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