SBJ/20090817/This Week's News

Hollywood nightclub gets spot at Staples

AEG, looking to add some sizzle to Staples Center’s premium offerings, has formed a joint venture with Hollywood nightclub operator SBE to build a lounge on the arena’s upper suite level.

The $1.3 million project, Hyde Lounge, is modeled after the SBE club of the same name that opened in April 2006 on Sunset Boulevard. Like that intimate nightspot, known as a magnet for young celebrities, principals hope the arena’s new club will attract a young crowd with plenty of disposable income.

“We all do arena clubs and restaurants and dine-in views and sports lounges, but it’s the first time we have done … a high-end Hollywood nightclub like this, so it’s going to be an interesting experience,” said Tim Leiweke, AEG’s president and CEO. “If you look at the way [SBE] goes out and entertains people, the way they create an environment, it’s all about Hollywood and nightlife, and these guys do it better than anyone we saw.”

The recession has put the hammer down on all big league teams as they struggle to renew suites and sign new accounts. AEG, in developing this velvet rope concept with a well-known local brand, will reduce the facility’s suite count by eight to 150.

With Hyde Lounge, the focus is on pulling in the young and affluent local crowd drawn to the next trendy attraction. The joint venture aims to capture a portion of the age 21 to 35 demographic in Los Angeles that has the cash in hand to buy a $400 bottle of champagne served tableside but not the deep pockets to pay six figures annually for a traditional suite or a cushioned chair near Jack Nicholson’s spot on the hardwood.

“By the pricing of the product we’re going to offer, it’s going to lend itself to a very high-energy, very affluent and very serious and exclusive customer base, which is a very small piece of the overall business model of Staples Center,” SBE Chief Executive Officer Sam Nazarian said.

The original Hyde Lounge on Sunset Boulevard
is known as a place to spot young celebs.

Nazarian, 34, fits the profile of his clientele. He’s a native of Iran whose family fled the country during the 1979 revolution and settled in Southern California, where his father struck it rich after investing with telecommunications firm Qualcomm. The junior Nazarian has played himself on HBO’s hit series “Entourage” and frequently rubs elbows with Hollywood’s A-listers.

SBE owns clubs, luxury hotels and fine dining restaurants. SBE-owned Katsuya, a collection of Japanese restaurants, recently opened a location at L.A. Live across the street from Staples Center, where AEG holds the development rights.

The Staples Center version of Hyde Lounge will be designed in part by sports architect Rossetti, the firm planning other parts of the arena’s $10 million renovation this summer. It will have ledge seats overlooking the bowl and high-end leather furniture, rich fabrics, strong earth tones and hand-carved finishes.

The 175-person lounge, opposite stage end, is to debut Oct. 27 for the Lakers’ home opener. Levy Restaurants, the arena’s food provider, will operate the club in tandem with on-site managers representing the two firms. Food will also be served with some of the same items on the menu at Katsuya and other SBE restaurants.

In its first year the lounge will be open to courtside seat holders and suite owners. As part of the deal, AEG sold a block of tickets for Lakers, Clippers and Kings games and other events to SBE to distribute to its best customers to hang out at the new club, said Lee Zeidman, the arena’s executive vice president and general manager.

 In year two, the joint venture plans to sell memberships. Prices have yet to be determined.

“We chose to go out of the gate conservatively to build the clientele and awareness and exclusivity of the club,” he said.

If all goes well at Staples Center, there are opportunities to expand the partnership at AEG’s O2 arenas in London and Berlin, and in Las Vegas, where SBE bought the Sahara Hotel Casino in 2007 in a city where AEG wants to build an arena, Leiweke said.

“My guess is this is a concept that if it works well, we will roll it out to other places,” he said.

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