5.25M per game. If my numbers are right the Bills are keeping another $1.25M a game or about and additional $12M a year in their cut of ticket revenue from games played in Buffalo. (Disclaimer: I don't remember the % shared on tickets).

 

p.s. I miss the old Yankee Stadium too. I wish that this place retained more of the character.

 

That's exactly it. They aren't near it now, but they are playing with fire if they want to really boost prices by building a new stadium.

[TXBILLSFAN]

In the end, any increase in revenue comes from either an increase in prices (tickets go from $50 to $80) or a diversion of revenue from another source (i.e. buying beer in stadium vs. in store; or paying Bills for parking vs. an outside vendor.)

 

The key question to ask in this discussion is how much incremental revenue can the WNY contribute ?

 

Clearly, as the NFL continues to broaden it's appeal nationally, the Bills can capitalize by drawing in consumers from further places (like Toronto, Rochester & Syracuse). In addition, the Bills need to compete with other forms of entertainment, not the least of which is sitting at home (for free) to watch the games.

 

I agree, that the Bills are far from capitalizing on the revenue that is out there; a lot of that is the product they put on the field; let's face it, if you start to win games, demand goes up and prices follow. In addition, the Bills can do a better job selling suites to corporations that are not in the 716 area code to bolster that side of the revenue equation. I believe the last I checked the Bills were in the bottom 5 in NFL in suite sales, too.

 

 

[bbb]

I should say that my thinking is in terms of the NFL and all their pushing for a new stadium. They are the ones who should care more about how it looks on TV.

[Kirby Jackson]

In the end, any increase in revenue comes from either an increase in prices (tickets go from $50 to $80) or a diversion of revenue from another source (i.e. buying beer in stadium vs. in store; or paying Bills for parking vs. an outside vendor.)

 

The key question to ask in this discussion is how much incremental revenue can the WNY contribute ?

 

Clearly, as the NFL continues to broaden it's appeal nationally, the Bills can capitalize by drawing in consumers from further places (like Toronto, Rochester & Syracuse). In addition, the Bills need to compete with other forms of entertainment, not the least of which is sitting at home (for free) to watch the games.

 

I agree, that the Bills are far from capitalizing on the revenue that is out there; a lot of that is the product they put on the field; let's face it, if you start to win games, demand goes up and prices follow. In addition, the Bills can do a better job selling suites to corporations that are not in the 716 area code to bolster that side of the revenue equation. I believe the last I checked the Bills were in the bottom 5 in NFL in suite sales, too.

Nice post TX. I believe that the Bills are near capacity in suites but only generate $7-$8M a year. In NY they generate north of $50M. Obliviously, Buffalo can never come close to that but that number ultimately impacts the cap. That is why it is so important that they remain efficient and become more efficient with creative revenue streams. The suite revenue isn't shared (or at least it didn't used to be because Arizona had none). It is important (and will become even more important) to find new ways to generate nonshared dollars because continuing to raise prices isn't an option once they hit that tipping point. Edited August 20, 2014 by Kirby Jackson

[thebandit27]

Nice post TX. I believe that the Bills are near capacity in suites but only generate $7-$8M a year. In NY they generate north of $50M. Obliviously, Buffalo can never come close to that but that number ultimately impacts the cap. That is why it is so important that they remain efficient and become more efficient with creative revenue streams. The suite revenue isn't shared (or at least it didn't used to be because Arizona had none). It is important (and will become even more important) to find new ways to generate nonshared dollars because continuing to raise prices isn't an option once they hit that tipping point.

 

I feel like suite revenue generation was/is a huge part of the Toronto market push. Tons of corporate money up there, and having 8 opportunities to send clients/partners less than 2 hours to an NFL game is probably an easy expense to justify.

[Mr. WEO]

It's old and outdated, we need a new one to get any kind of big events. They can transform it into office space

 

There is a ton of empty office space already--isn't the HSBC tower 90% empty?. Who would spend a huge amount of money to convert open square footage into office space?

 

I think that number is high myself. I think 20-25 events total for a year is probably right.

 

 

 

There are definitely smaller conventions (etc.) that would still be held there.

 

Take a look at the current roster of events--it's underwhelming. In fact, look at the Lucas Field/Convention Center event calender. It's filled with events with under 500 attendees. Very few over 5000.

 

WEO, Taxpayer $$$ are used for all convention centerts.

 

There comes a point when most facilities become inadequate and outdated. That is the case with the current facility. There have been studies that indicated that an enlarged and more modern facility could be located on a refurbished HSBC Building site which is nearly vacant. The location where the current facility is located can be sold and used for commercial development.

 

http://www.bizjourna...r.html?page=all

 

I just don't see what large events they are going to bring in that they don't get now. There is much more evidence that there are fewer wastes of money than "new convention centers".

 

I feel like suite revenue generation was/is a huge part of the Toronto market push. Tons of corporate money up there, and having 8 opportunities to send clients/partners less than 2 hours to an NFL game is probably an easy expense to justify.

 

Why aren't those companies filling the suites now then?

[A Dog Named Kelso]

The current lease is a publicly available document and does not prevent the team from being moved to Toronto in 2020. The trust document is not a public document. Until reputable journalists reported leaks concerning the trust's preference for bidders who will keep the Bills in Buffalo after 2019, EVERYONE was clueless about the reality.

 

It's easy with the benefit of hindsight to say that it was clear all along that only bidders who would commit to keeping the team in Buffalo after 2019 had a chance. There was always speculation to that effect, but nobody really knew.

 

Even today, the terms of the trust are not publicly available. We are all hoping that the un-named sources leaking information to sports journalists know what they are talking about. There have been enough similar reports by different reporters that I tend to believe what has been published in the media about the trust's preference for an owner who will give some type of assurance (even if it isn't a legally binding commitment) to keep the team in Buffalo after 2019.

 

No one was talking about hindsight. There have been multiple reports that groups from different parts of the US withdrew when they saw it would be not be likely to move the Team. That point was the time to reorganize not continue on a course that has ultimately imploded and made him look foolish. Also, as a fan of the NFL, JBJ should have known full well the repercussions of a team moving and the bad blood that is stirred up.

 

As you can see there are still people talking about teaming up with each other. Instead the JBJ group continues to try it plan to purchase and move the team otherwise they would have been able to persuade Kelly to join. Or at least not have him make the statement he did.

[Kirby Jackson]

 

Why aren't those companies filling the suites now then?

There isn't a suite capacity issue there is a suite revenue issue. If you start to raise prices and lose people you will have some of these larger Toronto companies to backfill (at least in theory).

[TXBILLSFAN]

Toronto corporations (or Canadian corporations) are key to selling big money suites, as they have deep pockets. I don't know the cost and inventory of the existing suites and whether they could build "super" suites i.e. 50-yard line with extra amenities to sell for a lot more money in a new stadium --- that is a consideration that must be explored.

 

Having tiers of suites at different price points would maximize revenue in a manner similar to the way seats are sold in newer stadiums. I think, if done correctly, the "average" fan is priced out of the best 10,000 seats but can still afford to attend games.

 

I'm sure the Bills must have a marketing study that shows the supply/demand and price elasticity for suites and traditional seats and could use that in new stadium design

 

 

[thebandit27]

 

Why aren't those companies filling the suites now then?

 

I thought the corporate suite attendance was solid?

[Kirby Jackson]

 

It's easy with the benefit of hindsight to say that it was clear all along that only bidders who would commit to keeping the team in Buffalo after 2019 had a chance. There was always speculation to that effect, but nobody really knew.

 

It was pretty clear to those in the process. This wasn't a hindsight thing (at least once Ralph had passed). It's possible that when JBJ and company explored the options last November or whenever it was they didn't know that the team would only be sold to a group keeping them. Once Ralph passed and the ground rules were set on this thing it wasn't a mystery. That is why you heard people like JBJ saying that they would keep the team. It wasn't because that was ideal or what they wanted to do it is because that was their only chance of winning the bid.

[Mr. WEO]

There isn't a suite capacity issue there is a suite revenue issue. If you start to raise prices and lose people you will have some of these larger Toronto companies to backfill (at least in theory).

 

I guess I was more asking is, if there is a pent up demand for corporate suites in Buffalo by Canadian companies, why haven't they been driving the market for the suites at the Ralph to this point?

[Kirby Jackson]

 

 

I guess I was more asking is, if there is a pent up demand for corporate suites in Buffalo by Canadian companies, why haven't they been driving the market for the suites at the Ralph to this point?

There hasn't been much if any availability. It is a bit of a risky proposition to price out the people there and hope to fill them with these deep pocketed Canadian companies. It's kind of the bird in the hand philosophy. It's probably something that can certainly be explored with greater pricing tiers and ranges in a new stadium. Edited August 20, 2014 by Kirby Jackson

[thebandit27]

There hasn't been much if any availability. It is a bit of a risky proposition to price out the people there and hope to fill them with these deep pocketed Canadian companies. It's kind of the bird in the hand philosophy. It's probably something that can certainly be explored with greater pricing tiers and ranges in a new stadium.

 

Something along the lines of a loyalty-based right-of-refusal policy for suites, similar to what I assume season-ticket holders would get with a new stadium?

[Kirby Jackson]

 

 

Something along the lines of a loyalty-based right-of-refusal policy for suites, similar to what I assume season-ticket holders would get with a new stadium?

Absolutely that will be the case. It will be done by seniority but when you go to pick out the same seat that you used to have it is now $2k for the season and not $730 (or whatever) so you slide down to something that fits your budget better. Those then will get back filled. The same will be the case with suites. You may sacrifice some on location and/or benefits to fit your budget. Someone else will move into the higher priced options. Either that will happen or people will absorb the large price increases. There will be options for everybody I am sure but there will be more tiers in terms of pricing and benefits. The gap between the cheapest and most expensive tickets will be WAY bigger than it is now. At least this is what I would do if tasked with pricing the stadium. Edited August 20, 2014 by Kirby Jackson