Patrick Brown, Associate in the Sports Business team at law firm Lewis Silkin, reviews trends in stadium commercialisation, local council involvement in development and the rise of fan ownership and influence in the status of stadiums
More than just a stadium…
However it’s done, whether being rebuilt from scratch (Tottenham Hotspur, Chelsea, Arsenal), expanded (Liverpool) or converted from other uses (West Ham, Manchester City), football stadiums are big business, and vital community assets. There are, though, some vital legal and commercial factors that stadium owners and managers should bear in mind when looking to redevelop.
Quite simply, it is no longer commercially acceptable to sell a ticket and a pie and be done with it, and clubs are looking at ways to generate revenue all year.
When new stadiums are constructed, it’s no coincidence that box numbers go up, along with the capacity, as clubs seek to eke out every penny from their supporters, and new ways to capitalise on the myriad food, drink and merchandise opportunities are adopted. Chelsea are more restricted by space for their ongoing redevelopment, meaning they will dig down in order to increase capacity to a reported 60,000, while Tottenham have gone so far as to include the UK’s longest bar, a micro-brewery capable of delivering 10,000 pints a minute and even an in-house bakery.
Ground-sharing – particularly between rugby clubs (who typically have less money) and football clubs (Reading’s Madejski Stadium hosting London Irish, Wasps moving to Coventry City’s Ricoh Arena) – is another key means of bolstering receipts beyond match days. NFL’s popularity in the UK has offered further opportunities. Tottenham are redesigning their new stadium to enable a retractable grass pitch to slide on top of a permanent artificial NFL pitch and incorporated NFL-size (i.e. much bigger) locker rooms alongside a number of other features. Tottenham have agreed a deal to host at least two games a season for the next ten years which will bring in extra revenue, as well as promoting their brand further in the US. Twickenham are already in on the act and look set for more tie-ups in coming years.
Local councils have historically sought to gain as much as possible for their constituents from stadium developments, and sport-led regeneration has had dramatic impacts around the country in recent years.
Councils have sought these benefits in two ways. Firstly, by using the stadium to attract new businesses and families to the area. Secondly, by securing planning obligations under section 106 agreements. Arsenal for example, whose move from Highbury to the Emirates took place in the early 2000s, had extensive obligations to comply with, including funding a £60m waste-recycling centre near Holloway Road and 3,000 new homes, as well as contributing towards improvements to both Drayton Park and Holloway Road tubes.
However, with tighter guidelines now in place these regulations are not as wide-reaching as they once were and, generally, a council would not want to scare off a club by attempting to impose onerous obligations. For example, Haringey council was reportedly desperate to accommodate Tottenham rather than risk it moving to neighbouring Enfield, or to the former Olympic Stadium, and miss out on the local regeneration and income the stadium would bring. Tottenham were therefore able to negotiate a more advantageous planning permission. Although developing a new hotel, a Sainsbury’s megastore, new public square and extreme sports centre (hopefully bringing jobs) the club will make comparatively low financial contributions to the council.
Mind the community
Meanwhile, for fans and local groups who benefit culturally and economically from an existing stadium, and who may fear the ramifications of upheaval, a practical way of keeping a club rooted is through the Assets of Community Value (“ACV”) regime in The Localism Act 2011. Listing as an ACV prevents an owner from selling a stadium without a supporters group first being alerted and given the chance to make a bid. Oxford United Supporters Trust protected the Kassam Stadium back in May 2013, and Old Trafford, Portman Road, The Valley and St Andrews stadiums have since been successfully listed.
Of course, it is not all sweetness and light with many seeing ‘regeneration’ as synonymous with ‘gentrification’, and local residents routinely forced out of their homes by either compulsory purchase orders (CPO) or by escalating costs. Indeed, even clubs in more precarious positions than those discussed above can come under threat of CPO when competing interests are at play – just look at Millwall.
A stadium’s legacy is impossible to predict but what is certain is that stadiums are playing an increasingly central role to both a club’s and its local area’s future, and innovative means of attracting new supporters and maximising revenue look set to continue apace.
Contact: Patrick Brown, Associate in the Sports Business team at law firm Lewis Silkin