Whitepaper: Connected Stadium Solutions

In the digital age, stadiums are evolving beyond physical venues, leveraging technology to expand their reach to global audiences or become self-contained entertainment ecosystems. Whether from a fan engagement or an eco-friendly (smart facility) perspective, more and more companies are developing ideas around ‘Connected Stadiums.’

 

While these solutions are a significant investment, companies frequently overlook how investors will benefit, and how to properly identify the needs of the correct target consumer. Are they succeeding according to the stadium’s primary objectives? Solutions such as the Rugby Channel (Omnigon) are simply a video OTT solution to enable customers (fans) to stream live video content. But how do you assess the value it creates? The Real Madrid Fan Engagement (Microsoft) mobile application is doing really well if the target consumer is the sporting franchise and its primary objective is to increase the franchise’s customer base.

 

Many organisations offering Connected Stadium solutions have been focused on the wrong business model, targeting the sporting franchises directly and the stadium stakeholders only indirectly. Neither of these examples really seek to justify the fundamental issue for a stadium investor – how do you shorten the time to recover the $1B investment on a new stadium, so it does not become a 12 – 15 year incurred debt?

 

Case Study

The Tottenham Hotspur stadium owners were faced with a common scenario: their primary residents (the Spurs Premier League football team) were performing well and weekly attendance had reached the current stadium’s capacity; the team was also regularly appearing in European leagues. The franchise was keen to maximise the revenue opportunity brought on by this success. The resulting decision was that its London borough, in conjunction with the football team’s investors, decided to build a new stadium next door to the existing grounds.

 

 

The challenge facing this type of investment was as follows:

 

• Cost of the new stadium – $1B
• New seating capacity – 61,000 (an increase of 17,000 seats)
• Additional revenue potential – $15M

 

With a projected 12 – 15 years for the current investors to recuperate their initial investment, the stadium is a risky proposal for the investors. However, if they do not build, then the primary tenants (Tottenham Hotspur Football Club) would likely move to an alternative venue (a case in point was West Ham United Football Club’s move to the London Olympic Grounds).

 

There are fundamental issues with building a stadium for a single sporting franchise, especially for sports like football, American football and cricket, which have a very limited number of home games combined with a restricted season. In the case of Tottenham Hotspur Football Club, there are only around 25 home games (including European league games) per season. This means that these stadiums are basically unused and unoccupied for 80% of the time!

 

Decision Context

When looking at Connected (Smart) Venues it is critical that we evaluate the value proposition to the stadium owners and not the sporting franchise. In order to do this, we need to understand the business model for a stadium owner:

 

1. The stadium’s customers are sporting franchises or events, not the fans.
2. The stadium caters to a primary tenant, but it must also be able to attract secondary tenants.
3. There are two revenue components associated with the stadium:
   • Tickets, concessions and merchandise, purchased by fans of the franchise (tenant)
   • Sponsorship, driven by the number of fans attending events at the stadium.
4. The cost of building stadiums is now only justifiable if they include additional facilities:
   • Modern stadiums now have associated shopping malls, housing, medical facilities and hotels in their vicinity (these increase revenue opportunities).
   • Stadiums must be a focal point for the local community, which in turn increases the potential fan base for the tenant sporting franchise.
5. Stadiums must be accessible via integration with public transit facilities as well as through plenty of available parking.

 

In accordance with this business model, three critical drivers make the case for Connected Stadiums:

 

1. Tenant experience:
   • The stadium should have quality sporting facilities that afford them the best opportunity to maintain or increase their success.
2. Fan experience:
   • The stadium should ensure that fans are having the best possible experience in order to justify ticket prices and maintain, or increase, the fan-franchise relationship.
3. High-profile, ‘smart’ stadiums for sponsorship:
   • A high-profile tenant sporting franchise will bring devoted fans to the stadium, filling out capacity and maximizing revenue from ticket sales.
   • The ability to guarantee seat sales also attracts major sponsorship deals.
   • Sponsors are also attracted to high-profile, state-of-the-art and technically advanced stadiums.

 

Tenant Experience

Building a new stadium without the ability to attract a successful primary tenant usually results in the creation of white elephants. This scenario is best illustrated by the Olympic Games, where the majority of stadiums have fallen into disuse after the games have ended, having found no other tenants. Other former Olympic stadiums in cities like Montreal, Sydney and Los Angeles have either become homes to small-time franchises or tourist attractions with minimal revenue. This trend has seen a few exceptions, such as London Stadium now housing West Ham United, but the tenant experience at that facility has already generated major issues less than a year into the move.

 

Sporting franchises require and expect more from a stadium than ever before:

 

• Sporting events are seen as the culmination of multiple training sessions
  • The stadium should be able to offer ‘best in class’ training, including ‘live’ video and athlete tracking/monitoring.
• Franchises expect a ‘fully equipped’ facility for their athletes
  • Expected features include training gyms, special parking facilities and local residency options.
• Athletes are considered finely-tuned machines that are expensive to maintain
  • Health monitoring of athletes is now seen as critical.

 

Cost-wise, the most significant is continuous health monitoring for athletes, both during training and at an event. Tottenham Hotspur Football Club’s wage bill for 2015 (note that this is just wages) comes to $140 Million, which is more than 4 times the yearly gate receipts! If you also consider the transfer costs of assembling a squad (Manchester City’s Team was pulled together for a mere $532M), then it becomes apparent that losing a player to injury can have a major impact on a franchise’s revenue (current single player transfer fees for top tier football sides is anywhere from $20M to $85M).

 

The following graphic illustrates the Connected Stadium capabilities that define the scope of the tenant experience:

 

 

Smart Athlete

Smart athlete technologies (such as wearables) allow the franchise to track team members while in a facility, whether as part of training or during an event. Collected biometric data can be used to improve athlete outcomes. Current approaches to athlete injury are typically reactive, but data insights from continuous monitoring enable a more proactive medical strategy.

 

Smart Coaching

Athletes’ use of wearables gives coaches a better understanding of their abilities and potential for improvement. Tracking data such as distance run, calories burned, speed (acceleration) and body temperature can help coaches adapt their strategies to maximise successful outcomes for athletes.

 

Smart Health

Athletes are making riskier plays and compromising their personal safety more than ever. In order to save them from grave danger, medical response must be state-of-the-art. There have been several high-profile cases of athletes who have come close to dying during a sporting event. Even more extreme cases include that of Reggie Lewis (Boston Celtics) who died during a preseason practice.

 

Smart Video

This is already a common capability in many stadiums, allowing sporting franchises to review training and event video recordings to analyse the team’s performance and enhance coaching.

 

Smart Referee

Rugby and cricket are the latest adopters of technologies that improve event refereeing. However, most of these are TMO (Television Match Official) rather than independent technology. Probably the most high profile of these is Wimbledon’s Hawk Eye.

 

Smart Security

Improving security within and around a stadium facility is rapidly evolving from a ‘nice to have’ to a high-profile concern. In 2016, West Ham United’s star striker Andy Carroll was pursued by a group of unruly fans who threatened him with a gun. There are cases where referees have needed additional security while leaving the pitch after making unpopular decisions.

 

These features of Connected Stadiums offer numerous ways to help sports franchises maintain and boost their revenue. They help stadium owners appeal to the most successful teams not only as primary tenants, but as secondary tenants as well.

 

Fan Experience

 

 

Most software companies looking to provide solutions around Smart Venues frequently misunderstand the scope of this engagement channel. They mistakenly believe that the primary function of improving the fan experience is the fan’s direct relationship with the sporting franchise and indirect relationship (via the event) with the stadium. In reality, the primary function of these solutions should be centred on a premium in-stadium fan experience, which raises the perceived value of tickets.

 

Every stadium must justify ticket prices in order to meet revenue expectations while trying to ensure a full house. The following table shows ticket prices for Tottenham Hotspur’ Premier League matches. Several key aspects are worth noting here:

 

1. Entertainment value drives ticket price (side seats’ perceived lower-quality views drives down the expected entertainment value).
2. Price ranges are huge without any perceived value difference.
3. Premier League teams have struggled to justify ticket price increases, which has led to a hugely complex set of varied pricing.

 

 

Cat A – Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, West Ham United
Cat B* – Crystal Palace, Everton, Leicester City, Southampton, Sunderland, Watford
Cat C* – AFC Bournemouth, Burnley, Hull City, Middlesboro’, Stoke City, Swansea City, West Bromwich Albion

 

Having a huge variance in ticket price means that it becomes much harder to establish a predictive ticket sales (and hence revenue) model for a stadium.

 

Smart Venue

There are two external bodies that have a major stake in any stadium/venue construction or enhancement:

 

1. Local government (state, county or city).

• Stadiums usually see a certain amount of investment from local authorities in order to offset costs. However, the local authorities must be convinced of a certain ROI based on added value to the local community (e.g. the San Diego Chargers’ new stadium plan was rejected by San Diego’s local authority).
• New stadium projects must justify the cost with additional revenue opportunities. It is extremely difficult to justify a $1.5B investment in a stadium that only hosts sporting events for 10% of the year. Modern stadium plans are now more integrated with surrounding communities, and usually include elements such as a linked shopping mall, activity centre, medical facilities, residential housing and hotels.

 

 

2. Sporting Authority (FA, FIFA, NFL, NBA, etc.)

• Sports teams operate as franchises with the parent body controlling which localities get a franchise and where they are located (e.g. Oakland Raiders have applied to the NFL to relocate to Las Vegas). Their decisions are driven by two major considerations:
  • Catchment area for the fan base.
  • Facilities offered by the stadium.
• The facilities aspect is critical for a Smart Stadium, as any event must offer the following capabilities:
  • Security: local authorities (such as in the UK) often require a safety certificate for any sporting event, which means stadiums must have plans to address crowd management and crowd safety.
  • Emergency response: There must be modern medical facilities available at the stadium or a viable plan to access one nearby. There should ideally be a dedicated emergency channel for connecting to the relevant services.

 

 

Smart Venue capabilities create an opportunity to increase the revenue and value proposition of the stadium, which in turn increases the likelihood of gaining approval from local authorities. Smart security and emergency response are critical for both meeting expectations and mitigating concerns.

 

Smart Venues also offer the opportunity to create an eco-friendly facility, which can reduce costs associated with basic services such as heating, lighting and electricity. Apart from the obvious maintenance cost reduction, a more environmentally sustainable offering makes the stadium more appealing for sponsorship deals.

 

Examples of eco-friendly building features are illustrated in the graphic below:

 

 

NASA Sustainability Base in Moffett Field, California by William McDonough Partners

 

Approach Enablement

Tenant Experience

 

 

In order to offer Smart Venue capabilities, some key components must be addressed:

 

• Location detection of athletes
• Speed and direction of travel
• Data connectivity
• Internet of Things (IoT) integration
• Big Data

 

Location Detection

The following table lists the options available to track athlete location:

 

 

As far as athlete tracking is concerned, the key driver is accuracy, whether it is on the athlete’s body or in conjunction with a vehicle (i.e. bike, car, skis). It is also critical to separate proximity detection from location detection (which also includes speed and direction).

 

Speed and Direction

There are two main options for tracking athletes’ speed and direction:

 

1. GPS – we can leverage existing technology to support this, however the challenge is accuracy.
2. Hyper Sync Networks and Doppler Analytics – we have access to an existing solution that not only provides location, but also includes speed and direction to a high degree of accuracy.

 

Data Connectivity

The following table lists the options available for tenant connectivity:

 

 

The primary purpose of this connectivity is to enable wearable IoT device access for athlete health monitoring. This means that the number of users connected is limited and, due to the private nature of the content, should operate on a secure, isolated network. However, this becomes a challenge if the same network is used for channels using high volumes of data, i.e. video/rich media. If the same network can (and it can) be used for location and speed, then there are tremendous cost savings associated with WiFi/LTE HSN adoption.

 

IoT Integration

This technology is critical for Smart Venues as it offers the only viable way to integrate real-time tracking (i.e. location, speed, direction) with other elements of the tenant experience (i.e. coaching and healthcare capabilities) and the fan experience (i.e. enhanced scoreboards, individual athlete statistics). The clear recommendation here is to look to cloud-enabled solutions such as Microsoft Azure’s IoT Hub.

 

Big Data

Athlete monitoring not only ensures real-time tracking of biometric data, but also the preservation of that data for post event/game analytics to further improve coaching and healthcare. However, there must be a requirement that the stored data be encrypted and only made available to certified users. Storing all this data as unstructured, encrypted content on the cloud will facilitate using approaches such as Map Reduce to extract/filter data for future analytics.

 

Fan Experience

 

 

The primary value proposition for a stadium is to deliver a best-in-class experience associated with an in-stadium event. However, most organisations offering Connected Stadium solutions get derailed around media content, as fans do not have a direct relationship with a stadium, but rather an indirect one through the sporting franchise. The challenge with the mobile fan experience is to offer an adaptive solution that enhances the event experience, while aligning with the brand experience of the sporting franchise. The key capabilities are as follows:

 

• Location
• Navigation
• Internet Connectivity
• m-Commerce
• Cognitive Learning

 

Location

The following lists the options available to track location:

 

 

For fans, stadium navigation is the main priority, which means precision is not as critical as it is for athletes. However, the biggest challenge associated with fan location is defined by the transmitter; in other words, the transmitter must be enabled by the mobile device and cannot require fan authentication within the stadium or require reconfiguration of WiFi/LTE. Therefore, leveraging LTE signals is the most likely option to pinpoint fan location.

 

Navigation

Facilitating fans’ arrival to their stadium seats is critical to their event experience. In addition to offering maps, a mobile app must provide directional tools to help fans navigate from their point of arrival through public or private transport into the stadium and then to their seats.

 

Generic mapping applications will not suffice here, as this requirement will necessitate internal stadium information and also feature a 3D aspect (multiple levels of the stadium) that includes the ability to overlay location details.

 

Navigation tools should also allow fans to move about effectively within the stadium, whether they are searching for concession stands or friends in other sections. The solution will depend on the approach adopted for location identification.

 

Internet Connectivity

While athletes require connectivity to collect biometric and performance data, fans desire Internet access both within and around a stadium for several reasons:

 

• Social media connectivity
  • In our ‘always-on’ world, the event experience – especially in the case of millennial fans – is judged heavily by its ‘shareability’ through social networks. Properly integrating these channels creates new opportunities for engagement that drives revenue through additional ticket sales and increased sponsorship impressions.
• Mobile experience
  • A mobile app or web app requires the Internet in order to function as a portal to multiple services. These could include franchise details, team merchandising, concession stands, transport options and ticket sales.
• Rich-media streaming
  • While live video may not be an in-stadium necessity, video streaming is needed for special features such as instant replays or virtual reality enhancements.

 

m-Commerce

Although Connected Stadiums are part of facilities that include retail operations, shopping opportunities should be available through mobile channels to provide a unified in-stadium fan experience. Facilitating efficient merchandise purchasing and fulfilment offers great potential to increase the customer base. This can be achieved through the following:

 

1. Single mobile shopping cart experience.
2. Single payment gateway (linked to a single loyalty programme).
   • Ideally, the loyalty programme should be linked to the sporting franchise and not the stadium.
   • The payment gateway should be tightly linked to mobile money and mobile wallets to facilitate ease of use while reducing risk associated with traditional payments.
3. Various delivery options based on a combination of the following:
   • Customer location
   • Events occurring
   • Type of product

 

Cognitive Learning

As we are now looking at an integrated ‘Smart Venue’ rather than an isolated stadium, you will find more types of customers than just traditional fans – non-sporting family members, community members who are not sports-oriented, etc. Therefore the venue experience must adapt based on an expanded view of the customer base:

 

1. Sporting fans
2. Non-sporting, family members
3. Remote fans (not part of the local community)
4. Customers as part of an event
5. Customers who are not part of an event

 

This wider scope makes gathering consumer data more critical than ever. An adaptive experience based on cognitive learning will be based on the following:

 

1. Customer’s profile (team fan or not)
2. Customer’s habits/trends
3. Date and time
4. Promotions at the venue

 

Smart Venue

 

 

 

As with airports, standards around venue security are more stringent than ever. Traditionally, the main concern was ensuring that opposing fans didn’t mix together in one part of the stands resulting in fan-on-fan violence. However, the threat of terrorist activity at sporting venues (such as the recent attacks in Paris) has escalated the need to improve security, and especially crowd management. Both sporting authorities and local governments expect robust safety features such as:

 

1. Crowd Management
   • Real-time analytics to understand potential hotspots
   • Real-time re-routing of fans to reduce bottlenecks
   • Retrospective data analysis to improve crowd navigation and access
2. Smart Security
   • Dedicated communication channels for security personnel
   • Ease of access for security (smart navigation, location tracking, smart doors, etc.)
   • IoT integration and events to automatically notify security of any potential issues (restricted door access, metal detector alarm, bomb threat, etc.)

 

While these are critical preventative measures, there also needs to be an active response capability. Most security personnel will say that fans have a critical role to play in security, but that becomes moot if there is no dedicated emergency service channel or access to emergency services. As such, we should target the ability to integrate Smart Facility with dedicated Smart Safety and leverage analytics to decrease response time. The tracking of safety equipment (location) and fastest time to a designated point (navigation) become critical to support this.

 

Summary

Many organisations offering Connected Stadium solutions mistakenly assume that the customer is solely the sporting franchise. The franchise’s entire business model is targeted at increasing and growing a global fan base that is not venue-specific. Many solutions have proven to be very beneficial for the franchise without a clear value proposition for the stadium. In the case of the Real Madrid Fan Engagement Application, its first year of availability saw 450 million fans download and subscribe. The fan engagement application for this business model is driven by media streaming (e.g. event highlights, training and promotional videos). However, this channel was useful to promote sales of merchandise or tickets to upcoming events for the team generally, regardless of the location or stadium at which sporting events were taking place.

 

Building ‘stadium-first’ solutions is an entirely different business proposition, with key stakeholders that are not so obvious. The usual initiator for a new stadium or stadium re-build is the sporting franchise owner, but that is pretty much the only stake that the franchise has. Two main groups or organisations ultimately make the decisions, but they are impacted by major influencers as outlined below.

 

Decision Makers

Local Government Authority

Usually the local government authority is responsible for partial, if not complete, funding for the stadium along with planning approvals. Its main concern lies in the value the stadium will bring to the community. Its areas of interest are:

 

• Job creation
• Revenue opportunity
• Community facilities
• Increase in customer catchment area

 

The result being that they are less interested in single-event offerings such as a traditional stadium, and more likely to approve an integrated ‘Smart Venue’ that would include features such as retail, tourist attractions, entertainment facilities, medical and residential facilities.

 

Sporting Authority

The sporting authority’s primary concern is that new venues do not become a liability that brings the sport into question of security or public safety. One sub-standard stadium will have immediate ramifications across all venues associated with the sport, and may have a larger-ranging impact on other venues. Their main concerns include:

 

• Security and safety standards
• Large enough catchment pool to keep stadium full
• Integration with public/private transport
• Value of stadium as a sponsored site

 

While they are interested in the stadium’s location and its ability to integrate with other amenities, the sporting authority’s primary concern is the stadium’s ‘sponsorability.’

 

Major Influencers

Sponsors

Sponsorship is key to making the stadium a successful part of the sporting franchise. However, sponsorship is complex in practice, especially regarding brand name retention:

 

• Most people associate the Boston Celtics with the ‘Boston Garden’ (venue name is TD Garden after TD Bank)
• The Denver Broncos play at Mile High Stadium; the stadium is actually sponsored by The Sports Authority (at least it was)!

 

Stadiums that see exposure through major TV deals – such as hosting the Super Bowl – increase their name recognition and awareness. This year’s Super Bowl was at NRG Stadium in Houston, TX, and now a large number of Americans will recognise NRG Stadium by name. This means the potential target base for customers has increased, especially if the fan experience is good enough to make the stadium a target for a Super Bowl showcase.

Sporting Franchise

Many organisations would be surprised to learn that the franchise itself is probably the least influential of the four groups mentioned here. Their primary concern is the local fan base and sporting facilities. However, their business model is to:

 

• Build a successful sports team
• Keep a local fan base that can ensure maximum season ticket sales

 

Location is critical to this model, as seen by the Oakland Raiders who have asked the NFL for permission to relocate to Las Vegas. The Raiders would be the only team within the state of Nevada, centred out of the largest city in the state, making Las Vegas a ready-made fan base. In San Francisco they must compete with the San Francisco 49ers that have a high profile, connected stadium (Levi’s Stadium). A stadium looking to create a fan base from the local community has the following interests:

 

• Sport training facilities
• Fan experience (match day)
• Local community integration (shopping, residential, etc.)
• Ease of access (public/private transport integration)

 

However, the team’s revenue source is primarily driven from sponsorship, as ticket sales (assuming all games are sold out) are pre-determined, with the exception of post-season success and TV broadcast payments.

 

Many organisations offering Connected Stadium solutions have been focused on the wrong business model, targeting the sporting franchises directly and the stadium stakeholders only indirectly. The parties described above are ultimately those who will determine the success of the offering.