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Abstract
Many professional football clubs have big plans for new stadiums or stadium expansions. Bigger stadiums are a sign of status, help to increase and diversify revenue streams, and enhance the fan experience. So how should a football club go about getting a bigger stadium? Should they build a new one or expand their existing stadium? And how are these stadium investments associated with club performance? Using an event study approach, we analyze sporting performance in the years around stadium investments in the English Premier League from 1992/1993 to 2021/2022. We find that clubs with stadium expansions have better subsequent sporting performance while clubs with new stadiums do not. Further analysis indicates that investments in new stadiums are associated with a temporary decrease in transfer expenditure. This decrease is not the case for stadium expansions as transfer expenditure is maintained and performance on the field subsequently improves. In summary, our analysis indicates that stadium expansions are the better option for professional football clubs as they increase both stadium capacity and sporting performance in the shortterm.
Keywords: investment, performance, new stadiums, stadium expansions, football
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Introduction
Tottenham Hotspurs officially open their new£lbn stadium.1 Everton cleared to build new£500m stadium at Bramley-Moore Dock.2Liverpool's £80 million Anfield Road End expansion to add 7,000 seats.3 West Ham's London Stadium capacity to increase to 62,500 seats after expansion approved.4 Newcastle United could soon expand St James Park to an 80,000-capacity mega-stadium.5
Professional football clubs see new and bigger stadiums as an integral part of their business model. Bigger stadiums help to increase and diversify revenue streams through higher matchday revenues, increased naming rights and sponsorship deals, greater potential for hosting music concerts and non-football sporting events, and the possibility of related hospitality and real estate developments within the stadium vicinity. New and expanded stadiums also add to the fan experience, with more luxury suites, bigger replay screens, expanded museums and gift shops, and enhanced food and beverage outlets.
For the 2022-2023 English Premier League (EPL) season, the biggest stadium capacities were 74,140 at Manchester United's Old Trafford, 62,850 at Tottenham Hotspur Stadium, 62,500 at West Ham's London Stadium, 60,704 at Arsenal's Emirates Stadium, 53,400 at Manchester City's Etihad Stadium, and 53,394 at Liverpool's Anfield. The...