Report: Love of the Game Trumps Economy of the Lame

So, here is some inside scoop from the premium seat industry, my story on the status of premium seating and the recession. Enjoy.

While many industries and markets are down due to the recession, premium-seating options in college and professional sports venues still largely boast ‘no vacancy’.

In universities across the country, longtime fans supporting their alma maters are retaining their luxury suites despite economic troubles. At new venues across the country, like the new Yankee Stadium or the new Cowboys Stadium, an increasing number of luxury seating options are now available, increasing the value of those franchises, keeping existing suite leases, and attracting new ones.

At Kinnick Stadium in Iowa City, Iowa, Director of Premium Seating Jess Rickertsen said that of the 46 luxury suites available, only one suite is empty at the time of press, and likely to be filled. Furthermore, Rickertsen added that there is a still a short waiting list for seating in the outdoor club section.

“Our waiting list could be longer,” Rickertsen said. “But a couple people’s leases were up, and they simply decided to just not renew their contract.”

Customer loyalty of wealthy fans is important to schools and to the people and businesses that purchase premium seating. At Kinnick for instance, an 18-person suite requires an annual pledge of $53,000 per suite to the Kinnick Stadium Renovation campaign, plus the season tickets and an amenities charges.

This year, according to Rickertsen, the University of Iowa expects to pull in about $5 to $6 million from their premium seat sales. All proceeds from premium seat sales go towards the debt incurred in the Kinnick Stadium renovation completed in 2006.

While premium seating is lucrative for universities, suite renters also have a big incentive to hold onto suites through the recession. With college suites, 80 percent of the money given to the school for the suite is tax deductible. This kind of savings makes suites doubly attractive when coupled with the new space to rewarding clients.

At Kinnick Stadium, many larger businesses have suites. Coca-Cola, Hy-Vee, Heartland Express, and Jacobson Companies, among other firms.

However, when contacted, executives for Coca-Cola, Hy-Vee, Jacobson Companies, and Heartland Trucking were unavailable to comment on how they utilize their suites in Kinnick Stadium.

Of the companies who rent suites at Kinnick, Heartland Express is the only company contacted that was doing worse because of the recession. Due to weak demand, the company’s shares are down 7.6 percent for the year, according to the Wall Street Journal.

Rickertsen could not say what each of the companies uses their suite for. However, Rickertsen speculates that at Kinnick most suites rented by businesses are used by families or to entertain clients.

Nowadays, business leaders are becoming more meticulous in ensuring that the suites their companies rent are used for gaining new clients. Thus, with the tighter corporate budgets, venues looking to sell premium seating have had to change their own marketing, according to Bill Dorsey, the executive director of the Association of Luxury Suite Directors (ALSD).

“When professional sports venues sell premium seating, they don’t use the word ‘luxury’ anymore,” Dorsey said. “Suites are a way that corporations make an investment and can use their suites as a marketing tool, as well as better track their investment.”

Dorsey confirmed Rickertsen’s speculation on corporations who lease luxury suites: it is all about keeping the businesses in the black now.

“Return on investment has been the big pitch now, and it really has been the last two or three years.”

Dorsey said he has been tracking these trends ever since the concept of premium seating began in the 1990s. After years as a sports business journalist, Dorsey founded the ALSD in 1991, which now has 1,000 members who are responsible for marketing and selling premium seating options at professional and college venues across the country. Additionally, the ALSD keeps track of the health of the industry as well as the latest trends in premium seating.

Dorsey added that in terms of premium seating, about 90 percent of those who rent suites at college venues are families, wealthy individuals, or CEOs. In professional sports, about 90 percent of suite renters are corporations, Dorsey said.

Despite the any backlash against extravagant expenditures for marketing, the premium seating market is growing across the country, Dorsey said.

“In the four professional sports there are 12 thousand suites,” Dorsey said. “In a few years there will be 13 to 14 thousand suites, but even so teams are ripping out suites and building other kinds of products, most of the new suites are from the new venues being built.”

When clubs do decided to reduce the number of luxury suites, more and more venues are developing club seating. As a result, club seating has been gaining in popularity in recent years, both because of its flexibility and profit margin to teams, according to Dorsey.

“Smart teams are reducing their supply [of premium seats] to increase demand,” Dorsey said.

Even though the economy has soured, do not expect any deals on any of the new stadiums offering premium seating, despite some openings.

Suites in the new Cowboys stadium will run from $100,000 to $500,000 a year, according to the Dallas Morning News. Furthermore, Cowboys owner Jerry Jones told reporters that 273 of 300 suites available in the new stadium had been sold is spite of the economy.

Additionally, at college stadiums with devoted fanbases, luxury seating will not be available to new buyers anytime soon. At the University of Nebraska, their premium seating website states that they have had a 100 percent renewal for suites for some time, despite a poor record in recent seasons.

Likewise for the University of Texas. The Longhorns added a 2,000-seat club to Darrell K. Royal-Texas Memorial Stadium, and the foundation announced that the section has sold out for the 2009 season.

As the economy slows, premium seat sales revenues have not. College and professional sports venues have gotten around sagging volume by increasing the value of their premium seating options. Overall, more value to sports venues means those saddled with capital improvement debts will not be posting ‘vacancy’ signs of their own.

Inside Kinnick Stadium

So, as a supplement to my report, here is a bit of information, visually I might add, about premium seating at the University of Iowa.I hope some of it sparks questions, and some jaws on the floor...

And, here is the narration to the photographs. I apolgize for not captions with the pictures, but technology is what it is.

Picture 1: Seats in the indoor club at Kinnick. Hard to beat not freezing during games with cold temperatures. Each of these seats is a $4,700 per year donation

Picture 2: Seating in the Outdoor club seats at Kinnick. For $1,700 a seat, they can be yours, provided you are not on the waiting list. These seats are the most popular out of all of Kinnick's premiun seating options, mostly because of the price points, according to UI premium seat director Jess Rickertsen.

Picture 3: The Indoor Club Lounge at Kinnick Stadium. Club seating is becoming more and more popular at sporting venues across the country.

Picture 4: Concession stands inside premium seating areas have expanded concessions, as well as alcohol sales, something not seen in general admission at college sports venues.

Picture 5: The UI President has a suite in Kinnick, which she uses to represent the University. Just like a business, President Mason uses her box every game to entertain dignitaries, or to recruit new doctors to the UI Hospitals.

Picture 6: While her suite is the largest, Suites in Kinnick require $45,000 per year for a 12-person suite, all the way to $53,000 for an 18-person suite.

Cowboys Cashing In

Just found a good ESPN article about how the Dallas Cowboys are selling the new stadium... Seems like Jerry Jones wants to make it the center of college football.

ESPN.com Article

Ball Players in Financial Trouble

A good Forbes article that JUST now made it onto their website. Apparently, Formers Mets player Dykstra, now a financial advisor did not take his own advice.--His home is in foreclosure, as is Jose Canseco... The article also talk about Michael Jackson, although he got out of his debt the hard way... (Too soon?)

Forbes.com Article

Inside the Industry Links

So, this is my attempt at leading and foreshadowing... In the process of doing my research for my big project, here is a list of some sites to look at if you want a little more global view of premium seating and stadium venues.

Stadia Magazine

Panstadia Magazine

Panstadia especially has some good content, and like all news outlets, it deals a lot with the recession, since people are assuming that premium seating is the last thing on people's and companies' wishlist.

Street and Smiths

Street and Smiths' Sports Business Journal has to the authority, at least in the U.S.

Top Ten Luxury Suite Owners

So, here is a breakdown of the top companies that use luxury sports suites, according to these groups, who published a study here: Who Buys Luxury Suites?

The Top Ten

10 Telecommunications
9 Real Estate Agencies & Managers
8 Accounting & Auditing
7 Management Consulting Services
6 General Contractors & Home Builders
5 Finance & Investments
4 Insurance
3 *Radio, Newspaper & Television
2 Attorneys/ Legal Services
1 Banks & Bank Holding Companies

Attornies and Legal Services are number 2, which is surprising, since its not like their clients are going to be rewarded for paying so much in fees. But I guess the lawyers who works so much have to their rewards too...

Don't fret over Yao

Yao Ming's injury and possible retirement comes as a shock to many, and saddens those marketing the NBA to Asian Markets, obviously China.

Even so, Forbes.com predicts that the Chinese market will stay.--Even if Yao leaves. Figuring that there are more Chinese players in the NBA than there were, Yao just got the NBA's foot in the door in the Chinese Market.

Article Link: Forbes.com Sportsmoney

Premier Feature Coming Soon

Make sure you check back soon for my class project I am working on. I hope the multimedia that will be going on the site will "entertain and inform."

The Death of a Team

Just found a Newsweek article with my focus in mind. Of course it is nice to hear about my favorite team the Cowboys, but the real nugget inside this story deals with teams that have nice stadium can make money from them, and in the case of the NFL, drive salary caps up, and thus keep attracting all the talent.

Here's more, its a pretty decent article: Newsweek

Recession burning premium seat sales?

A good article came out regarding what the economy is doing to premium seat sales... Apparently not much in a lot of market. All in all it seems teams are just being more creative.

Article Link: Luxury Box Article

Going Digital to get the Green

Well, the new Cowboys Stadium is making a lot of news articles recently. More and more, it seems there is something new the Cowboys are trying to make money. Barrons' story discusses how Cisco was hired to do wiring in the new stadium, to prepare the stadium for "21st century sports technology," whatever that means...

Anyway, the thought is that the Cowboys will start shooting their own game footage, and be able to sell their camera angles to American broadcasting companies, or sell the footage to new markets in Mexico and Latin America. Apparently, the idea behind this is to go after completely new and untouched streams of revenue...

Times are a changin'

Article Link: Barrons.com

Creating Wealth Courtside

As I work up to my final project, I will be posting more article regarding the evolution of luxury suites. Here are two articles that deal with the primal reason that stadium owners deal with luxury suites: wealth generation. For instance, the blog article from "The Life of Luxury" has an entry regarding what I am talking about. The blog mentions the new Cowboys stadium, and how the design of 300 suites of varying size and opulence have created a $90 million marketplace right in the stadium. That figure is incredible if you think about those 300 suites having a sum square footage in the thousands.

Adding to this article is a Forbes.com article comparing all the different luxury suites available across North America. Of real interest is how stadiums are trending towards clubs instead of suites. The article talks about the Yankees Legends Suites, which are priced at $2,500 per seat, per game, on a five, seven, or 10 year increments. Each of these seats will bring in millions of dollars.

However, the Yankee organization loves that they can make so much money, to be able to keep lower-end ticket prices down; very important when you take public money to finance the new stadium.

All in all, it is interesting to note that now professional teams are trending to higher-valued products, versus selling mass amounts of tickets.

Forbes.com Article

Finding a Franchise Honey Hole

If you have not checked out Forbes.com, their section SportsMoney has quite a few stories tackling the business behind owning major league franchises. For instance, San Francisco, post-Barry Bonds, and with a few mediocre seasons to boot, has the most value per fan at $78. The second place winner, with the smallest metropolitan area for Major League Baseball was Milwaukee, with a population of only 1.55 million. Their per fan value was $76. Not bad, and probably to improve in the coming years with their success and their well-appointed stadium.

Even more shocking, despite a recent World Series title (2003), The Florida Marlins have only an $11 value per fan, probably the result of poor game attendance and the lack of their own stadium. Good thing their new stadium is to open in 2012...

After doing more and more research, Forbes SportsMoney has the best information available regarding the simple economics of sports business. Look for more post with their analysis in mind soon...
Article Link:
MLB's Valuable Fans

Reacting to John Vincent

Here are my reactions to John Vincent's article, Equitable Media Coverage of Female and Male Athletics:

1.) Gauging media coverage: In the article, Vincent really examines everything about how women in sports are covered by the media. He comments that professional women athletes only get covered if they fit the typical idealized women in our society, and that other characterisitics about her may get swept aside in an effort to cover items about her sexual characteristics or dig into her personal life. He also brings up the variation of races, and how minority athletes, particulary African-Americans may be subject to racism within coverage. Vincent uses results from other studies regarding articles position, placement, word count, word usage, and all other typical forms of media metrics to come up with his argument for this paper.

2.) The most important thing Vincent sums up in the article he thinks how women athletes are covered is a reflection of how we view women in society. Since he feels the media has a lot of control over how women are viewed in society, he thinks that the media should be more proactive in covering female atheltics. Before the conclusion, Vincent talks about all the metrics which the media should watch for, and he advocated that efforts be made to serve eqaulity in those regards.

3.) Personally, I do not think his reccomendations are realistic or appropriate for the media to undertake. The media exists to inform society, and I don't think the media should be responsible for changing a society's values, when maybe it is not the society's problem. Covering media with a more feminist approach becomes tricky for the media to just simply do.

The World's Largest HD TV

So, the new Cowboys Stadium had it's grand opening on June 6, with country music star George Strait in concert. Having George Strait open your new stadium creates quite the stir in Texas, but probably what has Cowboys ownerJerry Jones more excited is the new HD TV that took four months to install in the stadium.

The Dallas Morning News has the best details concerning what now is the world's largest HDTV: DMN Story

What really wasn't in that story was since fans in the nosebleed sections now have a good a view as fans in the more expensive seats, Jones can now charge a premium for even the upper deck seats. Who ever though buying a TV could be such a good business move?

Photo Credit: Matt Stocum/AP

Welcome to the Club Level!

Welcome to The Club Level!

This blog will focus on following the money behind the sports. --From high-dollar trade deals and new stadiums to premium club seating and marketing to high-end clients and fans. In other words, if there is an item concerning money and sports, it could make it's way to the blog.

Before following the money, let me tell you about the editor. I am Jonathan Groves, and I started this blog as part of an ongoing class project. I am an avid Dallas Cowboys fan, thus the club level panorama from the new stadium. Other than following the Cowboys and the other Dallas Teams, I enjoy skiing and fishing as my "primary" sports.

Part of what I find interesting about sports in the United States is all the money that gets spent and invested in all facets of sports. Americans spend large sums of money on things from hitting lessons for their chuld in Little League, all the way to premium club seats. So, basically following the previous thought process is the inspiration for this blog.

Cheers,

Groves