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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:
Local Partnerships: Teams are increasingly partnering with local restaurants and food vendors to create a sense of place and community connection.
Premium Experiences: High-end food options and all-inclusive packages are becoming more common as venues seek to enhance the overall fan experience.
Sustainability Initiatives: Eco-friendly packaging, locally sourced ingredients, and waste reduction programs are gaining traction.
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.
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