How Do South Florida Pro Teams Make Money? Hint: Sports Are Only Part Of The Ticket

By Rob Wile
Miami Herald

WWR Article Summary (tl;dr) As columnist Rob Wile points out, “in a region known for its fickle fan bases and less-than-full stadiums, South Florida sees the greatest economic impact from the irregular events like soccer matches, concerts, and conventions they host.”

Miami Herald

Sports in South Florida is on an upswing. But not for the reasons you think.

Yes, the Dolphins were sitting atop the AFC East Division in the NFL for the first time in years (well, until that awful Patriots game). Yes, the Heat has convinced Dwyane Wade to come back for a curtain-call NBA season. And yes, the city looks to be finally getting a professional soccer team.

But it’s not necessarily performance on the field that’s pushing teams forward. It’s the fields themselves.

Consider: According to the Miami Dolphins, the El Clasico soccer match between Real Madrid and Barcelona in July 2017 was the highest-grossing soccer event in North American history.

The team expects Super Bowl LIV, which Hard Rock is set to host in 2020, will be its highest-grossing-ever event.

And not counting sporting events, the stadium drew the largest crowds of any outdoor facility in the southeast U.S. last year, according to Pollstar, a research group that collects ticket sales data from promoters, venues and artist representatives. (Individual teams declined to provide data to the Miami Herald.)

It’s one reason why ratings agency Fitch found that 2017 total revenues for South Florida Stadium LLC, the Dolphins corporate entity registered as Hard Rock’s operator, grew 13.5 percent, “reflecting strong performance of ‘other events’.”

Or take AmericanAirlines Arena. While the Heat can still pack the stadium, the team only plays about 40 games a year on Biscayne Bay. But the arena, still only in its second decade, now ranks as the 18th-most-popular in the world by annual ticket volume, according to Pollstar data. That’s thanks the bevy of other high-profile acts, such as Elton John and Paul McCartney, it attracts year-round.

And even publicly-financed Marlins Park now regularly hosts regional and national conventions in addition to its annual slate of ball games. Thanks to last year’s All-Star Game at Marlins Park, as well as the El Clasico match, Miami-Dade County in 2017 had its strongest July ever for hotel bookings, with occupancy at 81 percent during its slowest months of the year, according to Jose Sotolongo, sports tourism director for the Greater Miami Convention and Visitors Bureau.

The BB&T Center, home of the Florida Panthers, also pads out its non-hockey season with enough events to rank it as the 100th-largest arena in the world, according to Pollstar.

Despite the expensive price of a pro-sports ticket, it’s mostly TV and revenue-sharing deals that lend South Florida’s four pro teams relative financial stability, even when the season’s in the tank. But Sotolongo, as well as sports economists, say even championship-winning seasons don’t move the needle much compared with attracting people and generating excess revenues in South Florida.

Especially in a region known for its fickle fan bases and less-than-full stadiums, South Florida sees the greatest economic impact from the irregular events like soccer matches, concerts, and conventions they host.

“The Miami Open, the Ford 400 (run at Homestead Miami Speedway), the Super Bowl, the World Cup _ even stuff below, like judo tournaments, are creating a boatload of receipts,” Sotolongo said.

Or as Dolphins’ owner Stephen Ross put it in a press conference last year, “I think Miami is a great event city. That’s what it’s really known as.”

Revitalizing the Rock
Were he still alive, Miami Dolphins founder Joe Robbie could hardly have imagined that the stadium he built for his team 30 years ago would become an international sports and entertainment destination.

It’s thanks to the vision, and wallet, of Dolphins owner Ross, chairman of real estate conglomerate The Related Companies. After being turned down for public money for the renovation, Ross decided to forge ahead.

“It wasn’t about … the future of (the NFL),” Dolphins President Tom Garfinkel said, describing Ross’ mindset when he committed to the renovation plan. “It was more about saying, ‘Miami deserves a new stadium, the fans deserve a new stadium, and how do we create a world-class facility?'” The Dolphins franchise owns the stadium.

The goal was to have the stadium reflect Miami’s diversity, vibrancy and sense of self as a curator of culture for the rest of the nation, Garfinkel said.

“We want to represent that, not in a cliche way, but in an authentic way,” he said. “I think the country is changing, and South Florida is a microcosm of that.”

Today, about half of Dolphins’ stadium revenues in a given fiscal year come from non-Dolphins events, Garfinkel said.

Just this year, the stadium has hosted Beyonce and Jay-Z, Taylor Swift, and the Eagles and Jimmy Buffett.

A Coldplay concert at the Hard Rock last summer featuring top Latin acts was the 35th-highest-grossing stadium concert in the world, according to Pollstar, with a gate of more than $6 million.

The math makes sense: Thanks to the NFL’s 17-week schedule, the Dolphins will play no more than 10 games a season at home (not counting a hypothetical 11th game playing in the Super Bowl in a year they host it). Without such events, the stadium would sit empty for much of the year. In addition to concerts and soccer, Hard Rock will now be home to the Miami Open, an event calculated at a $300 million economic impact on the city, according to the CVB, thanks to its ability to attract high-spending jet-setters.

The Hard Rock will also be the home of the Miami Hurricanes for the next 13 years. Miami Athletic Director Blake James said in an interview that the pro stadium environment is now one of its most potent tools when recruiting top football talent.

“Seeing us in a stadium that’s gonna host Super Bowls, national championships, it’s just a great environment,” he said. “(The renovation) has been a huge win for us, who wouldn’t want to play there?”

Still, as a flagship franchise in the NFL, the Dolphins have invested in ensuring its football sell-out streak, now in its fourth-consecutive year, continues at the stadium.

One of the organization’s biggest investments has been in content and social media, Garfinkel said, and it’s paid off big: Its 300 million video views helped generate $3.5 million in sales leads and new new season ticket sales, he said. Their in-house digital team now comprises 25 employees.

Right now, the Dolphins are valued at $2.6 billion, about league average, according to Forbes. It’s one reason why Garfinkel says there is still room for progress.

“We’ve got a long way to go,” he said.

But looking back five years, Garfinkel points to a change in organizational mindset that allowed the team to rise up from the bottom-5 in ticket sales to its string of sellouts. (Like other teams, “sell-out” status is counted by tickets sold, not attendance.) After reducing seating from 75,000 to 65,000 as part of the renovation, the Dolphins now ranks second in attendance percentage according to ESPN, averaging an overcapacity crowd.

On The Bay
As Hard Rock Stadium becomes the premier large-capacity outdoor venue for South Florida, 20,000-seat AmericanAirlines Arena has cemented its place as the beating heart of sports and entertainment for the city of Miami, a claim its predecessor, the slightly smaller Miami Arena, could hardly ever make.

Last year, Marc Anthony’s Miami concert generated one of the highest-grossing events for any indoor arena in the world, with a gate of more than $3 million, according to Pollstar. Other major acts that visited the Triple-A in the fiscal year ending June 1 included Justin Timberlake, Ed Sheeran and Kendrick Lamar.

Thanks in part to the arena’s ability to draw worldwide acts, Forbes now ranks the Heat as the 10th-most valuable franchise in the NBA, at $1.7 billion, a 26-percent increase year-over-year.

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