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SBJ/December 14 - 20, 1998/No Topic Name
Heisman home forms Chapter 11 strategy
Published December 14, 1998
Saturday was the Downtown Athletic Club's big moment, the day it awarded the Heisman Trophy, but a day at the end of January when a Bankruptcy Court judge will hear arguments about the future of the New York club is shaping up as the most important in its history.
The club filed for Chapter 11 bankruptcy protection in February and plans to present its financial strategy to the judge next month. If approved, the club's plan, which includes using the Heisman Trophy as a way of increasing club revenue, will proceed. If the plan is rejected, two real estate developers who have sued the club might end up as its new owners.
Downtown Athletic Club President Bill Dockery is confident the judge will side with the organization, which has become synonymous with the Heisman Trophy. The trophy is owned by a trust, and its revenue flows to the club.
No matter how desperate the situation gets, Dockery said the Heisman Trophy will not be "prostituted" to raise more money. "It is not going to be sullied for a few bucks," he said. "We may be bankrupt, but we are not broke."
Nonetheless, Dockery expects to increase Heisman revenue by 25 percent over the next two years, though he will not disclose how much the trophy brings in now. Licensing, merchandise and sponsorship are the three main revenue streams.
The club signed a new licensing agreement with the Collegiate Licensing Co. last week, replacing the existing one with Advantage International Inc.
"There are tremendous promotional and marketing opportunities surrounding the Heisman Trophy," said Pat Battle, CLC president. "We will focus on creating collectible lines around past trophy winners and their respective universities."
A gift shop on the ground floor of the club, now managed by a third-party vendor, will soon be under in-house management. The shop and a new Web site will boost retail merchandise revenue from the Heisman, Dockery said.
Heisman Trophy banquets and dinners have several corporate sponsors, including Chase Manhattan Corp., the American Stock Exchange and Wendy's International Inc. The club is negotiating a relationship with Just for Feet Inc. and wants its sponsors to increase their contributions.
"We might be willing to raise our fees, but we want to talk about finding other ways to leverage our sponsorship," said Andrew Parton, a director of marketing at Chase, which will sponsor the cocktail party before Tuesday's dinner.
None of the Heisman money, however, is crucial to saving the Downtown Athletic Club, Dockery said. The club is ready to lease 110,000 square feet, or slightly less than half of its 35 floors, to Centaur Properties, which wants to create corporate apartments in the space.
With the Centaur rent and the Heisman revenue plus an expected increase in club members from nearby residential development, the club should be profitable, predicted Dockery.