Revenue is forecast to climb as the continued economic recovery provides governments with greater budgets.
New York, NY (PRWEB) June 21, 2014
Over the past five years, the Sports Stadium Construction industry underwent a period of contraction, as demand for industry projects fell. Industry operators build, renovate, alter and maintain sports stadiums, arenas and fields. Most of the industry's demand originates either from educational institutions, such as high schools and universities, or commercial sports enterprises, such as sports franchises and leagues. In either case, the public sector is usually heavily involved in providing funds and incentives for the construction of stadiums.
During the recession, increasing unemployment, a collapsing housing market and decreasing incomes caused government tax receipts to plummet and welfare costs to rise, especially at the local and state levels (which provide most government funding for the industry). As a result, according to IBISWorld Industry Analyst Maksim Soshkin, “budget deficits increased and authorities were forced to reduce them by cutting funding for industry projects.” Moreover, the sports franchise industry's revenue stream was also slowed by the recession, limiting its ability to finance new stadium construction. Therefore, “in the five years to 2014, industry revenue is expected to decrease, with a slight rise in 2014,” says Soshkin.
The Sports Stadium Construction industry is fragmented, with the top four companies accounting for slightly over one-fourth of industry revenue in 2014. With financing hard to come by, the industry started to more heavily rely on public-private partnerships (PPPs) in which the private investors (i.e. sport franchises, investors and sponsors) and the government jointly finance projects, take on risk and agree upon project cash flow distribution. This method has especially been applied to the largest projects, such as Levi's Stadium. However, despite the increased use of PPPs, demand declined enough to reduce industry profitability, employment and participation.
Over the five years to 2019, industry revenue is forecast to climb at an average annual rate. Continued economic recovery is anticipated to ease local and state government budget burdens, thereby increasing public sector funding for industry projects. Moreover, as consumers become better off, more of them will be willing to purchase tickets to sports events, increasing sports franchises' revenue and encouraging them to expand, renovate and build new stadiums. Nonetheless, economic recovery is projected to remain fragile and government spending will remain relatively tight. As a result, the use of PPPs will continue to gain popularity.
For more information, visit IBISWorld’s Sports Stadium Construction in the US industry report page.
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IBISWorld industry Report Key Topics
The Sports Stadium Construction industry constructs stadiums for football, baseball, soccer, basketball and other sports events.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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