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European arenas battle soaring energy costs

A number of European arenas have told IQ that skyrocketing energy costs are emerging as the sector’s biggest challenge since the Covid-19 pandemic.

Though many arenas are experiencing a boom time thanks to pent-up demand and rescheduled shows, venue heads are reckoning with the ballooning cost of electricity and gas amid wider inflation.

“We are facing massive price increases across all our markets, at unprecedented levels,” ASM Global’s Marie Lindqvist tells IQ. “The market is incredibly volatile and continues to increase.”

According to Lindqvist, the prices for electricity and gas at ASM venues have quadrupled since the beginning of the year, with the UK being hit the hardest.

And it’s not just the country’s larger venues that are struggling; Music Venue Trust estimates that the grassroots music venue sector is looking at a potential £90 million in new energy-related costs, equating to 26% of the entire gross turnover.

On average, the annual cost of energy per venue is set to increase by 316%, according to the charity for grassroots music venues in the UK.

“[Rising energy prices] is probably our number one challenge right now,” Lindqvist continues. “However, the cost base, in general, is a huge challenge with pressure in all key cost lines such as labour cost inflation, event costs, food costs etc.”

“We are facing massive price increases across all our markets, at unprecedented levels”

In Estonia, inflation has risen by 22% in the last year, which is particularly felt in labour and administration costs. Siim Ammon, CEO of Saku Arena (10,000) in the capital Tallinn, says gas prices are now five times higher than at the same time last year.

“This means we are forced to find alternatives or a way to lessen consumption,” Ammon tells IQ. “Sadly, this is going to hit our promoters as well.”

Lindqvist is also weary of how increasing cost pressures could impact ASM’s guests and partners and says the company is trying incredibly hard to minimise the knock-on effect.

“The actions that we have in place will ensure that we are doing all that we can to do this,” she says. “We are also in constant dialogue with our partners to try to minimise show costs, in particular energy requirements for a show.”

In the Czech Republic, it has been reported that the inflation rate (which accelerated to approximately 17.5% in July) is having an impact on consumers’ ticket-buying behaviour.

“The overall rise in prices of services, energy, food, etc. in the country has made people more sensitive to buying entertainment and pickier about which concert to go to,” says Stanislava Doubravova from the O2 Arena, the country’s key venue for international acts.

“[Rising energy prices] is probably our number one challenge right now”

AEG-owned Barclays Arena (formerly the Barclaycard Arena) in Hamburg, Germany, is among the venues that have reported a “huge” increase in energy costs. In a bid to curb prices, the 15,000-capacity arena is exploring the use of alternative sources, such as wind power and solar energy.

“Since its construction in 2009, the Barclays Arena has a greywater recycling system on the roof that collects rainwater for the sanitary system,” says VP and MD Steve Schwenkglenks, adding that the venue is reducing waste and increasing recycling across its food and beverage offers.

“We have stopped ‘All you can eat’ offers in our premium boxes, because a lot of food had to be thrown away. This doesn’t mean that every one of our lodge partners won’t get enough to eat, it’s just that we are trying to dispose of as little food as possible. At the end of 2022, we will introduce a deposit cup system in the arena.”

Much like Barclays Arena, Poland’s Spodek Arena (cap. 11,000) is attempting to bridle the energy price hike through eco-friendly solutions.

“Sadly, this is going to hit our promoters as well”

“We have introduced a system to manage and optimise the use of electricity, heat, and water; installed a smart heating and ventilation management system at the ICC, and we have also implemented special processes for monitoring the use of lighting,” says Marcin Stolarz, CEO of the Katowice-based arena.

ASM is also leaning on technology to help monitor and reduce its carbon footprint and costs. “We are able to view our consumption in real-time so track usage every day with a view to becoming as efficient as we can be,” says Lindqvist.

“We are also further investing in new technology and working closely with Greener Arena and other experts in the field to continue to move forwards in this space. Finally, we are recruiting a head of sustainability whose sole role will be to support our business to achieve our carbon reduction targets and to support our venues to be as green as they can be.”

Read more about the opportunities and challenges facing arenas worldwide in IQ Magazine‘s Global Arena Guide 2022, published this September.

The Guide features over 250 interviews from arena professionals worldwide, as well as a comprehensive global directory.

 


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