Building stadiums and arenas – but not for sports

Concerts are lucrative, lucrative enough to construct buildings with 10,000-18,000 seats primarily for shows:

Los Angeles-based Oak View Group, an entertainment and sports-facilities company backed by private-equity giant Silver Lake, is slated to develop eight new arenas over the next three years, six of which will forgo major-league teams, largely to keep their calendars clear for concerts.

An arena can generate twice as much net income from hosting a concert than a National Basketball Association or National Hockey League game, according to Oak View. Live music is expected to balloon to $38 billion industry by 2030, from about $28 billion currently, according to PricewaterhouseCoopers. Oak View said being able to schedule twice as many concerts as it would otherwise with a professional team in house is an attractive prospect in markets including Palm Springs, Calif., and Austin, Texas. And as streaming is helping artists develop larger international audiences, markets including Manchester, U.K., and Milan are ripe for more arena shows, too…

The company said the arenas are being designed with music as the primary focus, from acoustics to VIP amenities. They will include fewer suites – a pet peeve of musical performers, who typically aren’t able to sell tickets for those seats – and add more clubs within the venue to entice concertgoers to linger before or after a show.

Multiple thoughts in response:

1. The ability to tweak the venue for music in multiple ways seems like a big win for artists and audience members. Instead of being in cavernous arenas that need enough floor space for a playing surface, everything can focus on a stage. It will be interesting to see how sound quality in new arenas like this compares to multi-use facilities.

2. This is a reminder that the big money in sports is not necessarily in attendance to games but rather in television rights and other revenue sources. Could this lead to a future with smaller sports arenas that provide an upgraded experience (it is already difficult to compete with large HD televisions) and more emphasis on what is built around the stadium?

3. Sports teams often ask for public money for facilities. And many communities seem willing to provide it, even when the evidence suggests it is not a good investment. Will music arenas also be funded with public money?

4. Since many larger cities already have arenas or stadiums, it will be interesting to see what mid-sized markets get music-only facilities. Some of the locations mentioned above are places without major sports teams (like Austin). But, I could imagine some of these facilities within large metropolitan markets in order to cater to musicians (imagine such a facility in the southwest or northern suburbs of Chicago taking away business from the United Center, Allstate Arena, and the Sears Centre).

5. Just as sports stadiums and arenas have limited games, these facilities will have a limited number of concerts each year. What else could the arenas be used for?

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