Many NFL fans will be familiar with the concept of “home field advantage” – the idea that players perform better when playing on their home field. This is especially true for teams in the National Football League, where the rules of the game are designed to foster close competition between teams and keep the games fast-paced. While there is no denying the entertainment factor that a genuine home field advantage can bring, there is another side to this story that most fans may not be aware of: the financial benefits that accrue to the home team.
A Strong Financial Incentive To Be On Your Best Behavior
For a team’s first three home games of the season, the National Football League gives the away team free admission to those games. This is typically referred to as the “standard home field advantage” for reasons that will become apparent below. What most people don’t realize is that this doesn’t just apply to the first three home games of the year. Many teams give their away games a good bit of priority, so that they can take advantage of this rule. It’s often the case that when a team gets a freebie for a home game, they’ll have to play on the road for the rest of the season. This can put a real damper on a player’s morale, especially for a team that’s already struggling – as many NFL teams do in the early going. But it also creates an important financial incentive for the team: they’re getting paid to play on the road – a benefit that is most welcome when your team is struggling to find any wins at all.
Of course, the opposite is also true – playing on the road in NFL football is often a financial hindrance to a team, with many exceptions to the rule. One significant disadvantage that a road team has is the luxury of playing for high scores – a factor that actually increases the wear and tear on the body, not just the pocketbook. On the plus side, however, is the benefit of playing in front of large home crowds, which can boost a team’s effort and engage its fans. This is not to say that all road games are profit-making ventures for NFL teams, as there are often substantial costs associated with flying players in from other cities, but it’s enough to keep the financial benefits in mind.
The Most Effective Way To Measure The Value Of A Football Stadium
Even beyond the issue of free admission for away teams, there are a number of ways that an NFL stadium can be a significant source of financial gain for its occupants. Chief among these is the idea of “luxury tax” that most fans are probably not even aware exists. This is essentially a surcharge charged to teams that play in “luxury” facilities, like MetLife Stadium in New York City. The amount of the luxury tax varies by league, but it’s generally a flat rate of about five or ten percent on ticket sales. In addition, there is also a per-game charge, which varies by stadium and depending on whether the game is sold out or not. These charges are meant to help bring in enough revenue to cover the cost of the “luxury” stadium, which is generally a great deal for teams and a significant financial windfall for the city. It’s not just financial stability that MetLife Stadium provides for the community, either: it also contributes significantly to the local economy, as there is usually a large number of people in attendance, along with plenty of vendors and restaurants in the area. It’s not hard to see why teams would want to play in a city with some of these lucrative financial incentives available!
How To Calculate The Value Of A Football Stadium
If you’re thinking about buying or selling a football stadium you’ll need to know how to calculate its value. There are a few ways to go about this and the formula below is the one that is most frequently used by sports economists:
(VACATOTAL * (DRAWRIGHT – 1)) + (STADIUM NAME) + (CAPACITY x 0.20 x PATRONAGE)
(Where:)
(VACATOTAL = Total VACANT SEATING PRESENT CAPACITY x1.31)
(DRAWRIGHT = DRAFTSMEN x1.15)
(STADIUM NAME = Last Four Digits of Stadium Name x 1)
(CAPACITY = Capacity x 1.15)
(PATRONAGE = Total Persons x 1)
(* Note: For ease of use, round all numbers to the nearest hundred.)
The Role Of Ticket Sales In Generating Revenue
Another important consideration for a team that buys a stadium is how much it will generate in ticket sales. Most people might think that just having a professional sports team would be enough to ensure a good crowd but the amount of money that a stadium will generate depends on a number of factors. First, there is the fact that the team is in the National Football League and therefore must draw significant interest from fans. Second, the location of the stadium is important, as fans will generally travel to see games. And third, the pricing of the game tickets is crucial – you don’t want to sell tickets at a discount, as this might discourage potential fans from showing up.
Because the stadium is generating revenue, it has the potential to significantly increase a team’s total revenue. This, in turn, can increase a team’s chances of winning. So, although this might not seem obvious, a winning team has great economic value, especially if it comes with a winning attitude!
What’s fascinating about all of this is that there is no standard “home field advantage” in the NFL. Each stadium is built and operated under unique circumstances and for different reasons. This means that while there are certainly financial benefits to playing on your home field, it’s far from a given that this will happen. What’s more, the luxury tax and other factors mean that the financial benefits to a team might not even be perceptible until years down the road. But in the meantime, the value of a football stadium will be clear to see.