Didn't read the article or anything in the body, just the title, but whenever I go to Rockets games I fill up down the street on Franks Pizza because concessions are so damn expensive. If it was reasonable I'd be eating at the game, and I'm sure everyone else that does what I do can say the same. For Tilman it'd be a matter of how low can you drop the concession prices before you start to see a loss in income.
Coincidentally, that was my immediate take-away when given an early walk-through. Spoiler: off-topic rant about my TC, pre-opening walk-through When the Rockets fan council was given a walk-through of TC prior to opening, Jeff and I walked away with two diametrically opposed views. I think the difference was due to I looked at it from an Upper Deck, STH's perspective looking at my new seat, and he did it from a journalists perspective. He wrote a glowing report, and (I can't remember if I started a thread or not), but I reported back to the board one, and only one, comment -- count on the Upper Bowl being roughly 40 feet further back, and 40 feet higher -- "Absurdly far from the court" as you said. I went to that walk-through with the sole reason to step-off the footage...and I think that was a conservative estimate. I did that, because early reports from the team was they were bragging about (spinning) a "wider, lower bowl," which worried me....while others praised it. Les chose a Staples design....which might have been the last NBA arena to actually use that poor design. Guys like Cuban chose the *much* better design. In fairness to Les, he did not increase our prices at that time vs all the lower bowl, iirc. I remember the Rockets Sales emphasizing the "Wider Lower Bowl" being a good thing -- which the team Marketed. Yeah, for corporate seating. But it destroyed the upper deck....along with the completely unnecessary 2nd row of luxury boxes. Without cantilever supports, it pushes everything back, a great deal. Staples used cantilever supports, so their luxury boxes don't actually push the upper bowl back, but they are more expensive to build.
Either I'm missing something, or the article isn't clear on how where the increased revenue was generated. Where is 'everywhere else', the team shop? Higher ticket sales?
The Falcons did it first and they went to the Super Bowl, they didn't need the lower concessions to fill that stadium.
On target. Perhaps Jeff was "overwhelmed" by the newness of it. After all, it's something he should get well deserved credit for, by definitely being a factor in keeping the team in Houston with his campaign. I could certainly see that happening to him or anyone else who wasn't thinking of it as a fan might who regularly goes to games (like I've understood you to be, at least until you moved to Colorado), including upper bowl season ticket holders, but instead seeing it as brand new venue, one he helped give birth to. I'm sure it looked very impressive. I strongly suggest that folks read heypartner's spoilered part of his post above. It isn't a hallucination if upper bowl tickets seem much farther away from the court than they used to be at the Summit. They are. I don't know what could be done about that now, if something could be done, but I would be all for it. I'd take a couple of more trips to Houston every year to see a game the way they were meant to be seen. In person.
The article says "16% increase in *concession* revenue this past season." That's clear, but I agree, that paragraph you highlighted is confusing. We have no idea about Net Profit on concessions, or if the Hawks are moving to change in pricing model to see if it increases ticket sales. The Team Shop is not owned by the team, fwiw. Maybe sportsbusinessdaily or forbes will give us a better analysis, later.
Net revenue generally does not account for the cost of goods sold, general and administrative expenses or other costs (those are typically incorporated in the operating income calculation). Net revenue is generally intended to be a measure of the "real top line" rather than the bottom line. Profit is what you have left after expenses (cost of goods, payroll, etc..) If you sell 10 bags of peanuts for $2 each your net income is $20 If you sell 15 bags of peanuts for $1.50 a bag your net income is $22.50 you've increased your net revenue by 12.5%... great, right? no.... If the bags of peanuts cost you $1 10 bags @ $2 your profit is $10 ($20 in sales - $10 in cost of goods) 15 bags @ $1.50 your profit is $7.50 ($22.50 in sales - $15 in cost of goods) now add in operating expenses (payroll for someone too sell the peanuts, etc...) and you can go from turning a profit to... So basically, they sold more stuff - but lost money doing it... not a real solid business plan - lol! If they wanna say that because the hotdogs were cheaper, people bought more at the team apparel shop... I'd call that a questionable correlation.... I wouldn't think "Gee my hotdog and soda were half of what I expected - think I'll go buy a jersey..." lol Like I said earlier, if cheaper concessions bring more people to the arena - great - well played! but if you already sell out - no benefit to be had...
sry, I meant Net Profit/Income. We agree on terms now. I was just clarifying with you that it's not necessarily "spin" for a CEO to say lower prices on key items is better for business. Read the next two sentences to us.
Revenue/Income/Sales is the money you collect from selling something minus Operating expenses (costs to run your business - cost of goods, payroll, etc) equals Profit (what is left over after paying for your business's expenses) A 'loss leader' is something a business sells while knowing they will lose money ($5 turkeys at Thanksgiving) because they figure they will make their profit when the person buys other stuff (the stuffing, the cranberry sauce, the pumpkin pies, etc...) If they are utilizing concessions as a loss leader - as it says they lost money on concessions - that means they are going to make up those losses (and any lost profits) in other areas - increased ticket prices, higher parking charges, higher prices in team shop, etc... it's a shell game... "Let's eat at the game - hotdogs are only $1... gee, I don't remember parking being $20..." Bottom line, increased revenue doesn't necessarily mean anything to the business - it's increased profitability that matters.... see the example regarding bags of peanuts - that's why I say its spin...
[Educational Post] kjayp is right here. No one judges the success of their business on revenues. It's profits that matter. Lower prices on concessions likely leads to lower profits, despite the increase in revenues. There are people in this thread that need to take a few accounting lessons. Lower or Equal profits on higher revenues is a bad outcome -- it means you have more risk associated with your business than another business with higher profits on less revenue. Profits divided by revenues equals margins and margins are hugely important in evaluating the strength of a business. Lowering concession prices lowers profit margins in 99 cases out of 100. GOOD DAY
For the second time, I know all that. It's Econ 101 basic stuff. You don't have to lecture. You are getting boring, quick. You say the CEO is spinning, apparently to hide increased prices in other things to offset the "negligible" loss (that's the article's term). Obviously, Hawks don't sell out, and many NBA teams don't, so prices don't have to go up, just attendance...but you know that. I'm more positive, by willing to believe the CEO isn't hiding a "shell game." So, I have thought it through to try to see why he could be completely honest about this. Can you think of one way (just one), where he isn't spinning. I'll even simplify the variables in question: Let's assume attendance cannot or does not increase at all...it's a constant in this question. Let's assume everything else but concessions is a constant as well, and cannot or doesn't grow, In other words, the only variable to growing the business's "profitability" is through concession prices, Can either you or @Trader_Jorge explain how the CEO can, in fact, increase his business (whatever is your favorite word, net profit/income/"profitability") by lowering prices on some key, popular concession items while not changing other pricing ... (no tricks, no shell game, no nothing,,,,just him and his team with a spreadsheet of concession pricing) I can. So, that was a challenge. Do you want to play? Keep in mind the CEO interviewed in the article is working on a Hawks business plan, and is not the CEO of the Falcons, who's revenue numbers were listed.
I apologize if what i was saying came off as condescending to you - wasn't my intent... I guess I'm just confused by the terminology you are using... such as... no, I didnt mean "net revenue" - net revenue is your top line - profitability is your bottom line - yes lowering prices can increase revenue - but it can hurt your profitability... as they are saying they increased sales (+16%) - but lost money on concessions (a negligible amount)... Net Profit and Income are not the same thing... when you slash the items (as I did with Revenue/Income/Sales) it means they are the same thing - which is why I went into the explanation...maybe you're intending something different... I'll reply to the rest of your post in a moment...
We agree on terms. I meant the slash in "Net Profit/Income" as an adjective applying to both nouns of the slash or series. .... like, Net Profit or Net Income, largely synonymous terms in a layman discussion, so allowing you to pick your term. sry, guess I need to be more alert to misunderstanding in this thread. Sure glad you didn't think I was saying "ratio of Net Profit to Income." my bad/mistake
It’ll take a lot more than cheap concession to keep me from going to Pappasitos for fajitas and Ritas before a game.
