SEAT Magazine, Winter 2012


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Cover and feature article from the latest issue of SEAT, published by the Association of Luxury Suite Directors. Design and production by Carole Winters Art + Design, Cincinnati, Ohio, in InDesign, printed via pdf workflow at JPA Printers in Pontiac, Michigan. Editor: Jared Frank, Dallas, Texas. We've been producing this quarterly magazine for about three years and have significantly streamlined the production process. Printing and mailing an actual magazine is expensive but differentiates your organization from all the online noise. If you would like more information, please contact me.

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SEAT Magazine, Winter 2012

  1. 1. A SNEAK PEEK OF THE 2013 ALSD CONFERENCE AND TRADESHOW Page 36 S E AT leading the premium seat industry winter 2013 P u b l i s h e d b y t h e A s s o c i at i o n o f L u x u r y S u i t e D i r e c t o r sTHE CORPORATE TICKET MARKETPLACE PAGE 47 Member Highlight: The Premium Club: In the Club: Southern Hospitality from Decreasing Suites A Coast-To-Coast NetworkChef Tina & the Practical Joker But Not Revenues With Year-Round Benefits PAGE 28 PAGE 64 PAGE 78
  2. 2. THE CORPORATE TICKET MARKETPLACE Just as dramatic as the sports venue evolution of the past 20-plus years are the dramatic changes in how the corporate fan handles his ticket assets. So how did we get here? And, more importantly, where do we go from here? Every team’s approach to how they do business with these most-valued customers depends on the answers. By Bill Dorsey, Chairman, ALSD MetLife Stadium is home to the NFLs New York Jets and Giants and the Commissioners Club, one of the most exclusive premium seating areas in all of sports hospitality.
  3. 3. THE CORPORATE TICKET MARKETPLACE:The following is not a fairy tale…even if it almost reads like one. O nce upon a time, a sports fan – a per- The First Generation of the Marketplace: son who bled for his team – was known Contractually Obligated Income by various names. Joe Six Pack was the A person, who uses corporate tickets, in most cases, sits in expen- generic name for all these fans. Some sive premium seats. These seats can be suites, but also club seats, names though were more specific: loge boxes, field boxes, or courtside seats. There are many rooms Cheeseheads braved the frozen tundra in the corporate fan’s house these days. The food that is ordered of Green Bay and sat on cold, wooden is also plentiful and more upscale than the fare offered to Joe Six benches without backs, while the Dog Pounders of Cleveland Pack. Many food options are available, and if the corporate fan competed against the Terrible Towelers of Pittsburgh for status as orders far enough in advance, almost anything can be brought in: the hardiest and huskiest of fans. the best wines, the best food, the best of everything. But over the last 20 years, a new fan has emerged: The Cor- The best of everything costs money. It is not unusual for cor- porate Fan. porations to own multiple suites in multiple venues that cost Now, the corporate fan is not someone who paints his face, and millions of dollars. Some of the larger corporations spend up to he is not someone who sits in the cheap seats, where he can look $100 million for all their sponsorships and premium seats. It’s big out over the stadium rafters and see Russia. No, the corporate fan business. is someone who entertains clients at a game. The corporate fan is Corporate users comprise what is now called the Corporate someone who is creating a captive market situation for himself Ticket Marketplace. It’s been a booming business for more than and the company he represents. It does not mean the corporate two decades now. The Contractually Obligated Income (COI) fan is not a fan, but he also has another prime directive. created by long-term suite leases is what fueled the stadium boom That directive is to drive business. The corporate fan’s goal is in the 1990s. Whereas in 1990 when the corporate VIP market- not primarily the game; the corporate fan’s primary function is to place was considered only about 3% of the marketplace, a new create commerce for the company he is representing. world-class professional venue now usually has nearly 20% of its seats considered “premium.” Those 20% of seats often equate to somewhere around 40%-50% of the total ticket revenues created.A corporate fan’s tickets are called assets. And those ticket revenues often do not include things such as Personal Seat Licenses (PSLs) (see sidebar) that exist in many These assets are tracked, just like any other new venues, primarily in the NFL, where approximately half of the teams now have raised capital for these new sports cathedrals investment. No one really talks about who wins through PSLs. the game or not; a corporate fan talks about ROI THE SECOND GENERATION OF THE MARKETPLACE: of these assets. TECHNOLOGY AND FAN EXPERIENCE The gentrification of the venue marketplace is alive and well. Tickets Become Business Assets Besides a few icons (e.g., Wrigley Field, Fenway Park, Lambeau It’s an investment of sorts in human capital; “relationship market- Field, Madison Square Garden, Dodger Stadium), nearly every ing” it’s sometimes called. As with any investment, it is expected to team in the country now has itself a venue no more than 25 years pay off down the road. As such, a corporate fan’s tickets are called old, dating back to the Palace of Auburn Hills in Detroit which assets. These assets are tracked, just like any other investment. No opened in 1988 when the Corporate Ticket Marketplace really one really talks about who wins the game or not; a corporate fan began. And even the iconic venues are receiving facelifts. talks about ROI of these assets. How many clients did the cor- After around two decades, the early adopters are going through poration entertain? What were the results of these interactions? another round of renovations. Not always new builds (although Did the corporation secure any new business or maintain existing San Francisco, Minneapolis, Seattle, Las Vegas, and Milwaukee business? all seem to be planning new venues at the moment), many venues The corporate fan that uses these tickets usually needs to file seem to be receiving a facelift of sorts. The shelf life for a new expense reports. He needs to track usage. He needs to file reports venue is very short these days – less than 20 years. on who was at the event and what the business relationship is. Much of that is based on the new sports mantra called Fan He is cognizant of compliance issues, of Dodd-Frank regulations Experience. As player salaries have gone up over the past two de- about entertainment expenditures. If he does not use the tickets cades, the need for buildings to generate revenue has escalated. properly, the corporate fan can, upon occasion, lose his job. Upon As prices have gone up though, some fan amenities, including occasion, the corporation sends people to the suite to oversee their technology in the venues have not kept pace. The result? Fans will investments. Sometimes, it’s done clandestinely: a kind of secret NOT come to the venues if their cell phones don’t work. High shopper program for the corporate world. definition television, games on the Internet, and less costly F&B48 | S E A T | | #SEATWinter2013
  4. 4. Always In Style: BeingPersonal Seat Licenses NFL Teams with PSLs Dallas Cowboys special is no longer an amenity; it’s a necessity.Personal Seat Licenses (PSLs), sometimes called Charter In the 10,700-square-foot New York GiantsOwnership Agreements, are stadium financing tools, Commissioners Club, members New York Jetsprimarily existing in NFL venues. Approximately half of enjoy a destination of luxury Carolina Panthers with dark rich wood and plushNFL venues (15 teams) have raised capital through PSLs Oakland Raiders velvet and leather construct these buildings. There are two or three St. Louis Ramsteams currently building new venues which will also Baltimore Ravensoffer them: San Francisco 49ers, Minnesota Vikings, and Tennessee Titanswhatever team ends up in Farmers Field in Los Angeles. Philadelphia Eagles PSLs are not only for the corporate fan. They are Chicago Bearssold to nearly everyone in the venue. But the corporate Houston Texansfan is the person who is charged the most, especially Pittsburgh Steelersin markets such as Dallas and New York, where PSLs Cleveland Brownscan reach six figures for the absolute best seats in Cincinnati Bengalsthe house. Because a PSL is needed to obtain a good Seattle Seahawksseat in many NFL venues, they can be purchased as acommodity. Several companies offer them similarly to Average PSL Revenue Per Team:buying a ticket on the secondary market. $144.2 million Average Number of PSLs Sold Per Team: 48,221 Teams Using or Potentially Using PSLs in the Future: San Francisco 49ers Minnesota Vikings Los Angeles franchise (Farmers Field) #SEATWinter2013 | | S E A T | 49
  5. 5. Whereas in 1990 when the corporate VIP marketplace was considered only about 3% of the marketplace, a new world-class professional venue now usually has nearly 20% of its seats considered “premium.” Those 20% of seats often equate to somewhere around 40%-50% of the total ticket revenues created. Who Occupies Premium Inventory? Realistically, there is only a small percentage of the cor- Growing Industries porate market that can afford suite ownership. Consider Attorneys/Legal Services the following breakdown: Insurance Assume your suites lease for an average of $200,000 Business/Management Consulting Services per year. How much revenue would a company have to Accounting, Auditing & Bookkeeping generate to afford such a level of investment? The an- Telecommunications swer depends on the profit margin of their industry, but Beer, Ale, Wine & Liquor Distributors we will use 1% of gross sales (that would equate to 5% Doctors Offices of net sales if profit margin is 20%). So to be considered a legitimate lease candidate, a company should gener- Shrinking Industries ate at least $20 million in sales. Banks, Bank Holding Companies & Credit Unions Eliminating non-prospects such as retail, churches, Television, Radio & Newspaper schools, etc., there are a total of 4.9 million business- Finance & Investments to-business (B2B) organizations in the United States. General Contractors & Home Builders Of the 4.9 million companies, only 2.5% (124,824) have Real Estate Agencies & Managers sales of $20 million or more. By changing our param- Car Dealers eters to those companies with minimum sales of $40 Mortgage Brokers & Loans million, only 1.2% of companies would qualify. Real Estate Developers These figures may seem discouraging, but they Title Companies confirm that suite sales professionals must become Plumbing, Heating & Air Conditioning Contractors more flexible and creative moving into the future. One way to capitalize on the wants of companies to be suite Status Quo Industries holders without being limited to the size of the markets Casinos listed above is to offer suite sharing opportunities. Business Services NEC Suite sharing allows multiple partners to enjoy all Restaurants & Caterers the amenities associated with a suite at a fraction of the Holding Companies & Other Investors cost. For example, four partners share a suite for the Manufacturing Categories season at $60,000 each. Your gross revenue has just increased by 20% with the suite generating $240,000 Counter-Cyclical Industries instead of $200,000. Computers/High-Tech Using the same formula as above, $6 million or more Collection Agencies in annual sales becomes the qualifying threshold for Credit & Debt Counseling Services companies to be suite share candidates. The market- Pawnbrokers place at that level is three times larger than the market- Check Cashing Service place for single lease clients: 380,906 (7.7%) companies Apartment-Related Companies generate at least $6 million in sales. Educational/Training Companies A lot has changed over the past five years. Compa- Discount Chains nies that were once premium customers could be out Fast Food Restaurants of business now; and some industry segments that Auto Repair were booming are suffering now. In addition, counter- Medical-Related cyclical industries have emerged, are now thriving, and Remodeling Contractors are a viable target for suite sales. Self-Storage Below are business categories occupying premium space in four segments: growing, shrinking, and status – Ron Contorno, Full House Entertainment Database Mar- quo as well as counter-cyclical. keting and Dr. Heather Lawrence, Ohio University50 | S E A T | | #SEATWinter2013
  6. 6. have all started to keep both the casual fan and now even the past five years. And some teams –specifically those in the largest The Big Event: A Supercorporate fan at home. markets such as New York City – have apparently gone too far. Bowl suite usually commands Teams are beginning to realize that if you charge more, you While the rest of the bowl is nearly full, the most valued tickets in upwards of $300,000 for primehave to provide more. Corporate fans especially realize this reality some of these markets are going unsold. Corporations – despite locations. The Commissionersbecause they are buying the boxes or the club seats in many cases all the amenities they receive – are cutting back in some of these Club will certainly qualify as a prime location when MetLifeto impress the people they invite. It has to be special. Being special markets. Stadium hosts Super Bowlis no longer an amenity; it’s a necessity. New York City has had the most difficulty in this area. MetLife XLVIII in 2014. And so the 21st century venue, in order to cater to the com- Stadium had significant occupancy issues when it opened, espe-panies who can afford these high prices, is attempting to provide cially for the New York Jets. The New York Yankees too have hada truly unique experience. Nowhere is this more evident than for their premium seat issues; although to be fair, Madison Squarethe corporate fan. Garden was actually able to raise premium prices. The corporate fan coming to a game today often has access to The reason teams/venues no longer can “build it and they willthe following: come” is partially money, partially political correctness (the cor-• The best seats in the house porate fan doesn’t want to appear as Nero while Rome burns),• The players and the field and partially because they have been there and done that. The• Their suite during non-gamedays secondary market has also emerged with a ready supply of tickets• Special clubs or nightclubs at the venue available, at least for club seats. Many companies simply cherry• High-tech innovations such as fantasy game rooms or iPads pick the games they want. There is probably not one reason just as in the suite or loge box there is assuredly not one magic bullet to get lost customers back.• Mobile food ordering systems Occupancy rates have dropped in many cases, although they• Added-value amenities such as holiday gifts, food tastings, have stabilized from a couple years ago. But while occupancy golf outings, etc. rates have somewhat stabilized, the term length of the lease has• Rights of first refusal for non-contracted events: concerts, gone down. Gone are the days of the 10-year lease, except for major events such as the Super Bowl or the Final Four (in new builds in major markets for the biggest of sports such as the some cases), and other events San Francisco 49ers in the NFL. Most teams today accept much• The ability to hold meetings with full Internet access shorter lease terms. Contracts with corporations also often allow• Wi-Fi installations for full reception on mobile phones for suite sharing. In some cases, they are now even allowing suite re-selling, especially for those companies who have long-termOccupancy Rates and Lease Lengths Decrease leases and cannot get out of their lease because of their contrac-Clearly, the corporate fan is catered to…at a price. There’s the rub. tual obligations.Teams, with the ongoing and seemingly endless task of raising Specific contracts with corporations are also custom writtenrevenue, have continued to raise prices for premium seats. This has in some cases. The buyers, i.e., the big corporations, often havenot been an easy thing to do during the Great Recession of the a great deal more power in negotiations than they once did. The #SEATWinter2013 | | S E A T | 51
  7. 7. The Top 20 Business Categories Buying Premium Seats The answer to the question, “Who buys premium seating?”, is further Overall Analysis: investigated here, listing not only the top 20 business segments, ALL Business/Corporate Premium Seating Customers but additional breakdowns, including employee size, annual sales revenue, and business status (headquarters, branch, independent). Employee Size: The top 10 industries alone represent 35% of all the business types Less than 5 Employees: 26% that buy premium seating. 5 - 9 Employees: 11% These new insights are the result of Full House Entertainment 10 - 19 Employees: 11% Database Marketing partnering with the Ohio University Center 20 - 49 Employees: 16% for Sports Administration. Over 13,000 professional sport premium 50 - 99 Employees: 11% seating customers have been analyzed, and Full House and Ohio 100+ Employees: 25% University are excited to share the top industries that lease suites and other premium inventory (club seats, VIP clubs, etc.): Sales Volume: Attorneys/Legal Services Less than $1 Million: 28% Insurance $1 - 2.5 Million: 13% General Contractors & Home Builders $2.5 - 5 Million: 10% Oil $5 - 10 Million: 10% Business & Management Consulting Services $10 - 20 Million: 9% Doctor’s Offices $20 - 50 Million: 9% Banks, Bank Holding Companies & Credit Unions $50 Million+: 21% Real Estate Agencies Food and Grocery Manufacturers & Distributors Location Type: Finance & Investments Headquarters: 15% Manufacturers of Industrial & Commercial Machinery Branch: 14% Accounting, Auditing & Bookkeeping Independent: 71% Television, Radio & Newspapers Plumbing, Heating & Air Conditioning Contractors Restaurants & Caterers – Ron Contorno, Full House Entertainment Database Marketing Engineering Services and Dr. Heather Lawrence, Ohio University Trucking Car Dealers Electrical Work (Electricians) Dentist Offices contracts often favor the buyer. Corporations, who recognize they years: the “retention” expert. Because it is much easier to keep an have newfound leverage, are negotiating better deals for them- existing customer than to find a new one, retention has become selves. And teams tend to acquiesce. It’s not unusual to have many the watchword of the day. And in places such as Oklahoma City, versions of the standard suite contract in the same venue. the Thunder in the NBA have hired not one or two retention ex- What kinds of changes are being made to contracts? The es- perts, but 14 of them. calator clauses in the contracts have gone away or are very small; The days when business is taken for granted are long gone. The suite owners, in some cases, are given renewal credits or are al- days when premium staffs were one person are nearly gone. Staff- lowed to re-sell their suite; and sometimes, they can negotiate the ing has gone up; customer service has improved; and corporations “big events” coming up years in advance. That is something that are the beneficiaries of teams who need to work harder to main- would never have happened back in the take-it-or-leave-it glory tain their business revenues. days from 1990 to around 2007. The Corporate Ticket Marketplace Becomes a Retention Becomes the Watchword of the Day $10 Billion Industry Times have changed. The market has changed. The way teams do There are many factors to consider when judging the actual size business needs to change. And in many respects, it has changed. of the premium seat market. Depending upon your definition of First off, customer service has evolved tremendously. No longer premium seating, it is determined that there are approximately do teams sign contracts and then virtually ignore the customer 30,000 suites and 800,000 club seats in the five major sports, plus until the contract comes up. Now, the teams specifically reach colleges, minor leagues, racing venues, and portable hospitality. out and “touch” the customer multiple times. The suite directors This equates to a $10 billion industry. charged with this task, at least the good ones, get to really know Of this $10 billion, about $5 billion is in the professional ranks, their customers, including birthdays. They are professional con- $5 billion among the remaining levels. While stadiums, especially cierge assistants. in the college ranks, have built out new premium spaces in recent Meanwhile, a new title has emerged over the past couple of years, many teams have downsized their premium offerings. The52 | S E A T | | #SEATWinter2013
  8. 8. two trends tend to offset each other. Many teams, cognizant of what major events are in their build- The $10 Billion Industry: The professional ranks have 141 teams; the college ranks in- ings years in advance, make sure their leases with the corporations In North America, there areclude about 500 universities. Minor leagues also contribute heav- take the major event into account in several ways: 1) they use the approximately 30,000 suites and 800,000 club seats in theily to the $5 billion. For example: there are more total suites in mi- event as a bonus for signing a long-term lease, and 2) they include five major sports, plus colleges,nor league baseball than there are in MLB because the number of the event and justify a much higher cost for the lease than the minor leagues, racing venues,teams is so much higher. But minor league suites tend to cost only market would normally bear. and portable hospitality.about 33% (or even less than that) of suites at a MLB stadium. This equates to a $10 billion Premium seating consists of both club seats (including court- The Next Few Years industry.side) and suites, loge boxes, field boxes, and various “clubs” which Negotiating leverage will continue to be on the side of the corpo-exist in the venue. Club seating, the most expensive seat in the rate consumer for the next few years it now appears. But teams arehouse on a square footage basis, is about 60% of the total market- getting smarter. They are beginning to custom build venues spe-place. Too many teams, realizing this, have built out too many club cific for their marketplace, with just the right number of premiumseats in the past. This problem also is being rectified. seats that the market will bear. They are offering more and more Sponsored spaces and naming rights in premium spaces is not value to corporations, especially in the way of unique amenities.included here. Neither are Personal Seat Licenses and season And they are beginning, through sophisticated database tech-ticket bases which have existed for generations. Also not included niques, to distinguish between the business-to-business customerhere is the concert industry which varies greatly depending upon and the more casual business-to-consumer customer.the touring acts and the price points for those acts. As a result, occupancy rates seem to be going back up for the teams. And if there is anything the teams do understand, it is theThe Big Events concept of leverage. So corporations need to understand betterThe concert marketplace is very much like the event market- what is available to them and what is not. It’s a give and takeplace for sporting events. What the Super Bowl is to premium, world out there, and corporations need to know if they are thethe Rolling Stones are to concert venues. The cost of premium giver or the taker these days. #seats, not included in this $10 billion fee, is enormous. A SuperBowl suite usually commands upwards of $300,000 for a decentbetween-the-20s location. How is your team adjusting to the changing Corporate Ticket Marketplace? For major events such as the Super Bowl or Final Four, corpo- Write to Bill at, and connect with him onrations often are given the option to purchase suites at very high LinkedIn at Those who don’t take the option, give up their suites for theevents. #SEATWinter2013 | | S E A T | 53
  9. 9. THE CORPORATE TICKET MARKETPLACE:An Insider’s Perspectiveof Premium Seating Usageby Fortune 100 Companies The following information contains highlights and insights wasted without activation. The goal is to exceed a stan- gathered from interviews with 15 Fortune 100 company dard experience and provide a premium experience that insiders. attendees will remember for years to come. Premium seating is an important tool to distinguish a business Why do companies invest in premium seating, i.e., deal from other options a client may have, so company what are your primary objectives? employees need to use premium seating as a tool to do Primary objectives include: their jobs more effectively. 1. Driving business growth and adding new business 2. Retaining and providing hospitality to current clients What have been the best activation examples involv- to nurture an established relationship ing premium seating within your company? 3. Establishing relationships with teams and properties Activation can be as simple as staging events or meetings 4. Accessing premium space for business entertain- for clients and prospects because the suite environment ment impacts them more than being in a conference room. 5. Developing client loyalty Further, it becomes a great touch point to use a player or coach because these appearances make those in the suite Do companies use premium seating inventory as an feel special. Providing key clients with tickets to entertain employee incentive? their own clients also goes a long way. Another form of For the most part, companies are discouraged and activation is to offer prizes in the suite during the game as hesitant due to IRS regulations requiring reporting of an added value to those in attendance. gifts over $25. Several compliance departments prevent this practice, and they have policies that dictate that this As a leader in luxury suite ownership in multiple facili- resource is used for business first. Several companies offer ties, what tool/method do you use to manage your employees tickets at the last minute, but these practices ticket inventory? are not used as an incentive. The majority of insiders are using tracking software to monitor attendance, employee usage, and unused, used,The majority of insiders are using tracking software and charitable tickets. The most referenced software pro- grams are Spotlight, Ovations, and TicketOS. The biggest to monitor attendance, employee usage, and reason for using ticketing software is for ease of auditing. unused, used, and charitable tickets. The biggest There are still some companies that use spreadsheets and a listing of available games to distribute on a first-come, reason for using ticketing software is for ease of first-served basis. Others indicate they set up a matrix auditing. and identify the tickets for each game, splitting them between divisions of the company. Does your company use return on investment (ROI) Some companies are donating tickets to charity. If when evaluating the value of your premium seating? your company has done this, how do you track the In some instances, companies track data to show the value of the tickets? impact to business, but this evaluation still only provides There are differing procedures amongst the participants; one data point. An area of agreement among the partici- some track them and some do not. Some examples of pants is that there is not an exact science to determine responses include: ROI on premium seating; however, each company should 1. The tickets are not tracked unless they are going to find what works best for their senior management. go unused 2. The cost is tracked at either the retail price or the How important is activation (reinvestment) relative to cost of standing room only premium seating? 3. The 5031C number is entered in the database and Most of the insiders feel money and time are being the tickets are released to the charity54 | S E A T | | #SEATWinter2013
  10. 10. The most important thing to keep in mind is that an investment in premium seating is about creating a unique experience and not always about the game or matchup. Leveraging the connection to the team is the critical element.4. The value is based on the overall value of the part- nership, not the individual value of a ticket5. Goodwill cannot be measured; it is a great gesture when the tickets would otherwise go unusedHow has being linked to premium seating and corpo-rate sponsorship in sports changed in light of today’seconomic challenges?The biggest change is being forced to be more practicaland accountable. Since the senior executives are more ac-countable, others in the company have to show value inwhat they are doing. Overall, premium seating inventoryhas been decreased due to pressures related to spend-ing and low usage rates. One concern from the insidersis that prices have increased. Also reported is the greaterdifficulty to fill a suite than three years ago. It is morechallenging to find clients willing to attend; either theyare not willing, or internal rules and company policieshave changed, making it difficult for them to attend.What do you think the person/company with onesuite can learn from Fortune 100 companies that ownmultiple suites?It is critical that the person/company that has the suiteestablish objectives before buying and have a trackingmechanism to ensure tickets are being utilized for the in-tended purpose(s). Tickets should not be given to peoplewho are not influencers in the decision-making process ofbuying the person’s/company’s products/services. Ticketsshould be annually rotated, allowing one to hit differ-ent targets. The most important thing to keep in mind isthat an investment in premium seating is about creatinga unique experience and not always about the game ormatchup. Leveraging the connection to the team is thecritical element.– Dr. Peter Titlebaum, University of Dayton, Dr. Heather Lawrence, Ohio University, Dr. Christopher Moberg, Ohio University, and Ms. Christina Ramos, Ohio University Branding Bullseye: At Target Field, home of the Minnesota Twins, Cambria uses its suite as a “design studio” to activate its brand for guests 100-125 times a year. #SEATWinter2013 | | S E A T | 55