Posted by John Vrooman on Tuesday, May 8, 2018 in National Football League.

Interview with Las Vegas Sun.

-Is downsizing new stadiums projects and increasing technology and amenities the best way to comate the ever improving at-home game experience?

Welcome to the new NFL where smart luxury stadiums are economically designed to maximize team profit rather than fan welfare. The general downsizing trend in the NFL is consistent with textbook monopoly pricing schemes where half as many fans are gouged twice as much.

This is particularly true in the NFL where gate revenues from tickets are shared 66/34 with the rest of the League, while venue revenues from luxury boxes, club seat fees, sponsorships, concessions are not shared.

This revenue sharing asymmetry increases the Raiders incentive to distort the game-day package expense away from shared gate revenue and toward unshared venue revenue.

Team owners also have a strong financial incentive to trade volatile and risky gate revenue for relatively certain contractually obligated venue revenue and PSLs. The smaller smarter NFL stadium is becoming a luxury TV studio for NFL football that is now made for TV.

Equally shared media revenue is 60 percent of the NFL total, followed by unshared venue revenue at 25 percent and gate revenue at 15 percent. Those percentages are the relative weights that drive the economic architecture of the new NFL venues.

-In your opinion, what will the average stadium size be, in say, 10 years?

The stadium downsized equilibrium seems to be settling around 65K, and this is somewhat true regardless of market size. A classic example was the Chicago Bears move from old Soldier Field with an original capacity of 72.5K into a retro-inserted venue-revenue driven new Soldier Field with a downsized capacity of 61.5K.

-Why or why don’t you think a 65,000-seat stadium in a market new to major pro sports (in wildly successful first year of NHL with Vegas Golden Knights) like Las Vegas will be successful or not?

Stadium success or failure rests in the eye of the beholder. From the internal perspective of profit maximization the downsized stadium will be a success for the Raiders and the 31 other NFL partners.

From the external point of view of the mountain west fans however, half of the potential fan base will end up paying twice as much as the competitive market price and the other half will be excluded by price and relegated to watching the Raiders on TV or other new media.

The fortunate aspect of stadium downsizing is that it maxes profit margins and justifies private expenditures for private venues. Larger more traditional fan oriented stadiums often go past the optimum profit size and justify some public subsidization.

In the case of the Raiders stadium, Nevada virtually pays for the stadium twice. The Raiders will build a high-priced fan-financed venue that is also receiving the largest ever public venue subsidy of $750 million for a profit-max private business.

Welcome Nevada to the NFL cartel, a stone-cold sure-thing money machine.

---