SBJ/June 4 - 10, 2007/This Weeks News

Mets-Aramark deal to stretch for 30 years

The New York Mets and Aramark have signed a landmark 30-year deal for food, beverage and merchandise sales at Citi Field, a pact that easily stands among the longest for the concessions industry and could be the richest ever for Aramark.

The contract continues a long-term relationship at Shea Stadium for the Mets that dates to 1995 with Aramark and for decades prior to that with Harry M. Stevens, which Aramark purchased in 1994. To that end, the Mets held only preliminary discussions with other suitors for the contract, did not issue a request for proposals and did not conduct any formal bid process.

Rendering of a Citi Field concourse.

Aramark also held a first-right-of-refusal clause for the Citi Field contract, said an industry source closely tied to the Mets who has knowledge of how the deal was structured. The clause further diminished the possibility of a competing outfit landing the account.

Both sides declined to specify financial terms of the new agreement.

Despite the parties’ deep ties, the new deal will present substantial contractual and operational changes at the forthcoming ballpark, slated to open in 2009. Instead of receiving a percentage of gross revenue from food, beverage and merchandise, the Mets will garner a portion of the net, creating what Dave Howard, executive vice president of business operations for the club, described as “along the lines of a joint venture.”

“We’re true partners going forward,” Howard said. “We’re sharing all the upside and all the risk, which we think is a big plus for us. It’s a different sort of deal, but one that is certainly the largest ever of its type for us. And given Citi Field’s expected impact, this deal will be one of the biggest out there anywhere.”

Aramark and the Mets have endured some bumpy stretches in their working relationship, tensions in significant part fueled by the stiff operational challenges of working a concessions business at the outdated Shea Stadium. Beyond lacking modern amenities seen across most of the league, complaints about the food, both in terms of quality and quantity of choice, have been common.

The Mets are well on target to draw more than 3.5 million in attendance this year and expect to level out above 3 million in the 42,500-seat, privately financed Citi Field. Given anticipated per capita spending at the ballpark of at least $18 per person, according to industry analysts, the two parties will share revenue easily exceeding $50 million per year. Per capita spending in recent years has stood closer to $14 per person.

Citi Field will feature four high-end food service areas, each to be overseen by Aramark, most notably a left-field club restaurant with seating for 500, and a club-style food service area open to all fans on the stadium’s mezzanine level.

At Shea, thinking ahead to Citi (from left): Mets’ Mike
Landeen, Aramark’s Liza Cartmell, Mets’ Jeff Wilpon,
Aramark’s Dave Waddell and Aramark’s Ned Paynter.

Specific theming or branding for the restaurant has not yet been determined, but Aramark and Mets officials said the goal for that space is to make it at least on par with top-drawer dining options in Manhattan.

Also in development for the ballpark is a 7,200-square-foot team store, nearly three times the size of the main store at Shea, and a marked increase in overall concessions points-of-sale from 1 per 254 people at the current facility to 1 per 150 people at Citi Field. Additionally, the parties are developing plans to pursue non-baseball-related event bookings and are considering less-traditional amenities such as all-inclusive ticketing and other similarly targeted offerings.

“Being in New York and being who they are, we obviously consider it a marquee account,” said Liza Cartmell, group president for Aramark Sports and Entertainment. “There is a huge opportunity to really take the [Mets] into a totally new place given the fact that basically up until now it’s been all old buildings in New York.”

Aramark is not expected to make a front-end investment in facility development at Citi Field, Howard said, as those costs have already been built into the construction budget. Industry sources close to the Mets said it is inevitable that Aramark will provide some type of significant investment or payment to the club over the life of the deal.

Several years ago, Aramark spent about $3 million in concessions upgrades at Shea as part of its right-of-first-refusal agreement, and it’s possible the concessionaire gave the team a one-time grant of up to $40 million, said the source who is familiar with how the Mets did the deal.

“There is no other reason you give a long-term deal,” the source said. “They wouldn’t go beyond five years if Aramark did not make a huge investment.”

Those big lump sums are not unusual as teams seek every option available to help them pay for new construction, and in Queens, the Mets are privately financing the $800 million ballpark.

Concessionaires provide those large sums “just for the right to be the exclusive provider,” said food consultant Bill Caruso, who wouldn’t go so far as to say Aramark forked over $40 million. “For 30 years, it might get to $25 million.”

The New York Yankees initially asked for $50 million on top of the capital investment concessionaires sink into paying for food, fixtures and equipment when they were going through the process of hiring a concessionaire two years ago for new Yankee Stadium. It also opens in 2009.

Food providers balked at that figure and the Yankees reduced that request to an undisclosed number. The team has not officially announced its intentions, but sources say it could operate concessions in-house in what could be a joint venture with former Centerplate executives.

Other observers questioned whether the Citi Field deal runs continuously for 30 years, as many comparable pacts extend only a decade. A handful of one-time contracts among other major teams have reached 20 to 25 years.

The Mets and Aramark declined to say whether the deal contains extensions and escape clauses, but it’s safe to say there is some mechanism that would allow either party to get out if it were not happy with the relationship, said consultant Chris Bigelow.

“It’s definitely the longest contract I’ve seen in a long time,” Bigelow said. “Sometimes, it’s really a 10-year deal with multiple options. If everything goes right, it’s 30 years.”

The Mets’ deal maintains an important big-market MLB presence for Aramark. The company elected not to pursue the concessions account for the New York Yankees’ new ballpark, also set to open in 2009, partly for financial reasons. Talks with the Washington Nationals about working at their forthcoming ballpark have been fractious.



Concessionaire count
Citi Field is one of several stadiums and arenas opening in the next few years in the New
York City area. Several have yet to name who will handle their concessions accounts.
Team
Facility
Opening date
Concessionaire
New Jersey Devils
Prudential Center
October
Centerplate
New Jersey Nets
Barclays Center
2009 or 2010
TBD1
New York Giants and Jets
Name TBD
2010
TBD1
New York Mets
Citi Field
2009
Aramark
New York Red Bulls
Red Bull Park
2009
Bid process begins this summer1
New York Yankees
New Yankee Stadium
2009
TBD2

1 Aramark has the food contracts at existing venues Continental Airlines Arena (Nets) and Giants Stadium (Giants, Jets, Red Bulls)
2 The Yankees have not announced their decision, but sources have said that longtime concessionaire Centerplate will not continue in that role.
Sources: Team, facility and concessions industry officials

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