The Atlanta Falcons would have fans believe that their new, super-cheap stadium menu is just a way to reward the team faithful. It’s more than that: Behind the $2 hot dogs, $3 pretzels, and $5 beers is a strategy team executives say will make more money, not less.
Owner Arthur Blank announced Monday that the new $1.4 billion stadium will feature "street pricing" for concessions when it opens next year. That will make Mercedes-Benz Stadium the cheapest place to eat in the National Football League, where the average price for a beer is $7.42, going up to $10 or more in both Oakland and San Francisco, according to the 2015 Team Marketing Report.
(By the way, the Indianapolis Colts, according to the report, charge a below-average price of $7 for a beer and just below the league average of $5.29 for a hot dog.)
Falcons ownership believes that lower prices—and 65 percent more concession stands than the Georgia Dome currently offers—will encourage fans to buy more at the stadium. As it is, fans often eat outside of the stadium before or after the game, to avoid the high prices at the venue.
“We’re going to get them in earlier, they’re going to linger a little bit longer, they’re going to be a little freer and not think that they’re getting ripped off,” said Steve Cannon, CEO of Blank’s AMB Group, which owns the Falcons.
To make this possible, the Falcons had to sign a new deal with Levy Restaurants, which runs concessions at the stadium. Most teams contract with a company like Aramark or Levy to run concessions and share the revenue, in which case, the concessionaire has no incentive to keep prices low. Profit margins on food and drink can run to 77 percent.
This time, the Falcons will pay Levy a fixed amount, and the franchise will keep the revenue. This gives the team the power to set prices. It will bear the brunt of any underperformance.
Cannon declined to provide specifics about the deal with Levy or the team’s sales projections. The team, though, expects to come out ahead. “It could be a 10 percent bump, it could be a 30 percent bump, who knows,” he said.
There’s also very little financial risk for the Falcons. Concession sales are a tiny fraction of revenue for NFL teams. Food and drink sales at Lucas Oil Stadium in Indianapolis, for example, generated about $5.2 million in revenue for the Colts in 2013, according to The Indianapolis Star.
By comparison, every NFL franchise received $226.4 million in national revenue for the 2014 season, and teams also generate local revenue from things like retail sales and a portion of tickets sold. While the Falcons don’t disclose their own local numbers, one team does: the Green Bay Packers reported $149 million for 2014.
“The NFL is different from other leagues, since the revenue streams are different and there’s only eight regular-season home games,” said food-service consultant Chris Bigelow, who has clients in all four major U.S. sports. “In-stadium revenue just isn’t a driving force.”
The new arrangement also requires local vendors to charge the same prices inside the stadium as they do at their restaurants, and the pricing will be the same for any event at the stadium, including college playoffs, soccer games and concerts.