A cursory survey of sports venues will reveal fields sponsored by Citi, Chase, PNC, and Truist—just within Major League Baseball alone. However, the connection between payments and the arenas and stadiums that host events runs much deeper than naming rights. With a captive audience of thousands, there’s a strong opportunity to drive loyalty and revenue, which is why so many stadiums and arenas are exploring new pay methods.
In a recent PaymentsJournal podcast, Christopher Miller, Lead Emerging Payments Analyst, and Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, discussed their experiences at sports arenas across the U.S. and the emergence of new payment protocols at entertainment venues.
A Cash-Free Stadium
The greater movement away from cash and toward digital payments has been gradual shift on a national scale, but many event venues have already made the transition to cashless operations.
“I went with some friends to Charlotte to a soccer game for the team we support in Atlanta,” Hirschfield said. “You walk in this big 70,000 seat football stadium, and the first thing you see is a massive banner that says, ‘We are a cash-free stadium.’ I go to enough games, and almost every stadium I’m in nowadays is cash-free. It creates a lot of openings for organizations to grow their revenue base through new kinds of payment activities.”
One unique aspect of sports and entertainment events is that they attract a captive audience of tens of thousands. Many attendees have paid a premium for entry, and re-entry is often not permitted. Not only are most patrons there for the duration, but they are also frequently loyal and enthusiastic supporters of the team or artist they came to see.
These factors create opportunities for venues and payment firms to drive revenue and foster innovation.
“Many new technologies—and I’ll take biometric authentication as an example—have the best application in scenarios where you have loyal, repeat customers for whom it is worth the effort to enroll. And they believe that there is a benefit to them of enrolling that they will receive repeatedly,” Miller said. “Folks like season ticket holders are a slam dunk of a category there.”
Season ticket holders have already invested a substantial amount of money, are likely to spend more, and visit the sports venue frequently. This gives the team or arena a strong incentive to provide them with unique and distinctive experiences to engage and retain them.
“It’s really a sweet spot for both piloting and implementing these types of things,” Miller said. “We’ve been seeing, for example, biometric entry for a couple of years. There are some stadiums that have done away with every form of media whatsoever—there’s not even digital tickets. Your face is your ticket, your face is used for payment, and there’s just nothing but your face, not even digital wallets. But that’s at the far end of the spectrum.”
Cautionary Tales
Though stadiums and arenas can be effective environments for introducing these new programs, the initial scope should be manageable.
“The Intuit Dome in Los Angeles was the first one I know of that went fully biometric,” Miller said. “The first event there was a concert, and the biometric entry system was broken, and long lines formed of angry people who had been told they didn’t need tickets. It was a cascade of technological failure that delayed individuals from experiencing the concert or, at the very least, colored their perception of what type of experience the arena could be trusted to give.”
These issues can impact repeat patronage, but they are also common when dealing with emerging technologies.
“I was at a soccer game in Atlanta this past weekend and the Just Walk Out technology was down, so all of these stands were inoperable,” Hirschfield said. “They had food spoiling on the shelves, the hot food, but it goes to show there are limitations still in current technology that need to be addressed. There’s a lot to learn and these are great ways to learn without putting too much at risk.”
Because hiccups occur, piloting new technology programs is the best route. For example, at Chase Center in San Francisco, a biometric payments pilot was limited to a certain concession stand.
The pilot was rolled out as a unique, one-off experience, allowing the technology to be tested and challenges to be identified before scaling it throughout the venue.
Blending Team and Brand Loyalty
Another area of opportunity is for retailers to bring their full loyalty programs to the arena environment. There is a growing presence of retailers in arena concession stands, such as the Chick-fil-A stands in the Mercedes-Benz Superdome in Atlanta. However, these locations don’t fully function like their other franchises.
“It adds to a little bit of confusion on the part of the patron because I have a Chick-fil-A loyalty account and prepaid account, but I cannot use them at what they call their licensed venues,” Hirschfield said. “Gift cards are not applicable at the venue, and I can’t use the app to order. It shows there’s a need to grow—they need to figure out how to blend my loyalty to Chick-fil-A and my loyalty to my team.”
This pain point may ease due to moves happening behind the scenes. There has been a long-term trend of consolidation, involving major companies like Ticketmaster and Live Nation, as well as other arena management and ticketing vendors.
Additionally, there has been substantial consolidation in ownership across sports franchises and leagues. It has become more common for ownership groups to purchase multiple teams, creating opportunities to deliver experiences across multiple franchises.
One of the main reasons licensed stores at venues can’t offer loyalty and prepaid services is that their payment systems are tied to the arenas, which have historically been highly fragmented across the nation.
As consolidation reduces the number of management companies, it will become easier for companies like Chick-fil-A to integrate and offer their full experience at sports and entertainment venues.
“Being able to use a prepaid card issued by the retailer with whom you have a loyalty relationship in these license scenarios changes the game of what’s possible for those types of partnerships, who can obtain value, and how they can attain value,” Miller said. “I think there’s a technical problem there to be solved. There’s a good business opportunity to step into that niche and bridge this gap.”
Opening Opportunities Through Wallets
Another way to leverage the stadium environment to build loyalty is through prepaid wallets. More venues are offering tickets pre-loaded with benefits like $20 in concession value or discounts at arena retailers, but there is still plenty of room for improvement.
“I was in Utah at the Utah Jazz’s arena, and they have a great app where you can pay in the app and then go pick up your food,” Hirschfield said. “It reduces a lot of friction, but how do you load a wallet into that? Then you get those benefits that we’ve seen from other stored-value wallets, like reducing the amount of transaction fees because you’re doing it on a one-time basis versus a many-time basis.”
“In sporting events, I’ll sometimes go to three different concession stands in one event, because I’m with my wife and my kids,” he said. “My daughter wants ice cream, my wife wants a piece of pizza, and my son wants a hot dog. Those are three different places and three transaction fees that can be easily eliminated through technology.”
A team-centric digital wallet also opens possibilities for new partnerships and rewards programs. For example, at T-Mobile Park in Seattle, if a customer uses their Alaska Airlines Bank of America credit card on a Friday night, they receive a discount. However, to take advantage of this benefit, consumers must remember to bring the card and use it for transactions.
“Shifting all of those payments to a team-operated wallet changes the nexus of how valuable that partnership might be for both sides,” Miller said. “If the take rate across all the consumer base can be increased, than the economics of that partnership are improved and we haven’t had to do much. This is relatively small potatoes from a technical perspective, but it does acquire a scale at which it makes sense to take that leap.”
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