Bramley-Moore demand and how to grow it further

When I have put the case for a higher capacity stadium one of the first objections put forward are on the grounds that “thousands of empty seats will destroy atmosphere”. Firstly I hope to demonstrate that there would not be “thousands of empty seats” but I also think there’s a more interesting point to make:

Following that logic through to its natural conclusion one would imagine then that given most Premier League stadia operate at or near capacity, particularly Goodison, then match day atmospheres should be at least as great as they ever have been, for example, like the 70’s and 80’s when many grounds, Goodison included, had average attendances around 60% of the then capacity.

That is clearly not the case, so I find the linkage between capacity attendances and atmosphere a confusing one, and not based on current evidence. With the greatest of respect to those that offer such views I’d suggest there’s many more pertinent factors that have a greater effect on atmosphere than  the levels of stadium utilisation (closeness to capacity).

scousers this end

 

Fear of not maximising the opportunity – the opportunity cost

There is of course, the argument that empty seats represent money poorly spent, a wasted resource. I’d like to flip the argument on its head and say that week in week out capacity attendances in a smaller stadium would represent a much greater loss, the loss of potentially higher ticket revenues and of course ancillary revenues from food & beverage and other merchandising sales. The current capacity and facility constraints at Goodison represent this point entirely.

Empty seats represent (in the absence of unusual circumstances such as very bad weather), in my view, a failure to stimulate demand in line with capacity either through the product, pricing or marketing of the club. However, all three of those causes (even the performance of the team as a contributory factor) are more easily rectifiable than trying to solve the problem of capacity being smaller than demand.

Thus, as stated in my previous article, the proposal to go with a smaller capacity represents a greater risk to the club in the long term than a bolder, higher (but still achievable) initial capacity.

But this article is about demand, so let’s present the case that supports demand to fill a 60,000 seat stadium rather than a 52,000 capacity as currently proposed.

Firstly some general observations.

The Halo effect. Since 1988, 32 Football League & Premier League clubs have moved to a new ground (33 when Spurs move). If one compares the average attendances 5 years prior to the move versus 5 years after, average attendances increased by 62% across all the ground movers.

The Premier League is a booming industry. The first season (1992/93) of the Premier League saw 9,763,140 fans attend at an average of 21,132 per game. By season 1998/99 the total attendance at Premier League games had grown to 11,623,133 (average 30,587). The last complete season (2017/18) saw  growth by more than 25% to 14,552,748 (average 38,296) with almost all clubs having stadium utilisation well into the high 90%’s. From an academic perspective, utilisation (capacity) greater than 95% is considered to be a constraint on demand (ref: Buraimo and Simmons, 2006).

If we look at Manchester United, Manchester City, Arsenal, Liverpool, Chelsea and Spurs their average combined attendances have increased by 58% in the last 20 seasons.

Everton, the only ever present in the Premier League alongside 5 of the “big 6” and constrained by the size of Goodison Park has grown its average attendance from 36,203 to 38,797 (an increase of just 7 %).

Historically Everton have been a massively supported club, featuring in the top three average season attendances no less than 42 times. Only Manchester United, Arsenal and  Liverpool have appeared more.

So the background is encouraging.

How have other clubs grown their attendances?

Largely through providing bigger stadia (to satisfy demand – latent or created) and creating distinct product offerings across different categories of supporters. There has not been a huge amount of innovation to generate the additional demand, for most clubs there is an element of order taking rather than enormous sales and marketing effort.

There’s essentially three different categories of supporters (albeit with many sub sets within the three groups); Premium and hospitality spectators, season ticket holders, walk up (ad hoc) ticket purchasers.

The London based clubs plus Manchester United, Manchester City and Liverpool have made considerable investments in premium and hospitality seating, recognising the real revenue generation opportunities and the likelihood of selling capacity from this category. All have more than 10% of their capacities allocated to premium seating, Liverpool at 14%, Spurs at 12% and should Chelsea eventually go forward with their plans, a projected 28% of seating allocated to this most cash generative source. (For those that think the Chelsea stadium project is dead, Chelsea are yet to release from employment any of their stadium development people.)

Goodison currently has around 3.5% premium seating, and based on the proposed capacity of 52,000, 4,000 premium seats would represent 7.7% of capacity. I fail to see how a brand new, iconic ground on the banks of the Mersey should anticipate only selling half the amount Liverpool sell for each game.

Depending upon the business model season tickets form a significant part of the overall attendance (in the case of Everton) or just partly accommodate demand for regular tickets in the knowledge that non-season ticket holders will buy individual tickets at greater expense to themselves, thus being a pure revenue generating exercise.

Most major clubs have season ticket waiting lists, itself a reflection of how popular the game of football is, and the continued demand to watch regular Premier League football from the same seat, surrounded by known faces (family, friends or acquaintances) in a familiar (and chosen) part of the ground.

Despite offering a considerable number of obstructed view season tickets, Everton have both a record number of season ticket holders plus a record number on the waiting list (circa 10,000).

I suspect the offer of a season ticket in a brand new stadium with perfect sight lines and unobstructed views would enormously increase demand. West Ham, in a monstrosity of a stadium, added more than 25,000 to their season ticket numbers on their move to the former Olympic stadium. That’s with a club who in behavioural terms has done almost everything it can do to distance itself and damage its relationship with its own fan base.

Increasing demand

Many of the contributory factors as to why there’s an upsurge in new season ticket holders in a new stadium are often overlooked. Just think how the current arrangements at Goodison suppress demand? Going to a football match is largely a social event. Fans tend to go in groups be they family, friends or even work colleagues. Over time those groups are likely to expand (particularly those with young families, or young adults having higher disposable incomes). There’s currently no scope for that to happen at Goodison. Not only are season tickets restrained by the capacity limit, season ticket renewals are at record levels. In effect a complete log jam. I suspect also that those tickets not renewed will offer the worst of the views and facilities Goodison has to offer. Therefore, from my perspective current season ticket levels and waiting list size do not reflect the likely demand for Bramley-Moore. With a 52,000 seat capacity we would likely have a limit of less than 42,000 season tickets.

Assuming 4,000 executive/premium seats, that would leave the same number of walk up ticket availability at Bramley-Moore as is currently available at Goodison, circa 2,500. Surely even the most cautious or least optimistic supporter would recognise we will sell many, many more individual match tickets than we currently do at Goodison. Meanwhile, over at Anfield, nearly 18,000 non season ticket, non premium seats are sold to their “home” support every match.

Modern approach to selling and pricing tickets

A match ticket is ultimately proof of the right of entry to a given match on a given day. Compared to other industries with identical issues of fixed capacity and time limited product, many sports, the entertainment industry, and much of the travel industry, the approach to selling and pricing tickets in football is archaic.

Season ticket holders have grown used to the idea that maximum savings are achieved by paying for your ticket a considerable time in advance, or having more favourable direct debit terms for those wishing to spread the cost.

Why do the same principles not apply to “walk up” purchases?

Why is it not possible to sell groups of matches offering “x” regular games alongside guaranteed access to the most desirable games?

There are many markets totally untapped, including group tickets (for example) allowing families or friend groups to pool together,  allowing different individuals to attend seamlessly on the same ticket or account.

Larger attendances lead to greater “ancillary” revenues

One of the strongest correlations in football is the link between attendances and revenues generated from merchandising and food and beverage sales. However little work seems to have been done in creating merchandising deals for match goers. Why can’t merchandising offers be used as an incentive to attend the match? So for example, in the event that ticket sales look slow for a particular game why not offer merchandising or special food and  beverage deals as an incentive to attend?

The need for the highest possible capacity

I have written comprehensively on this topic including the case for 60,000. It’s impossible in a 1500 word article to go into detail on all that could be done to ensure capacity attendances in a 60,000 seat stadium.

However the evidence is clearly there that this is achievable, and similar increases in demand for tickets have been achieved elsewhere. It’s also undeniable that the club has not needed to use modern marketing and demand creating techniques to fill Goodison. The proper implementation of such strategies would add another layer of certainty to filling a 60,000 seat Bramley-Moore.

The financial benefits to the club given the funding model are clear too. This is not a vanity exercise. It’s a reasoned argument for making the club as big as it possibly can be, generating income to benefit the work of the Director of Football and manager of the day. It’s also about helping close the gap between ourselves and the clubs above us. It’s about moving to a new stadium and maintaining affordability whilst increasing income to the benefit of the footballing side.

The case is clear, and we should keep pushing for the highest possible capacity.

14 Comments

  1. Terrific read and unless I’m mistaken a real but respectful challenge to the club that they would ideally be responding to in some way.

    The merchandise/food/beverage add-on is a highly successful ticketing ploy used in the US and elsewhere to increase walk-up or casual ticket sales, so why couldn’t it be adopted here ?

  2. Brilliant stuff Paul and speaking as one of your regular comment giving dullards who worries about empty seats, you’ve convinced me ! 60,000 it is, or even 62500. Now let’s see the EFC response as I’m assuming you’ve shared this with your finance and stadium development contacts at the club?

    How do supporters effectively lobby the club to have this as an open discussion ?

    Just a thought. Is it possible that privately the club might well agree with everything you argue here but do not believe they can that easily increase their borrowing to buy the extra 6000 to 8500 seats? We are to a degree assuming that the loan is pretty much lined up. Bit is it ? Could there be a reassessment going on due to those nagging risks about the teams performance leading to the unthinkable R word sooner rather than we all like to think ie never?

    Or, there is an uncomfortable feeling emerging that the construction project is so much more complex and restrained that those 8500 extra seats represent a much larger tech challenge than anticipated and therefore the extra seats are proportionately so much more costly on this site ?

    As you know I feel there are a number of signs that there are real issues around the new stadium over and above the capacity. Funding is a biggy of course, but frankly as the recent travel survey backed up, it all feels like getting to and away from the stadium is going to be an utter nightmare the way the survey repeatedly issued pointed warnings about how impossible it’s going to be to have your car nearer than say, Widnes.

    It all feels uncomfortable to me and a massive distraction from the utter dross being served up in the pitch as we apparently “head in the right direction” when many of us think we are still going backwards with no clear and arguable sign that any progress is being made on the pitch. But, you’ve defo persuaded me that the capacity should be 60000 to 62500 !!
    All the best
    Mark Rustyman Wilson

  3. Cheers Mark appreciate your comments but I’d never call you a dullard:)

    Regarding lobbying the club I’d encourage as many as possible perhaps using the reply box here: https://peoples-project.co.uk/helping-you-find-the-right-answers/

    I think there are still challenges as you point out, and the rate of progress if any, across the club on and off the pitch is achingly slow.

    Moshiri has been and continues to be a huge benefactor to the club but operationally the jury is definitely still out.

  4. “There is of course, the argument that empty seats represent money poorly spent, a wasted resource. I’d like to flip the argument on its head and say that week in week out capacity attendances in a smaller stadium would represent a much greater loss, the loss of potentially higher ticket revenues and of course ancillary revenues from food & beverage and other merchandising sales.”

    So the club should build an 80,000 seater stadium? I’m sure it would be sold out once per season.

    I’m sorry but you again fail to prove a business case. What you write is not from a business perspective, rather from a fans.

    For instance, you bring up merchandising and beverages. How much does an average EFC fan spend on a matchday minus ticket price? And what sort of analysis have you done to conclude that EFC could sell nearly the same amount of corporate boxes as the spawn? That 10,000 long waiting list is also very icky. It’s a nice marketing ploy from the club but I have heard that in practice it usually doesn’t take many weeks before you get your season ticket after application.

    1. Marko, I’m not entirely sure what your issue issue is to be honest. I’ve campaigned for 60,000 because (i) I believe it to be affordable to the club (ii) I believe that matches demand (iii) it is a sweet spot that allows for a reasonable number of premium seats, can maintain affordability for ordinary fans, and provides a reasonable uplift in net income after financing costs.

      You’ll be aware that Everton outsource their F&B operations currently, so it’s not possible to access that data regarding F&B spend, but all business and academic studies provide a clear correlation between attendance and F&B plus retail spend on match days.
      Re Premium seats, I never suggested the same level as Liverpool but suggested that less than half the level is not ambitious enough. Demand in the corporate market can be created if pricing, product and marketing meets potential client expectations.
      By all means publish your own view of the ideal capacity with supporting evidence – I await with interest.

      1. Of course there’s more F&B if there’s more people in the stadium. You don’t exactly need a study to figure that out. But this info in itself is completely useless. You need to know how much this is per seat. And then you just add that to average seat price.

        I think the club officials and specialists they hire are the best people to figure this out. I don’t claim to have all the data available. But there are a few tidbits, namely:
        – Meis saying the last 10k seats are the most expensive
        -> We are talking minimum 60m, possibly something like 80m for the 10k seats,
        – Loan is planned to be for 40 years
        -> At the very least the extra seats costs 1,5 million plus interest annually
        – Average seat price is about £25
        -> 8k seats without the unknows (=F&B) means about 4 million pounds per year including tax – this is if every match is sold out
        -> Realistically those extra 8k seats would generate about 2 million pounds per year profit assuming every match is sold out
        – Everton’s revenue will be over 200 million with the new stadium
        -> 8k extra seats would add revenue by 1%
        -> What does those 8k seats have to do with ambition when you can’t sign a single good player with the extra income?
        -> Instead you risk making a loss (not much) and seeing plenty of empty seats if your optimistic guesses on increased attendances aren’t true,
        – The fact EFC’s best ever attendance was about 52k in 62/63 when there was no TV and tickets very priced so even poor people could afford them,
        – Our support is more local than for example Liverpool’s which means less tourists (=less merchandise sales, less F&B since locals prefer other pubs).

        I find it hard to figure out what the upside of building a 60k stadium is except to be able to say it’s bigger than the neighbours’.

  5. I’m not sure you have fully read my articles Marko. The model accounts for the higher increase. The additional costs come from equity not loans as I’m fairly certain the maximum loan amount will not be determined by capacity or cost. I have proved beyond all reasonable doubt that the demand to watch PL has grown substantially in the last 25 years, and the justification for a larger stadium is twofold – it allows for a greater degree of affordability whilst increasing net income over financing costs. Thanks for taking the time to reply.

      1. Correct regarding Moshiri. If you listen to my interview with Ryazantsev it is very clear that Moshiri will fund the capital required.

        Usmanov sold his Arsenal shares to Kroenke in August. I do not expect him to be an investor.

  6. Seems a poorly thought out article. No case study / evidence. Just wild conjecture.why does the author seem desperate to justify larger capacity. EFC no larger than LUFC, NUFC….

  7. Another great article Esk, thank you for taking the time to research all the facts while putting together a fantastic and compelling argument for a 60.000 seater stadium, don’t be put off by the negativity of the detractors and keep on striving for the number of seats that the majority of true blues expect while we try to keep in touch with the front runners of the pack of which we used to lead

  8. This is a superbly written article, very well researched and argued.

    I was in the camp that a 52,000 capacity would be good enough as long as there was the possibility of extending this to 60,000. The biggest factors for me are the “wall of sound” stand, ensuring every seat is close to the game and improving our corporate facilities – we can’t just rely on fleecing the existing fanbase in order to stay afloat and have to maximise our commercial and corporate revenue streams.

    My one concern is in relation to the additional development costs which would be required in order to meet the extra capacity. If finding the funding or getting planning permission for the extra 8,000 seats is prohibitive then I’d sooner us go for the lower capacity – as long as this includes a strategy for expansion in the future.

    I’d hate to see us blow another opportunity like the King’s Dock because of escalating costs. We are lucky to have this 2nd opportunity to build a world-class iconic stadium on the waterfront. I seriously hope that we do not waste this chance. If we do then Everton as a football club will struggle to be an entity in the English football scene. Bramley Moore is our only hope of making our great club have a promising future as well as a glorious history. Please do not blow this Everton!

  9. Thanks Craig, apologies for not authorising your comment earlier, for some reason I didn’t see the notification. Thanks for taking the time to comment.

Leave a Reply