Monday, November 9, 2009

Setting the Bar Too High

By now the news of the 2015 Pan American Games being awarded to Toronto and the Golden Horseshoe, or Southern Ontario, or some other variant geographical winning location name. Part of Hamilton's contribution will be added event locations including a government-backed/financed 15,000 seat stadium, a swimming pool at McMaster, and a velodrome. Adding to Hamilton's wish or needs list, is that the current 30,000 seat Ivor Wynne Stadium, home of the Canadian Football League Hamilton Tiger-Cats, is in dire need of replacement.

With that, Hamilton's leaders of perennial prognosticators of pugilistic participants are seeking to take the 15,000 seat gift tand double its size through private support most likely in corporate sponsor dollars towards the larger stadium. If there is a shortfall of required additional dollars required to build the larger than required stadium (for the Pan American games), then funds will be garnered through the tax assessment. Hardly something which taxpayers are supportive of.

To determine whether a 15,000 or a 30,000 seat stadium is the best fit, we must first look at the numbers:

Originally known as the Civic Stadium, it was constructed for the 1930 British Empire Games (now called the Commonwealth Games), Ivor Wynne has certainly enjoyed many years of athletic events. Throw in a few concerts, which caused much disdain from residents living close by, and you've got one heck of a facility…or at least it was. The 2007 Pan American Games in Rio de Janeiro saw close to 90,000 attend the opening ceremonies at the Maracana Stadium. While Hamilton will not be involved in any of the pomp and ceremony, the proposed stadium is planned to be used for the "Athletics" components of the competitions. Back in '07 Athletic competitions were held in two stadiums, the 60,000 seat Estadio Olimpico Joao Hevelange and the spacious Flamengo Park. When the Games were hosted in Winnipeg in 1999, attendance for all events hovered around the 500,000 mark for about 330 events, plus the opening and closing ceremonies. Given the history of the Games, it would appear that a 15,000 seat stadium is more than appropriate for Hamilton's participation in the Games.

What is sure to become the major tenant before and after the Games, is the CFL TiCats. Oddly enough, they're looking for the extra seats, which based on their historical trends, leans somewhat inappropriately too far out of a realistic reach. In 2008, the Kitty Litter attracted an average of 20,785; a decrease of 10.4% from 2007. This decline saw the stadium void of fans by the tune of 29.8% per game. Hamilton is a City in desperate need of adding value to the product it fields during the CFL season; certainly leaving the stadium one-third empty leads one to believe that there is little to no value in rushing out to buy a ticket to a game. 2009 attendance numbers fair no different, with only a slight increase in attendance (and one could go further to argue the actual numbers, as announced attendance seldom reflects those present in the stands).

Hamilton would do well to build a 15,000 seat stadium, with the capability to expand or add seats as required depending on the game or event. One only needs to look at the success of the Montreal Alouettes who moved from the spacious Olympic Stadium to the cramped confines of the 16,600-seat McGill University. The end result saw the Als play for a sold-out game every time. This equated to higher valued tickets and product…meaning more revenue for the team. You can rest assured that no one is giving away tickets for free in Montreal. In other words: why expand your inventory and dilute the value, when you can reduce your inventory and increase your value? From a business case scenario, this makes complete sense. Other sports franchises have toyed with this concept with consistent results; they create the demand to warrant a higher capacity facility while capitalizing on increased revenue growth due to high demand.

Manage the expectations, and the rest will take care of itself. Set the expectations too high, and you leave yourself vulnerable to criticisms which distract from any successes attained over time.

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