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By Chris Stafford

The last several years have witnessed a tremendous building boom of new and renovated convocation centers and arenas on university campuses across the U.S. These venues offer significant benefits and opportunities for the university as well as the local community.

The university’s athletic program benefits as a result of increased revenue in the form of incremental attendee spending on admissions, premium seating, food and beverage, merchandise and parking, as well as increased revenue from sponsorship opportunities and private donor contributions.

Additional benefits may include providing a competitive “home-field” advantage for athletic teams and providing a facility that may be used as a recruiting tool by the athletic program to attract top student- athletes. As a result of development, the university gains a suitable venue for on-campus special events such as commencement, lectures and other types of university-related functions, as well as potentially adding on-campus meeting space. Students and local residents alike may have increased opportunities to attend on-campus events such as concerts, family shows and theatrical performances. The local community may also benefit from the ability to host conferences, conventions, trade shows and other types of meetings at the venue.

Despite the wide-range of potential positive results, a new or renovated arena may not be the panacea it was envisioned to be for a university and/or local community. Why? It is not uncommon for a venue to struggle to meet the expectations that were anticipated during the planning phases of development due to: potentially conflicting needs of the venue’s users; unrealistic or unattainable goals; changing market conditions and the dynamic nature of the spectator and meeting event markets; and/or insufficient support systems and policies in place to fulfill operating objectives.

It is often difficult for a sports and entertainment facility, particularly in a university setting, to satisfy the needs of all users, thereby necessitating the need for the university to develop operating priorities. For instance, in an attempt to fully develop the “home-field” advantage discussed above for the university’s intercollegiate athletic teams, the athletics department may want to utilize the building not only for scheduled games, but also for practice, and donor and recruiting events throughout the year. This extensive use of the venue may severely limit the availability of the building for other types of university-related or outside events, such as the booking of concerts or family shows. This exemplifies how the needs and goals of one or more particular groups may conflict. In this instance, university administrators must balance the needs of the athletics program versus those of other arena users.

A number of universities have proactively tried to address this issue by building a “practice gym” or other types of ancillary developments to provide practice space for athletic teams only to find that coaches and student-athletes may still prefer to practice on the main floor of the venue to simulate game conditions and strengthen the home-field advantage.

To maximize the potential benefits of a new or renovated athletic facility, universities must determine what purpose(s) the new or renovated building should serve and identify the goals and operating objectives for the venue. Goals may be mutually exclusive or they may relate directly to one another. For instance, one potential arena goal may be to operate as a breakeven enterprise, produce positive cash-flow or to operate within a certain operating deficit, while a related goal may be for the arena to host a calendar of events that facilitates the fulfillment of the first goal.

Issues that university administrators must consider when evaluating potential operating goals include:

Do the operating goals balance the potential needs of all on- and off-campus constituency groups? Input should be solicited from the various groups that wish to hold events at the venue to understand potential facility utilization needs (athletic program, local and regional promoters, meeting planners, etc.).

Are goals realistic and achievable? While a goal may be to host a certain number of events or achieve a certain attendance, it is critical to understand the potential market support and demand, or lack thereof, for events at the venue.

Are goals measurable? To the extent possible, goals and objectives such as facility utilization and “bottom-line” performance should be quantified.

Do utilization goals for the facility (event type, number of events, attendance, etc.) coincide with the financial goals for the building? It is important to understand the economics related to the types of proposed events to identify implications to the venue’s “bottom-line” financial performance.

What is the best management structure to facilitate achieving established goals (athletic program, university special events department, private management)? The management of a sports and entertainment facility can affect its ability to draw events and operate efficiently.

It is important to note that many universities evaluate these issues during the planning stages of arena development, only to find that upon opening, operating objectives that had been developed may prove difficult to achieve. This may be due to a variety of reasons that may include a final building program (building design, number and type of seats, support facilities) that varies compared to original design considerations; varying arena user and event planner needs; alternate arena operating structures compared to what was originally intended or anticipated (i.e., who is charged with operating the venue); and other factors. Therefore, this type of introspective analysis and review is not limited to the predevelopment stages of new or renovated buildings. Many universities have conducted comprehensive operational reviews of their existing on-campus arenas to evaluate past performance to better understand if operating goals and objectives have been met and to identify potential areas of improvement. Goal setting and performance review represents an on-going cycle of strategic planning that should be frequently evaluated.

Critical analysis and comprehensive goal setting during facility development that continues throughout the life of an on-campus sports and entertainment venue will help ensure that critical success factors for the facility are met and the potential benefits that the venue may offer are maximized.

Chris Stafford is with the sports, convention & tourism practice with PriceWaterhouseCoopers LLP, based in Tampa, Florida. He may be contacted at chris.stafford@us.pwc.com.