International Stadia Group has established itself as a specialist in stadium financing. Chief executive Andrew Hampel and director of business development and funding Richard Cheesman explain how.
"To a great extent,” says International Stadia Group (ISG) director of business development and funding Richard Cheesman, “the ability to fund the development of a new stadium is balanced against that of its future profits which, in turn, are largely based upon ticket sales.”
For a stadium without a naming rights deal around 80 per cent of revenues are generated through seating. In terms of financing a new stadium, the key figure is the incremental revenues – ie the increase in revenues from the existing facility – and as much as 80 per cent of incremental ticketing revenues are derived from premium seat sales. “That means that somewhere between 60 to 70 per cent of the total incremental revenues available to finance the new facility will come from 10 to 20 per cent of the seating within the stadium,” explains ISG chief executive Andrew Hampel. “That’s pretty much the industry standard.
Therefore it makes sense to give that section of your potential revenue stream a very high degree of prominence and importance as you’re making every
decision in the process from planning right through to delivery.”
It is an area in which ISG, a London based stadium and arena finance specialist, has come to lead the way. Founded in 2006 and then developed as a joint venture with IMG from 2007 – Hampel is a former managing director of IMG EMEA – but operating independently since 2010, ISG is the market leader in forecasting and maximising revenue from seating in stadiums and in doing so helps fund and bring new stadium projects to light.
“In a sense what we try and do,” Cheesman explains, “is to bring our expertise and sophistication to our clients. That’s everything from initial research – which is done by our in-house division Comperio Research – to design, to product packaging, and then we put a sales team in place to actually deliver on what we promise. What our experience in the market does is allows for stadia and business plans to be considered as a quality asset which is a safe place to put your money because you know that we’ve done the research – that means your business plan is going to be delivered, which means that you’re going to get your money and the returns that you’re expecting back.”
Hampel adds: “There are other people that also operate in that space but we don’t believe that there is anybody out there that provides the wide ranging service that we do. The single most important point of difference between us and them is that we have the research capability and the research function because it all comes down to understanding the market and what people are willing to pay. The other significant point of difference is our ability to take people from day one through to opening and beyond in a seamless transition where you’ve got expert people working on each stage of the process.”
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Article published by kind permision of SportsPro, July 2012