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SBJ/December 19 - 25, 2005/Facilities
Levy gets American Airlines Center account
Published December 19, 2005
Levy Restaurants will replace Delaware North Sportservice by late March as the concessionaire at American Airlines Center in Dallas, an unusual move considering most changeovers in concessionaires occur during the summer, when there’s less activity in buildings.
The arena generates between $20 million
and $30 million in food revenue each year.
Chicago-based Levy and Center Operating Co., the arena’s management division, signed a 25-year contract for concessions and premium dining after Levy approached building officials about negotiating terms of a deal structured as a profit-and-loss arrangement, said Dave Brown, the facility’s vice president and general manager.
Sportservice operated on a management fee contract.
“We wanted to get into the new business model as soon as possible,” Brown said. “Once the deal was agreed to, we wanted to take advantage of it sooner rather than later.”
Center Operating Co., after initial talks with Levy, went back to Sportservice officials and asked whether they wanted to change the contract terms to match what Levy offered, but Sportservice declined the offer, Brown said.
“It was not a business model we liked,” said Rick Abramson, Sportservice president. “It wasn’t what we wanted to do. Things happen, and they’re going in a little different direction.”
Levy is assuming a greater financial risk than Sportservice by sharing a percentage of sales with the arena, said Chris Bigelow, a food service consultant. Conversely, the concessionaire also has the opportunity to share in greater profits over the length of the contract, he said.
American Airlines Center generates between $20 million and $30 million in food revenue annually, Bigelow estimated. The NBA Mavericks, NHL Stars and AFL Desperados share the facility.
Sportservice’s contract was scheduled to expire in June, and company officials in Buffalo announced last week that they would terminate their contract early and start laying off 523 event-day employees in February, according to the Dallas Business Journal, a sister publication of SportsBusiness Journal. Center Operating Co. started the process of rehiring most of those part-time employees last Thursday, Brown said.