Phish-ing for New Operational Revenues

Mar 7, 2012 10:18:35 AM

Miami Dolphins, Sun Life Stadium and IBM Intelligence Operations Center

Last September, Forbes Magazine published its 2011 ranking of the NFL’s Most Valuable Teams. Forbes gives detailed financial information on why NFL franchise values are “only” growing by 1.4%. The article notes that operating costs for NFL franchises are rising. This increase is due to:

  • Increased costs due to stadium management and employee expenses
  • Expanded marketing expense due to poor economic conditions

These increases are not massive issues for NFL teams when you look at them in isolation. However, when you link these changes in operating costs with recent drops in attendance at NFL games and associated operating revenue – two trends that negatively impact team and/or stadium operating margin emerge. For majority of NFL teams and stadium operators, this is a situation that requires attention.

Home Game vs. Games at Home

Exacerbating the operating margin problem is the trend of fans staying home to watch games. At one time, the best “game experience” was at the stadium. This is no longer the case. Three technology advances have served to “encourage” fans to stay home:

  • Advances in HDTV video quality and availability
  • Access to near real-time replay and scoring information via cable/satellite and internet video
  • Popularity of on-demand fantasy football scoring web updates

NFL teams and stadium operators are looking for ways to combat these advances and raise stadium operating revenues. These include ticket revenue, parking and food and beverage concessions. To complicate these matters, teams and stadium operators are up against competing against some of their own league-branded offerings. For example, NFL RedZone and Fantasy Football are two examples.

Miami’s Approach

The Miami Dolphins and Sun Life Stadium are attempting to improve their operating margins via heightening their fans’ customer experience by optimizing stadium operations. Sun Life Stadium is implementing IBM’s Intelligence Operations Center solution. The IBM IOC will enable the Dolphins and Sun Life Stadium to manage traffic congestion into and out of stadium parking lots; anticipate chokepoints at stadium entrances; and manage food and beverage distribution to make the fans’ experience worth the added time and dollar investment of coming to the stadium.

Cloud’s Silver Lining

With the operational margin and customer experience challenges, Miami has an additional issue. With the move to a new stadium and the re-branding of the Florida Marlins (now Miami Marlins), Sun Life Stadium is attempting to improve operating margins even though it has lost over 80 event dates against which to balance operational improvement investments. To combat this situation, Sun Life Stadium has chosen a cloud-based IBM IOC implementation that allows Sun Life Stadium to better manage its technology costs per event. Instead of 90+ major sporting events (10 NFL pre- and regular season / 81-83 MLB pre- and regular season), 2012 will feature only 10 scheduled NFL sporting events (not including post-season). Utilizing cloud-based operational expense models will lower fixed technology expenses. This will be critical to avoid excessive focus on implementation infrastructure costs in the form of servers and licensed software and not enough emphasis on the results of fan experience improvements.

Associated EMA IBM IOC Content:

Focus On The Forest Rather Than The Trees: IBM Smarter Cities China

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John Myers

Written by John Myers

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