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Oct 08, 2019

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SD Europe Insight: Stadiums in Europe

Sport represents an integral part of the lives of millions of Europeans. It builds community cohesion, grows social inclusion and can lead to an enhanced sense of European identity. The sector employs millions of European citizens, and adds billions of Euros in revenue.

In this context, the stadium represents the spiritual heart of sports community. An important center of aggregation and a place to develop a strong social impact involving all stakeholders, but also a fundamental tool to guarantee the stability of clubs and the development of a sustainable business.

In this article we’ll provide some insight into the ways in which stadiums can be shaped into joint operations that bring together all relevant stakeholders. With a look at our Erasmus+ project partners of the past: Malmӧ FF and FC United of Manchester, we will portrait two community-orientated structures. Furthermore, we will show the public-lead approach for stadia in Russia around the World Cup.

 

Goal? 

To give a general view about the potential benefits of stadiums for the local area, its costs and the stakeholders involved in planning/financing/managing a stadium; to highlight different levels of cooperation between clubs, public and private investors, and some solutions adopted

History

Historically, stadiums are not only a place to gather on a matchday but also as a point of reference for the entire local community. 

In SD Europe’s past Erasmus+ project ‘Clubs and Supporters for Better Governance in Football’ certain exchange visits involved discussions around stadiums. Among the highlights of the discussions were: the building process, stadium management, stakeholder relationships, and the transformative process of a stadium into a city and community landmark. 

Football is the biggest spectator attracting sport in the world. When a club works in partnership with a city, a stadium can add new layers to the culture and community.

During the exchange visit at FC United of Manchester for SD Europe’s Erasmus + project ‘Clubs and Supporters for Better Governance in Football’, FC United demonstrated how a sports stadium is utilised as an important place for people to gather for a community oriented club

The positive communal impact of a stadium is directly linked to the multi-purpose use and to the audience that it is capable of reaching. At Malmö’s stadium, there are office spaces that are used by the club, while some companies rent out the space. Furthermore, beneath the stands, there is a school. The school is run jointly by the club and the city and is attended by talented young athletes in different sports aged 13-16.

Football clubs and cities across Europe thrive on each others success. Therefore cooperation between the two is essential in maximising the cultural and economic benefits for both the club and the community. 

When it comes to stadiums, this has a long term impact, benefitting future generations; it is often hard to grasp but, today we’re building the stadiums for 2050 similarly to how stadiums were built decades ago for today’s infrastructure. 

Modern day stadium construction aims to integrate various parts of a city. In order to make it a daily meeting place for the whole community, while guaranteeing sustainability, club supporters and local communities need to be involved in the planning process of the project. 

Strategic use of a stadium can be a decisive factor in ensuring the sustainability of the club for the long-term and expands its potential for social impact by aligning the needs of fans, residents, local investors, and public administration.

A stadium at the center of the community is not only a place of sport, but also a place for aggregation and social commitment, culture and education for young people, a meeting point for the club with local associations and business, and as a multi-purpose structure for events

The construction of a new stadium, or the modernisation of an existing one, can bring many benefits to an area. From the creation of new jobs, to an expanded economy, stadium infrastructure vastly expedites the surrounding areas’ economic potential.  

A strategically planned and managed stadium can:

  • Generates new economic resources to develop sports club and the surrounding area
  • Attracts new city investment
  • Leads to urban area redevelopment (commercial and residential)
  • Creates jobs in the construction and management phases
  • Creates a cultural and social meeting place to develop community projects with the local area.

A new and community-oriented stadium improves safety, hospitality and access during match days by applying the latest technological societal innovations. 

Krasnodar FC has redeveloped an entire area around the stadium with a public access park, with obvious social benefits for the environment. FC United of Manchester has built training facilities for children and teenagers and Malmö FF hosts in its premises a school, jointly run with the city.

Finding the balance of club/private/public ownership, management and financing is often unique and depends on multiple factors. It’s heavily affected by local laws, political views, the economic potential of the club, the needs of the public administration, expected income, cost, and output in the building.

Essentially, the correct usage of a stadium primarily depends on the cooperation between the club, the city (or often region) and its administration. 

Cities are public and highly bureaucratic organisations that often lack the operational flexibility and growth of individual investment. The same principle applies to the construction and management of a stadium. In all three examples we’re examining, the land of the stadium is owned by the city and leased to the club on a long-term contract, while the club is responsible for building the stadium and managing it in a sustainable way.

Clubs can manage football stadiums in a professional way, aligning it with a club-oriented strategy, maximising financial and social benefits. This starts an endless cycle of the club benefiting from the community and vice versa. On the other hand, the role of the city can take different forms, from leasing the land, to providing financing, or fiscal advantages to the builders.

In professional football the ownership of most European stadiums are the public, as seen in UEFA’s 2012/13 Benchmarking report. According to the same report “It appears that stadium ownership has more to do with geography than resources, as only 27 of the 80 clubs that qualified and participated in the group stages own their stadium, and less than half of the 45 clubs with revenue in excess of €50m competing in the UEFA club competitions reported stadium ownership”. Since then, this has likely changed further as different countries in Europe have hosted the Euro 2012, 2016 and 2020 and the 2018 World Cup.

This is mainly due to the fact that building a new stadium or renovating an old one is a major cost for the club. With importance and benefit to the local community and major potential commercial revenue, the local municipality, businesspeople, and investors are usually interested in stadium infrastructure.

Malmö FF

At Malmö, the land on which the stadium is built is owned by the city and it was leased to the company that would own the stadium for free in 2007. This was the city’s contribution to a project with such extended benefit for the local community. Because of the huge capital cost required and the subsequent sustainability Malmö FF would not be able to fully finance the stadium at the beginning. They also chose not to own the stadium directly, but rather through a company with different investors. Initially, the stadium was owned by the construction company (50%), the club (Malmö FF) and a company owned by a club’s board member (25%). The intention was for the club to ultimately obtain full ownership when it had the necessary means, but before the club obtained full ownership it had also generated additional costs with the club having to pay an annual rent to the other owners. Today, 10 years later, through careful financial planning and execution, Malmö FF owns 100% of the stadium on the city’s that was leased to the club on a very long term contract.

Russia

In Russia, the preparation of the World Cup saw the building of 12 new stadiums, and other 3 were renovated, all of which were financed and owned by the national government. Because of the huge management costs and various bureaucratic reasons, the Russian government planned to pass on the ownership to the local governments and eventually the management of all commercial and football areas to the local clubs. On the other hand, private investment in Russia also benefits the wider community. For example, in Krasnodar, a fruitful cooperation between the club and the public administration has led to numerous investments related to the stadium and the surrounding area that saw the owner of Krasnodar FC financing not only the stadium, but also a big community park around it, making it a point of reference for the city.

FC United of Manchester

A public administration can also help privately funded stadiums with different tools. At FC United of Manchester, the city council provided a grant and a loan to the club, and the government provided a tax relief of 30% on some of the fundraising. The reasoning behind this decision was that since the club is community-owned any benefit would be of the wider community, not just a few individuals. This model also fostered a cooperation between the two sides beyond just financing the club, to partnerships with a shared ambition to deliver a cultural and economic benefit to the local community. 

The total amount of construction capital and maintenance cost is the reason smaller clubs and clubs in lower leagues, play in stadiums that are publicly-owned and are often multi-sport oriented.

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