Mercedes-Benz Stadium opened in 2017 at a cost of $2 billion.getty images
Arthur M. Blank Sports and Entertainment controlled almost no aspect of the fan experience at the Georgia Dome, the downtown Atlanta venue where its Falcons played from 1992 to 2016. Obtaining improvements was an incremental, almost painful experience that Falcons owner Arthur Blank likened to multiple visits to the dentist, with one tooth pulled each time.
When Blank decided to build what became Mercedes-Benz Stadium controlling and improving the fan experience was at or near the top of the goals list.
According to Blank’s book, “Good Company,” the average NFL Voice of the Fan survey rating for food and beverage (including value, quality, speed of service and variety) when the Mercedes-Benz Stadium design process began was 6.2 out of 10. F&B value alone averaged just 5 out of 10 across the league’s 32 teams. Outgoing AMBSE Vice Chairman Steve Cannon, who is retiring in June, noted that fans entering the Georgia Dome were among the latest arriving in the NFL; they did all their eating and drinking while tailgating, instead of inside the building, due to the low quality and high cost of concessions.
Additionally, Mercedes-Benz Stadium would be constructed with the aid of personal seat licenses, increasing fans’ investment in the team, and, reasonably, their expectations of the experience. Blank was highly aware that fan bases for the Falcons, and their soon-to-arrive MLS sibling, Atlanta United, were a captive audience once inside the stadium for a ticketed event.
“We are not going to gouge you because you’re in the confines of Mercedes-Benz Stadium,” said Cannon. “Street pricing was the inspiration. We’re going to treat these people with respect. They’re stepping up and making a big commitment to our franchise, just by signing the season-ticket check, and we’re not going to take advantage of them.”
The term “street pricing” passed through the public relations filter and became “fan-friendly pricing,” a program inspired in part by the Masters in Augusta, Ga., and its concessions prices seemingly lifted out of the 1970s. Mercedes-Benz Stadium would be built upon similarly cheap staples — $2 hot dogs, pretzels and sodas (free refills for the latter!); $3 pizza slices; and $5 beers. Whole dollar pricing was adopted to reduce transaction times.
Fan-friendly pricing majorly influenced HOK’s design of the stadium, known for its one-of-a-kind, eight-paneled pinwheel retractable roof and massive halo scoreboard. The $2 billion venue included 55% more cooking capacity than the Georgia Dome — more than half of the concession stands had cooking capabilities, reducing the distance food needed to travel to get to fans — and 65% more points-of-sale. Fan-friendly pricing modeling indicated a likely 30% to 50% bump in demand for concessions, so concourses were widened to accommodate queuing fans and ease crowding.
Who would run this operation? A request for proposals was issued and the response from the F&B world was lukewarm. Levy Restaurants was intrigued, though, and partnered with AMBSE to launch the revolutionary concept.
Even for the Super Bowl in 2019, the venue maintained its cost-effective prices for customers.getty images
The deal between the parties was key. Traditionally, teams sell their concessions rights to an F&B provider, which pays for goods and labor and invests in its own equipment and infrastructure, often amounting to tens of millions of dollars. In return, the F&B provider assumes control of the menus, sets prices, hires and trains the staff, and turns over 50% to 60% of its gross revenue to the stadium owner/operator.
In that deal structure, it’s imperative for the F&B provider to recoup its investment, especially if the contract is shorter in duration. That in turn contributes to potential issues, including higher prices, staffing shortages and poor service. Stadium owners still gravitate toward this model because they have high fixed costs and like the guaranteed revenue.
“What they’re really doing is passing their costs on to the customers, the fans,” Blank wrote in “Good Company.” “And no one questioned the model. At a certain point, it gets downright exploitative — you’re just shaking down the fans for a few more bucks because you can.”
Blank’s organization would chart a different path.
“Even if we had to run at a loss, I still thought it was the right thing to do,” he wrote. “I told my team, ‘When the competition thinks we’re crazy, we’ll know we’ve succeeded.’”
Fan-friendly pricing wasn’t a loss leader, it turned out.
“This was not philanthropy; Arthur has a foundation for that,” Cannon said. “This was a business decision.”
From its debut at Mercedes-Benz Stadium in September 2017, fans’ response to the prices was enthusiastic. Elevated demand negated the cheap prices, resulting in increased F&B revenue.
That’s not to say there weren’t issues.
The amount of waste produced was grossly underestimated, much to the personal chagrin of AMBSE CEO Rich McKay, who had contributed to the design of a specific cardboard drink carrier. It was discovered during the first game that the carrier didn’t fit in the trash cans, and they spilled onto the concourse floors.
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The stadium also ran out of ice, owing to the free soda refills, though that never happened again.
“Can’t tell you how many meetings I sat in about line management and ice,” Cannon said.
Food was replenished mid-game, but it was tough to fight through the crowds pushing a cart stacked with hot dogs. So more pantry space was created throughout the venue for in-game storage.
“How do you solve for too much demand?” Cannon said. “I will take that problem on all day long.”
The benefits were immediate. Fan per-cap spending increased 16% that first season, and merchandise sales, somewhat unexpectedly, rose more than 80%, perhaps because the concessions prices left more money in fans’ pockets, which they had already mentally earmarked for spending. More Falcons and Atlanta United jerseys on the city’s streets helped spread the teams’ brands, especially the new MLS club.
“It was a virtuous circle that started with a willingness to forgo some pricing power,” Cannon said, “but we more than made up for that with demand.”
Fan-friendly pricing was named SBJ’s 2018 Breakthrough of the Year and Northwestern University’s Kellogg School of Management created a graduate degree course of study around the concept. Mercedes-Benz Stadium hosted the Super Bowl in February 2019, and the NFL controls tickets and concessions prices for that game. But Blank didn’t budge on his pricing model and the league conceded, and that Super Bowl still set a record for per-cap F&B spending. The Falcons routinely place in the top five of the NFL’s Voice of the Fan survey, despite the team posting six consecutive losing seasons.
“[Blank] looks at a fan as a lifetime relationship and not as a transaction,” said Cannon.
That view has been tested at various times during the last two years as inflation hit the costs of labor and products. The team’s F&B margins have been squeezed, Cannon said. But Blank’s commitment to the fan-friendly pricing promise hasn’t wavered.
“That is pure Arthur,” Cannon said. “Even when we probably could have intelligently taken a little bit of price on this item or that item, Arthur would politely send us packing, saying, ‘Nope, this is how we’re doing it.’”
