The Big Idea

The Economics of Stadium Concessions

With the Master’s and its accompanying viral concession pricing photos behind us, let’s take a look at how other major sporting events sell theirs. Ever wonder why that hot dog costs $12 at the ballpark when you can get one for $2 at the corner store? And how do some venues get famously get away with much cheaper prices? The economics behind stadium concessions is a fascinating blend of profit-sharing, marketing strategy, and consumer psychology. 

How the Money Flows: The Business Model

Stadiums are financial powerhouses on game days, with concessions alone generating as much as $2 million per game, averaging about $30 per fan in attendance. The relationship between teams/venues and concession providers typically falls into one of three models:

1. Commission Model

The most common arrangement is for teams to hire concession companies and collect a percentage of sales, typically between 35% and 55% of total revenue. The concession company handles all operations, staffing, and inventory, while the team provides the venue and hungry fans.

As Chris Bigelow, a food service consultant for teams, explains: "Teams typically hire companies to sell their food and drink, and collect commission between 35 and 55 percent of total sales."

2. Management Fee Model

The venue owns the concession business and pays the concession company a fee to operate it. This gives the venue more control and a larger share of the profits, but also means taking on more risk and upfront investment.

3. Joint Venture Model

Some venues and concession companies form partnerships where they share both the investment and the returns. This model has gained popularity as teams seek more control without assuming all the operational responsibilities.

The Profit Margins: Why That Beer Costs So Much (Usually)

Stadium concessions are notorious for high markups, but the economics make sense when you consider the business model:

• Beer: 90%+ profit margin

• Soft drinks: 85-90% profit margin

• Hot dogs: 60-80% profit margin

• Nachos: 45-65% profit margin

• Pizza: 60-75% profit margin

• Popcorn: 80-90% profit margin

• Snow cones: 90-95% profit margin (the highest margin food item!)

These high margins might be deemed necessary because venues are only open for a limited number of events each year, so the concession companies are forced to make their profit during these peak times while covering their fixed costs.

While high prices are the norm, some venues have adopted more fan-friendly approaches in the hopes of addressing the problem of profitability through different consumer psychologies:

Mercedes-Benz Stadium (Atlanta Falcons)

When the stadium opened in 2017, it introduced "Fan First" pricing with $2 hot dogs, $2 sodas (with free refills), and $5 beers. Despite the lower prices, profits have actually increased. This is thanks to a two-fold approach in consumer psychology.

Firstly, the low sticker price, especially for families, has led to the average fan buying more items throughout the course of a game, a stark change from a few years ago when some would eat before entering the stadium altogether. This concept, referred to as a loss leader, is utilized often product sales. “Maybe that drives their spending habits,” Falcons CEO Rich McKay said. “The per capita spending of each individual is very comparable, if not higher than, many other stadiums.”

The second, and less noticeable to the fans at first glance (but perhaps even more effective), is the wait time associated with making these food and beverage runs during the game. Research from Oracle revealed that fans would spend 42% more on concessions if wait times were halved. This insight was put into practice at another NFL stadium, Empower Field at Mile High (Denver Broncos), where efforts to cut lines in half resulted in a 34% increase in concession sales. For venues hosting numerous events throughout the year, such efficiency improvements can translate to an additional $20 million annually.

Augusta National (The Masters)

Famous for its remarkably affordable concessions, including the iconic $1.50 pimento cheese sandwich, this pricing is part of the tournament's tradition and branding. This isn’t out of nowhere, though. Thanks to the tournament’s remote destination in the golf world, as well as its relatively late arrival on golf’s timeline, the tournament was forced to make sure that every patron who came to watch had a low barrier to a good time while supporting the event. That included cheap prices. Creating this goodwill among patrons helped reinforce the event's unique character that still captures the hearts and minds of golf lovers worldwide.

Coastal Carolina University's Bold Move

In a groundbreaking announcement, Coastal Carolina University will offer free concessions at football games for the 2025 season through their "CCU Kickoff Meal Deal." This makes the Chanticleers the first FBS program to offer such an initiative.

The deal allows ticket-purchasing fans to select up to four items per concession stand visit from a menu of hot dogs, nachos, popcorn, and fountain drinks, with no limit on visits. While alcoholic beverages and specialty items aren't included, this represents a major shift in thinking about the fan experience.

Coastal Carolina signed a deal with Aramark, an industry leader, to provide food for the entire school, so we don’t get to see the revenue specifically generated from concessions at athletic events. Similarly sized programs have generated anywhere from $25,000-$75,000. To Coastal, which didn’t even become an independent university until 1993, the tradeoff of developing a strong brand in a growing market of transplants near Myrtle Beach is worth the loss in revenue. Athletic Director Chance Miller said, “A lot of our new residents are coming from pro markets. They have a favorite professional team, but they might not have a college team yet.”

This, combined with the fact that alcohol and premium sales, such as Bojangles, won’t be free, means that the goodwill generated with this move might pay off sooner rather than later. Chance mentioned, “We’ve learned that folks buy more beer if they’re eating popcorn. Free hot dogs don’t mean they won’t want Bojangles too.”

The Future of Stadium Concessions

With the increase in technological integration, from self-checkout to mobile ordering and cashless payments, the wealth of data on what consumers want from their concessions is greater than ever before. Some trends are looking to capitalize on this new information:

1. Local Partnerships: Teams are increasingly partnering with local restaurants and food vendors to create a sense of place and community connection.

2. Premium Experiences: High-end food options and all-inclusive packages are becoming more common as venues seek to enhance the overall fan experience.

3. Sustainability Initiatives: Eco-friendly packaging, locally sourced ingredients, and waste reduction programs are gaining traction.

4. Dynamic Pricing: Some venues are experimenting with variable pricing based on demand, similar to ticket pricing strategies.

Conclusion

Stadium concessions represent a complex ecosystem where teams, venues, and food service providers balance profit motives with fan experience considerations. While the traditional high-margin model remains prevalent, innovative approaches like Coastal Carolina's free concessions experiment and Mercedes-Benz Stadium's fan-friendly pricing suggest the industry may be evolving.

As competition for entertainment dollars intensifies, teams and venues that can create value through their concessions strategy, whether through efficiency, quality, or pricing, will likely gain an advantage in attracting and retaining fans. After all, the taste of victory is always sweeter when accompanied by affordable (or free) stadium food.

Nerding Out

Chasing Rings or Revenue?

Major League Baseball’s biggest markets have always outspent their smaller competitors. This most recent offseason, however, narratives of the extreme gap between teams have left many wondering whether certain teams are competing at all. How teams allocate their resources reveals much about their competitive philosophy and financial strategy. Based on 2024 revenue and 2025 payroll data, we can identify several distinct approaches to baseball's money game. While there are numerous other external costs associated with these teams that can’t be accounted for uniformly, this can still give us a decent incite into a team’s current financial management strategy. Let’s take a look.

The All-In Investors (90%+ Payroll/Revenue)

New York Mets (90.0%)

The Mets stand alone in this category, with owner Steve Cohen seemingly determined to buy a championship at all costs. Spending a staggering 90% of their $444M revenue on payroll, the Mets have embraced a "whatever it takes" mentality. Cohen's deep pockets allow for this aggressive approach, though the sustainability remains questionable. When your payroll includes $71M in luxury tax penalties alone, you're playing a different game than everyone else.

The Premium Contenders (65-75% Payroll/Revenue)

Los Angeles Dodgers (73.0%), Toronto Blue Jays (71.5%), Philadelphia Phillies (67.2%), Arizona Diamondbacks (66.7%), San Diego Padres (63.8%)

These teams are serious about winning now, investing heavily in talent while maintaining some financial flexibility. The Dodgers lead this group with the highest absolute revenue ($752M) and payroll ($549M), demonstrating that even big-market teams are willing to spend proportionally high amounts to chase championships. This, combined with the notorious last few offseasons of deferred money contracts, puts the Dodgers at the top of this group. The Diamondbacks stand out for making this tier despite a relatively modest revenue base ($328M), showing their commitment to building on 2023’s World Series appearance.

The Balanced Competitors (45-60% Payroll/Revenue)

Texas Rangers (57.1%), Los Angeles Angels (52.3%), Kansas City Royals (51.5%), Baltimore Orioles (49.9%), New York Yankees (49.7%), Detroit Tigers (49.3%), Houston Astros (48.5%), San Francisco Giants (47.5%), Minnesota Twins (47.4%), Seattle Mariners (46.1%), Atlanta Braves (46.1%)

These teams strike a balance between competitive spending and financial prudence. Surprisingly, the Yankees fall into this middle tier despite their "Evil Empire" reputation, allocating just under half their massive $728M revenue to player salaries. The Braves stand out as particularly shrewd operators, generating $510M in revenue while keeping payroll relatively modest. The Orioles and Royals demonstrate that smaller-market teams can compete in this range when well-managed.

Resting on Laurels (35-45% Payroll/Revenue)

Colorado Rockies (44.7%), Oakland Athletics (43.4%), St. Louis Cardinals (42.9%), Cincinnati Reds (42.6%), Washington Nationals (42.3%), Boston Red Sox (42.1%), Milwaukee Brewers (40.8%), Cleveland Guardians (39.4%), Chicago Cubs (36.4%)

These teams seemingly prioritize financial returns over maximizing competitive advantage. The Cubs are the most notable inclusion, with the third-highest revenue in baseball ($574M) but a payroll percentage that ranks 26th. The Red Sox similarly leverage their massive market and iconic status to generate $574M in revenue while spending just 42.1% on payroll. The Cardinals, with their storied history and loyal fan base, have similar revenue to the Twins but choose to spend less proportionally. A dishonorable caveat here is the Oakland Athletics, who have tanked their revenue potential the past few years, moving out of loyal Oakland and into a minor league stadium in the hopes of green, money-filled pastures in Las Vegas.

The Bare Minimum Brigade (Below 35% Payroll/Revenue)

Pittsburgh Pirates (34.5%), Tampa Bay Rays (33.8%), Chicago White Sox (31.6%), Miami Marlins (27.0%)

These teams spend the least on talent relative to their income. Both Florida teams sadly make an appearance here. The Rays have turned this approach into an art form, consistently fielding competitive teams despite minimal investment, even making the World Series recently in the process. The Marlins take the crown for frugality, spending just 27% of their revenue on player salaries, the lowest in MLB by a significant margin, to the point of near complaint from the MLBPA. The White Sox, meanwhile, are looking to bounce back after a historically bad season, which makes their lack of spending all the more worrying for their fans.

Conclusion

The wide range of spending approaches across MLB reflects the diverse financial realities and competitive philosophies of team ownership groups. While some teams like the Mets and Dodgers spare no expense in pursuit of championships, others like the White Sox and Marlins focus on maximizing return on investment through player development, analytics, and guaranteed revenue sharing. Let’s see how each approach turns out in 2025, both on the field and on the balance sheets.

By The Numbers

Numbers That Jumped Off the Page

14- In a move that sent shockwaves through North London, Tottenham Hotspur have announced former Arsenal CEO Vinai Venkatesham as their new chief executive in a move. Venkatesham will join Spurs after serving as the rival Gunners' CEO from 2020-2024 and having been with the club for 14 years. More fuel to the fiery rivalry!

$21 Million- Rory McIlroy finally completed his career Grand Slam by winning the Masters in a playoff against Justin Rose. Beyond the green jacket, a less talked-about aspect of the win was McIlroy pocketing a cool $4.2 million from the tournament's record $21 million prize pool. Green seems to mean more at Augusta!

$35 Million- Cricket superstar Virat Kohli has turned down a reported $35 million renewal offer from Puma to invest in Indian sportswear brand Agilitas. The former Indian captain is backing the startup founded by former Puma India executive Abhishek Ganguly. While those outside of the cricket world might not know him, it’s worth noting Kohli is third in Instagram followers behind only Lionel Messi and Cristiano Ronaldo.

$84 Million- The Phoenix Suns fired head coach Mike Budenholzer after missing the playoffs despite having the highest payroll in the NBA. To make matters worse, it’s the third season in a row in which they’ve fired their head coach, leaving them with $84 million in owed money to Budenholzer as well as Frank Vogel and Monty Williams. Maybe the fourth time’s the charm?

Pulse Check

Last week, we asked Beyond the Sideline readers, “If you could have the best seats in the house for you and a friend, which game would you pick?” Here’s what they thought.

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