On a Tuesday in February a forty thousand seat ground in the north east has eleven people inside it. Two are in the ticket office, four are in the maintenance store, three are selling conference space in the west stand, and two are walking the upper tier with a clipboard, counting cracked seats.
The resident club plays there twenty-odd times a season. On the other three hundred and forty days the building is a cost: heating, insurance, repairs, security, and a pitch that has to be mown whether anybody is coming or not.
A stadium is an enormous fixed cost with a very small number of trading days, and the skill is entirely in what you put into the gaps.
The certificate decides how big the business is
Capacity is not a commercial decision. For a designated sports ground it is written on a safety certificate issued by the local authority, under the regime brought in by the Safety of Sports Grounds Act 1975 after the Ibrox disaster. The council takes advice from a safety advisory group: the police, the ambulance and fire services and the council's own officers. The Sports Grounds Safety Authority oversees designated grounds in England and Wales and publishes the guidance the certificate is written against.
It is not one number on a front page. It sets how many may be admitted to each part of the ground, and attaches conditions: stewarding, exit capacities, the state of the barriers, how the crowd is counted through the turnstiles.
It can also be varied, which is the part an owner underestimates. A general safety certificate covers use for an indefinite period, and the authority can amend it at any time. Where the risk to spectators is serious enough, a prohibition notice can restrict or prohibit the use of all or part of a ground. A stand closed in September is a stand closed for September's fixtures.
The rest of the paperwork is ordinary licensing at an unusual scale: a premises licence under the Licensing Act 2003 for the bars and regulated entertainment, every food outlet registered with the council and rated, a fire risk assessment, door supervisors licensed by the Security Industry Authority, and a licence for the public performance of music, which matters more than it sounds once the summer is concerts.
Behind all of it sits the Taylor Report of 1990, written after Hillsborough, which brought all-seater grounds at the top of the game: fewer people, paying more each, in a building that costs far more to provide.
The tenant fills it and pays less than it costs
The resident club is the reason the building exists and very rarely the reason it makes money. An anchor tenant on a long lease brings the crowd, the fixtures and the name, and negotiates from a position everybody in the room understands. The ground has no other use on a Saturday in November, and the club has nowhere else to go. Deals settle between those two facts, usually below what the space would earn on the open market.
So the business is what else goes in.
- Concerts. Three nights on the pitch in June can be worth a great deal more than three match days, because the promoter takes the ticket risk and the bars are still yours.
- Boxes and hospitality, sold by the year rather than by the match, at a far better margin than a seat.
- Conference and banqueting space in the concourses, which trades on weekday mornings, plus tours, a museum and community use of the training pitches.
Two things cap that. The pitch is a growing surface and does not enjoy a stage, a steel deck and a crowd standing on it, so the summer programme is built backwards from a relay. And the neighbours did not choose to live beside an arena: planning conditions commonly limit the number of late-finishing non-sport events in a year, so the concert business has a ceiling set by the planning authority rather than by demand.
VAT is simple here, and worth stating because people assume otherwise. Admission to a sporting event run commercially is standard rated. The exemption for sport belongs to eligible non-profit making bodies, and a stadium company is not one.
Capacity is certificated, and only some of it sells
The number underneath turnover is the certificated capacity, and the share of it sold across a year.
Work it through on a forty thousand seat ground with twenty-five event days. That is a million admissions available, and at an average of £34 a head a theoretical £34 million that nobody collects, because the tenant's crowd is the size it is and the concerts are three nights.
None of the cost base moves with any of it. Debt or rent on a hundred and twenty thousand square feet of enclosed building, insurance in six figures a year, energy on a floodlit site, and a groundstaff and maintenance payroll that is there in June as well as in November. Stewarding is the flexible part, at something like £22,500 for a full-time equivalent.
Gross margin on the trading is high, near seventy per cent, because a seat costs almost nothing to sell twice, and that is precisely what misleads people. A high gross margin over a fixed cost base means the business is violently geared: the first thirty thousand admissions of a year pay for the roof, the last five thousand are nearly all profit, and the arithmetic runs in reverse just as fast.
Getting in costs between £8,000,000 and £90,000,000, the distance between a twelve thousand seat community ground and a city bowl built from nothing. It is a very small trade: something like ninety grounds in Britain operate at anything like this scale, employing in the order of fifteen thousand people and turning over roughly £1.8 billion between them. Both are the scale of the trade rather than a published count.
The way it ends is a certificate being varied
Rarely by slow decline. The sequence runs like this. A crowd incident, a stewarding failure that the review afterwards makes plain, and a variation to the safety certificate that closes a section and takes six thousand off the capacity.
Two things then happen together. The income from those seats stops while every fixed cost carries on. And the anchor tenant, whose crowd no longer fits in the ground, arrives to renegotiate the rent on the basis that it is not getting what it paid for.
The quieter death is a tenant that leaves. A stadium without an anchor still has its certificate, its debt and its twenty-five days, and only about three of them are spoken for.
Where this shows up in the game
Business Baron runs a stadium as a calendar. Every month you decide what goes into the building: how many non-sport nights to sell, whether the pitch can take another stage before the relay, and how close to the planning limit on late events you are willing to run. One more concert in July is worth a great deal and costs you the state of the turf in August.
The number on the screen is the certificated capacity and the share of it you have sold. The local authority and its safety advisory group are not decorative. Steward badly, or let the barriers go, and the certificate is varied: a stand closes, the capacity falls, and the tenant who fills the place asks what the rent is for now.
It is one of the specialist trades, built to sit on top of the full game rather than replace it. The Stadium Operator page sets out the capacity, the season and the setup range the trade starts from.