- 30-acre site designed to support calendar of concerts, festivals and food and beverage events
- Team transitions from being a basketball club to a ‘real estate and content company’
- Luxury suite inventory reduced to increase demand
Adam Silver didn’t waste any time putting the Milwaukee Bucks on notice as he prepared to take over as NBA commissioner in late 2013. Speaking at an event on the Milwaukee lakefront just five months before his succession, he let the team know exactly what he thought about its antiquated Bradley Center home.
“Compared to other modern arenas in the league, this arena is a few hundred thousand square feet too small,” he said. “It doesn’t have the sort of back-of-house space you need, doesn’t have the kinds of amenities we need.”
The conundrum for the Buck’s then-owner, Herb Kohl, was whether to stick or twist. Either he had to find the funding to develop a new stadium in one of the NBA’s smaller markets or face the prospect of moving the team. The Bucks’ current president Peter Feigin explains how the celebrated philanthropist was lauded in the state for his solution in which he put the team up for sale on the condition its new owners didn’t relocate – most likely forsaking a few hundred million dollars in the process.
“It was a pre-requisite requirement that anybody who purchased the Milwaukee Bucks would have to build the new arena and take on the responsibility of getting that passed through the legislature, being able to coordinate that, being able to finance that,” Feigin says. “They did not want the team to flee to another state.”
Kohl sold the team to New York hedge-fund investors Marc Lasry and Wes Edens in 2014, and gifted $100m of his own money to build the new arena, matching $100m from the new ownership group. When the Wisconsin Senate later approved a bill to cover the remainder of the new venue’s $524m cost, the team could start to think about how it could deliver on Silver’s demands.
Basketball team to real-estate developer
That new venue – now called the Fiserv Forum following local fintech firm Fiserv’s 25-year naming-rights deal – has been designed to overcome the economic handicap placed on the team by their geographical location and provide them with an asset they can sweat throughout the year.
It will support a calendar of concerts and events to supplement Bucks home games while the eight-acre plaza and entertainment district that surrounds it has been built to accommodate roughly 100 outdoor festivals, food and beverage events, concerts, farmer’s markets and an ice rink. In a further development, the team will also rent out residential and commercial properties on the wider site.
“We’ve gone overnight from being a basketball club to a real estate company and a content company and a footfall company,” says Raj Saha, the new arena’s general manager. “I think people are so sick of me saying two things: content is king and footfall is our friend. We have to energise this district 365 days a year.”
The Bucks rent the 30-acre site including the stadium from the state, albeit for an effectively nominal fee of $1m per year. Their lease runs for 30 years, with the provision for two five-year extensions. The team is responsible for all operations and maintenance expenses but retains all of the profits (or losses).
The Bucks’ executive team worked with the CSL division of the Legends stadium consultancy to create a revenue model for the new facility that maps out potential sponsorship, event, seat and plaza activation opportunities. Key to the business plan is the ambition to create a universal entertainment space that appeals to audiences outside Milwaukee.
“We did a lot of research on travel times. One of the distinct advantages we have is we are about 40-50 miles from the border of Illinois and the outer counties of Chicago, which has a massive population we’ve never really targeted as a prospective fanbase and event participant base,” says Feigin.
“We understand that if someone lives a six-hour drive away they might not come to 41 Bucks games but we can create fandom in a variety of ways,” says Matt Pazaras, senior vice-president of business development and strategy. “They might come to a handful of games, they might watch us on TV, they might buy merchandise and then we start to see results there.”
Twenty concerts are so far scheduled for the main arena to attract both the local populace and this wider demographic, and the club has started an outreach programme with promoters to make the arena a destination for big touring acts. Pazaras estimates the venue will eventually be able to offer a calendar of 40 such events annually – which he argues is a complete departure for a market that “has never seen more than 12 or 13 top-quality concerts a year”.
The Bucks will rent out 100 residential properties on the wider site and carried out social research into the sort of amenities that would encourage people to live in the district. “We’ve done a lot of due diligence about how we evolve these 30-plus acres into a neighbourhood,” Feigin says. These studies informed the inclusion of a supermarket, gym and ‘safe public areas’ in plans for the district.
Pazaras says the residential areas won’t be a big revenue driver; their main function is to generate footfall in the 30-acre district. A further four city blocks are to be developed once an area housing the old arena and construction equipment for the new venue are cleared. Here the team hopes to attract commercial tenants to generate even more footfall.
“That, again, creates density on a day with no event on,” he says. “People are coming and going to work, people are eating lunch – we need it to be active all the time.”
Open stadium design
The executive team considers the arena and the outdoor plaza as two separate pieces of property to activate but on game day Saha says the most important thing is the connection between the interior of the venue and the district outside. Thus, the arena incorporates large areas of glass frontage and a mezzanine-level club lounge overlooking a giant internal atrium and the plaza. “It’s all open and people will be intertwined between events, seats and concessions and other experiences,” he says.
The decision to place food and beverage concessions on the outer walls of the arena has allowed for the construction of open concourses around the lower and upper seating tiers. “If you leave your seat and go out to the concourse you are still in the arena and can still watch, see, hear and smell the arena from the rail,” says Feigin.
The distribution of seating reverses the Bradley Center’s counter-intuitive seating plan, which incorporated 11,000 seats in its upper tier but only 6,000 seats in its more expensive lower section. The 17,500-seat Fiserv Forum flips this layout, including 10,000 seats in the lower bowl, 6,000 in the upper tier and 1,500 in a premium level. When the floor of the arena is used for concerts it will have an overall capacity of 18,000.
The new venue contains 34 luxury suites, down from 44 at the Bradley Centre – a deliberate choice by the Bucks to maximise demand.
“We wanted to create a higher premium on them, finish them stronger and create less of them, just to create demand,” Feigin says. “One of the interesting things we found is whether we think it’s the most successful NFL football team in the country or NBA team, almost everybody has overbuilt their suite product when they renovate their arenas or built a new arena. It’s usually perfect for the first phase, whether they’re five, seven or ten-year contracts, and then they’re never the same.”
He explains that Milwaukee’s 600,000 population “places limits in terms of where your pricing can go” and that this led the team to take a more flexible approach to the design of club suites. The new arena features adaptable loft spaces with retractable walls which can be reconfigured to incorporate small groups of 20-30 people or much larger groups of 180.
Feigin recognises the debt to Manchester City’s ‘Tunnel Club’ in the creation of an event-level club – open to about 450 people sitting in the first three rows of the arena – that features a long counter at the rear, located just steps from the locker rooms at the base of the player entrance. Fans who have paid even more will be allowed to form a human tunnel and interact with the team as they walk out into the arena.
Peter Feigin, president, Milwaukee Bucks in front of the Daktronics centrehung video system
Suites and club spaces for the new arena are sold out for the coming season. The team has sold 2,500 new season tickets, ranking it number one in the NBA for this metric, and is on course to sell 10,000 full season tickets at a 92 per cent renewal rate – an improvement of five percentage points on last season. Feigin says the new arena will generate 35 per cent more ticketing revenue than the Bradley Center.
Pazaras says the new stadium and suite configuration offers partners new “physical core assets” to sponsor. A good example is the way BMO Harris Bank of Chicago, the naming rights partner for the team’s former arena, has sponsored the event-level club suite by the locker rooms and has a dedicated entrance to the stadium.
“They’ve said to me, people aren’t necessarily emotional about their banks but by partnering with hometown teams and giving access and other benefits, they can create that emotional connection, so part of what they like to do is give special access to people that are customers of theirs.”
The bank is one of four founding partners for the stadium – the other three being Johnson Controls, Miller Coors and the Froedterd & Medical College of Wisconsin.
The Bradley Center’s lack of static and digital signage has been addressed with the installation of an Internet Protocol TV (IP TV) network in the Fiserv Forum. Pazaras says this allows the Bucks content team to “slice and dice” digital signage any way it wants, so the team could choose to play BMO messages, for example, in the club areas the bank sponsors. Equally, the concert and festival programme, both for the arena and the plaza outside, creates additional inventory.
“Before we were a tenant in a building, now we control all the content. That gives us much more physical space but also audiences. Now there’s partners that we work with that have said: ‘we like the Bucks but we also like family shows’ – it just gives them a wider demographic to market to, so we have a lot more people and space and time.”
The impact of the impending move on the Bucks’ commercial prospects has been stark – Feigin says annual sponsorship income has doubled over the past two and a half years (work began on the arena in June 2016).
“The building has so many more assets to leverage, whether it’s hospitality, whether it’s signage, whether it’s IPTV, whether it’s digital,” he says. “The new arena actually gives us the content to be able to increase revenue against it.”
The cornerstone of the stadium’s contracted revenue is the 25-year naming-rights deal struck with Fiserv towards the end of July, just a month before the grand opening. The financial terms of the deal were not made public, but it has been reported at between $6m and $7m a year.
Although Fiserv is a local firm with offices in Brookfield, Wisconsin, Feigin thinks the deal rewards the Buck’s positioning of the arena as an international platform. “I think they feel that attaching themselves with a global NBA team is one of the next steps in awareness and growth around the world,” he says.
The firm’s technology is used by banks, merchants and billers to move money around and allows customers to check their balances online, which leads inevitably to questions about whether it will activate by streamlining the payment system in the new arena.
“That is really one of the things we’re looking forward to,” says Feigin. “How do we work with Fiserv and really use the arena, the retail, the food and beverage and our core businesses as pilot programmes and test labs for new ways to transact?”
The giant glass atrium in the Fiserv Forum
The Fiserv brand will feature prominently on the exterior façade, playing surface, rooftop and throughout the facility. Feigin describes the company as the team’s pre-eminent business partner with access to all of team’s assets, including the players, buildings, hospitality, and, of course, branding on the team’s broadcast games. The ‘Fiserv Forum’ name is a nod to the fintech firm’s annual client experience event.
Contrary to some reports, the deal doesn’t include an option for Fiserv to move into the commercial district that the team plans to build on the adjacent plot of land now that work on the stadium is complete. “Commercial real estate has nothing to do with this naming rights deal,” says Feigin. “As a group we’re always open to opportunities but as it pertains to Fiserv, we didn’t discuss anything, and we didn’t make it an element of the naming rights deal.”
The deal does, however, make it more likely that the company will remain based in the region. The fact that the sponsorship comes less than a year after Wisconsin lawmakers agreed to give Fiserv up to $12.5m in tax relief if it keeps its headquarters in the state did not sit well with some who argued that the partnership represents a further state subsidy. “Maybe the state can sell naming rights on that new (Fiserv) headquarters and get some of the money back,” Sen. Jon Erpenbach told the USA Today network.
Feigin defends the building’s reliance on public subsidies by arguing that the multi-purpose nature of the new building will boost the state’s tax take.
“You’ve got people building and you’ve got land being developed, which are real estate taxes, and then you’ve obviously got income state taxes, primarily for the NBA players themselves who have a large payroll tax, as well as the 300 full-time employees we have and the 1,000 part-time employees.
“The maths in everything is keeping an NBA team in the city which obviously generates tens of millions of dollars in tax income in a given year.”
To read a Q&A with Bucks president Peter Feigin about the Fiserv stadium naming-rights partnership, click here.