How does Japanet envision regional revitalization through Nagasaki Stadium City?

Japanet Holdings is best known in Japan for its Japanet Takata teleshopping business but, in 2019, it launched its sports and regional revitalization business as a new pillar within the group. It has expanded sports and entertainment opportunities in the region since 2017 through its management of hometown professional soccer club V-VAREN NAGASAKI and, in 2020, established Nagasaki’s first professional basketball club, Nagasaki Velca, which now competes in Japan’s B.LEAGUE.

Regional Creation Nagasaki Co., Ltd., a group company set up to serve as the core of the sports and regional revitalization business, spearheaded the project to build Nagasaki Stadium City which opened on October 14, 2024. The project has attracted attention as a private sector-led, hybrid business focused on sports and entertainment. Discussing the background to the launch of the project, Yutaka Orime, the company’s Executive Officer, commented:

Yutaka Orime, Executive Officer, Regional Creation Nagasaki Co., Ltd.

“In 2017, we came to the rescue of V-VAREN NAGASAKI, which was struggling at the time, and made it a group company. This marked the start of Japanet’s sports business. It just so happened that in the same year, there was talk of repurposing the site of the former Nagasaki Shipyard & Machinery Works Saiwaimachi Plant, owned by Mitsubishi Heavy Industries. This site would eventually become Nagasaki Stadium City. Japanet’s President and CEO, Akita Takata was keen to take charge of this project. He believed that creating a ‘one-of-a-kind city never previously seen in Japan,’ with a soccer stadium at its core, would energize V-VAREN NAGASAKI and ultimately the people of the city. And Nagasaki would have a brighter future.”

As its name suggests, Nagasaki Stadium City was conceived as a “city” that would serve as the core for regional revitalization. At its heart is a soccer stadium with a capacity of approximately 20,000 people, an arena with about 6,000 seats, as well as a hotel, commercial facilities, offices and other services. Nagasaki Stadium City now has about 80 stores.

Nagasaki Stadium City

This large-scale project was led by Akito Takata, President and CEO of Japanet Holdings. Yutaka Orime, who was assigned to manage the project on site in Nagasaki, is passionate about the project alongside Mr. Takata.

However, Orime recalls that he often heard negative comments at the start of the project about this unprecedented and ambitious initiative from people around him.

“For a while, I heard from many quarters that there was no way this model could succeed in Nagasaki. Let’s call these people ‘dream killers,’ happy to make statements that shatter dreams and ideas. As a company, we adopted ‘beat the dream killers’ in our internal messaging for the year and, partly to prove that something like this could succeed in Nagasaki, we maintained our belief in the power of sports and did everything we could to bring the project to fruition.”

This type of unprecedented megaproject involves a wide range of stakeholders at every step, from initial development to ongoing maintenance and operation. The numerous digital services provided throughout Nagasaki Stadium City required a holistic design, from touchpoints to improve the customer experience to the infrastructure, such as a high-speed network, that supports the services. As management of the facility is expected to become more complex in the future, great emphasis was placed on efficiency and delivering labor savings.

EY, which is also active in regional development through professional sports and working to create sustainable long-term value, joined the project in 2021 as a PMO tasked with the overall management of ICT.

EY already had a strong track record of supporting regional revitalization through sports. For example, EY has supported initiatives by professional sports teams to improve their operations and undergo DX (digital transformation), and contributed to urban development projects centered on arenas and stadiums. EY also possesses know-how for end-to-end management of numerous complex issues, in fields such as facilities, urban development and coordination with government and public sector entities.

Akira Okada is a partner in EY Strategy and Consulting Co., Ltd experienced in sports DX and regional revitalization. He was in charge of this unprecedented, private sector-led project and shared his thoughts during a discussion with Orime.

Akira Okada, Partner, Government and Infrastructure Sector, EY Strategy and Consulting Co., Ltd.

Okada “Prior to this project, it was incredibly rare in Japan for private companies to lead the development and construction of stadiums. The priority was always the public interest element of the stadium and its sports facilities. There was rarely a focus on sports and entertainment as pure attractions, nor consideration of the overall profitability of the stadium and other businesses in the surrounding area. However, with this project, we have attempted to leverage the full benefits of the private sector approach.”

Mr.Orime “I think Nagasaki Stadium City will be seen in future as something unique in Japan, making a visit to Nagasaki a must-do so that people can see it for themselves. A hotel attached to a soccer stadium is also a first in Japan. As soccer games will only be played there about 20 days a year, I think our model of surrounding the stadium with facilities such as hotels, which allow you to generate stable profits relatively easily, to make the city as a whole profitable, is an idea that only the private sector could come up with. On the ICT side, we wanted to incorporate cutting-edge field tests and case studies, something that would probably have been difficult for the government to do. In my opinion, ICT can offer a sports business approach that is unique to the private sector.”

Okada “From the outset, when we were thinking about how to deliver convenience and comfort in Nagasaki Stadium City, we had a vision and goals for the kind of experience that the facility would need to offer. To achieve those goals, we employed the latest ICT to design services from scratch. I think the decision to invest in ICT delivered great value for the project and that’s something unique to the private sector.”

Mr. Orime “To build the system, I felt it was vital to agree an initial vision and goals for what we wanted to accomplish using ICT and what type of worldview we wanted to present to customers. I had the opportunity to discuss some ideas with EY, which also involved looking at case studies. They came up with ideas that we hadn’t considered so I feel that working together to determine the vision and goals provided huge momentum as the project progressed.”

Orime went on to explain that one notable outcome of the project is that a single app provides access to every aspect of the visitor experience.

Mr.Orime “There are already 350,000 registered users of the Nagasaki Stadium City app, as of August 2024. From the beginning, we worked with EY on how to make use of this big data to sort information based on preferences, use it for analysis and to make improvements.

To achieve workforce efficiencies, we had high hopes for employing ICT to optimize operations and reduce labor by visualizing shift management during events when in-person staffing is most necessary, and at normal times when fewer people are needed.

We expected the use of ICT at Nagasaki Stadium City to have a large economic impact by improving the operational efficiency of the facility and creating opportunities for consumer spending.

Orime added that when negotiating larger orders, working with EY people as a single team also paid dividends.

Mr. Orime “Large-scale projects entail placing orders worth several hundred million yen or more. EY led from the front by dealing with potential vendors and engaging in complex negotiations. When there’s a tough discussion between us as the client and a a contracted vendor , it is the business relationship which often suffers. We’re immensely grateful to EY for stepping in as a neutral party and helping us to build stable relationships with our vendors.

Orime believes that the project also benefitted hugely from the involvement of EY, which operates globally and brings information on current sports trends from around the world to Nagasaki.

Mr Orime “Worldwide, investments in sports businesses and venues seem to be getting larger. I believe this is due to of the power of sports and because of the involvement of the community in urban development projects which enhances corporate value and creates the conditions for successful businesses. I am confident we will see greater adoption of these practices in Japan.”

Okada “During our consulting sessions, we often talk about enhancing value by integrating the management of venues such as the stadium and the arena with sports entertainment, ticketing, food and beverage service, etc. We also consider expanding the range of revenue sources by operating an entertainment business that monetizes created content across various media, such as streaming. I think Nagasaki Stadium City has shown that this can be done. I hope that Nagasaki will be the starting point for enabling new sports and entertainment businesses in Japan to move to the next level.”

Mr Orime “Now that the facility has been completed and tickets for the first concert have been selling well, almost all of the so-called dream killers have disappeared. While we only had a few staff initially, we now stand at 300 people. They all worked hard to prepare for the opening.”

Mr Orime “The opening is just the start, but ensuring the long-term viability of the facility will be the key challenge. It will attract a lot of attention in its first year, but we want to keep delivering what customers want and continue to grow over the next 10 to 20 years.

Okada I hope that more people in the public sector will embrace the co-creation model and work with private companies like Japanet Holdings to achieve similar impressive results. If we get to see more examples of the public sector entrusting projects to a private sector providing superb services, I think both the public and private sectors will become more aware of the potential in these projects.”

Mr. Orime “You’re absolutely right. I also don’t think private sector-led projects are necessarily the only answer. I believe that increasing the number of examples like this, where the project involves cooperation with public institutions and where the regional and local context is reflected in the plan, can energize the whole country.”

Orime hopes that this new approach to regional revitalization, which straddles the line between public and private sectors, will spread from Nagasaki to the rest of Japan.

Mr. Orime “Nagasaki City, which is a testbed for our vision, represents a market of about 400,000 people. It is not that large by national standards but, if we can make a large investment and guide an exciting project to success there, it is an example that can be repeated in any city. With many Japanese regions on the decline, I would be happy if we can become a pioneer in re-invigorating cities through the power of sports, establishing a “Nagasaki model.”

It has been four years since Japanet Holdings and EY overcame corporate boundaries to unite forces in a team to co-create this project. And Nagasaki Stadium City has finally opened.

There is already considerable interest in the Nagasaki Stadium City. Now, with the emergence of a private-sector model with the potential to energize various parts of Japan through the power of sports, people across the country, not solely in Nagasaki Prefecture, are paying close attention to see what happens at Nagasaki Stadium City.