Barclays Center
Barclays
(Multi-National Corporation)
• Personal banking
• Credit cards
• Corporate & investment
banking
• Wealth & investment
management
• International presence
in Europe, North &
South America, Africa &
Asia
• Located in 50 countries
• 140,000 employees
2001
Bruce Ratner – NYC real estate developer
• 22 acres at the corner of Atlantic & Flatbush Ave
– Vacant land, tenements & warehouses
• Walking distance from 4 gentrified Brooklyn
neighborhoods
– Above a Atlantic Yards (railway yard)
– All of Manhattan & a large part of Long Island was a
20 min ride away
Kelo vs. New London
Old Dominion Land Co vs. United States
Rindge Co vs. County of Los Angeles
• Permissible to seize private property in the
name of economic development
• Public use as defined by US Supreme Court
Justice Sandra Day O’Connor includes a
stadium
2003-2004
• NJ Nets sold to Bruce Ratner
• Nets + Jay-Z + Kelso et al + Olympic bid for
2012 + nostalgia (pro sports in Brooklyn again)
= the arena gets built
This Was a Business Decision, Not a
Basketball Decision
• Ratner’s purchase of the Nets
– Not a stand alone commercial enterprise
• (ticket sales + revenue) > (player salaries +
administration costs)
– Eminent domain insurance
• Ratner’s sale of the Nets to Mikhail Prokhorov
– Recession in 2009
– General purpose real estate bailout
Ratner and the Arena
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This was the asset he wanted out of the deal
Naming rights = $400 million
Annual revenue = $120 million
Operating costs = $30 million
Mortgage = $50 million
$35 million profit on an initial investment of
$350 million (annual return of 10%)
Prokhorov Take
• This project has “explosive profit potential”
• Capitalization of the team will earn $700
million more after the move to Brooklyn
• Nets approximate annual earnings = $30
million
• Arena is worth $1 billion (owns a 20% share)
In Sum
1. Man buys basketball team as insurance on a
real estate project
2. Franchise is flipped to Russian billionaire
3. Both parties count their money
Next on the Agenda
• Move the New York Islanders to Brooklyn
The Art of the Sellout
Case Study: Citizens Bank Park
Philadelphia Phillies
• 3 years of consecutive sellouts
– 268 games (as of July 23, 2012)
• Typically draw 44,000 to 45,000 fans per
game
• Eventually attendance will decline
– 38,000 to 40,000 according to John Weber,
Phillies VP
Citizens Bank Park
• 43,651 seats
– 43,300 to 43,400 paid fans is considered a sellout
• Standing room sales are added to the total
– Brings attendance to over 100% capacity
• 2011 season
– Phillies won 102 games
– Averaged over 45,400 per game (104% capacity)
• 2012 season
– Still over capacity
– Selling 600-700 less seats per game
This is a sellout?
Empty Seats
Sellout Math
• Calculated by tickets sold
– Not the actual number of people who come through
the turnstiles
• No shows count in attendance
• Complimentary tickets are not counted
– Tickets available in secondary markets
(ex. StubHub)
• Approx 5,000 per game (June 2012 data)
• This market is softening for certain non-rivalry
games
– Many tickets are sold below face value
Current Attendance
• Through 28 home games in 2012
– 44,980 paying customers per game
– Lead the Major Leagues in average attendance
• As of 2012 only the Phillies & Red Sox average
over 100% capacity
2012 Ticketing
• 28,000 season tickets sold
• Began selling single game tickets in February
– Unload this inventory as early as possible
– “you never know how a season will go” Weber
• The walk up market
– At least 500 tickets are available on game day
– Can be upwards of a few thousand  based on
supply and demand
Ticket Sales Challenges
• Perceived scarcity
– 15 games in 18 days, 19 games in August  going
to one game is not perceived as scarce good
• Weather
– Early season in Philadelphia  cold
• Schedule
– 19 games in August  family vacations
Factors the Contribute to Sellouts
• Size of the stadium
– Veterans Stadium seating capacity was 62,382
• Aesthetics of Citizens Bank Park
– Servicescape
• The Phillies have been winning
Plenty of Good Seats Were Always
Available at the Vet
Drop Off in Ticket Demand
1. New stadium loses its novelty
– Novelty of a new stadium lasts 3-7 years
– Citizens bank Park was opened in 2004
2. The team begins to struggle
– See 2012 – 2014 Phillies
Secondary Ticket Market
• Key indicator
• Typically starts slow (April & May)
• Picks up in June, July and August
StubHub
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Subsidiary of ebay
Official secondary ticket market for MLB
Has access to all MLB team websites including ticketing
Estimated annual revenue of $325 million for baseball tickets
– 8 million tickets sold
• Market presence has led to an increase in revenue for teams
– making it easier to sell season tickets to fans who know they can
easily sell tickets they cannot use
– Teams generate revenue twice
• Initial sale
• Via agreement with StubHub MLB gets
– $60 million annual payment
– 12.5% of total ticket price