SBJ/Nov. 1, 2010/SBJ In-Depth

Multi-owner suites become the new normal

Miller Park opened in 2001 with 70 suites, the majority of them leased by individual companies.

Ten seasons later, the Milwaukee Brewers have reduced that number to 64. On the Club Suite level, home to 44 units, the percentage of single owners has plunged from 90 percent to 50 percent, as firms partner up to buy suites priced at $100,000 to $200,000 a year.

“The first casualty of the Great Recession we experienced at Miller Park was in the hospitality area,” said Rick Schlesinger, the team’s executive vice president of business operations. “In particular, we saw reduction in demand for long-term suites. Companies that used to be considered prime candidates for a full lease are interested in 40 games or 27 games.”

“It’s obviously more work for us because we have to sell the same suite three or four times to get 81 games filled, and there is more servicing with multiple clients,” Schlesinger said. “No doubt, that is the biggest sea change we have seen.”

Three years ago, the Brewers eliminated four skyboxes on the Club Suite level and developed the Gehl Club, a 7,900-square-foot upscale lounge tied to all-inclusive tickets covering the cost of food and drinks.



MILWAUKEE BREWERS
The ballpark eliminated four skyboxes to develop
the Gehl Club upscale lounge.

The Gehl Club, the third of four all-inclusive sections to open at the park since 2001, can accommodate 280 people. All told, there are about 850 all-inclusive seats at Miller Park priced at $50 to $100 a game.

“We added a range of all-inclusive areas that we have been able to charge relatively higher ticket prices for and they remain extremely popular,” Schlesinger said. “Whether you call them premium areas or all-inclusives, we are still seeing a demand for that experience.”

In addition, five Club Suites are reserved for single-game rentals, Schlesinger said.

The 18 Founders Suites on the field level are being renewed after their initial 10-year lease terms expired (two more are reserved for team use). The good news is the Brewers expect all 18 to be sold with extensions and new deals spanning three, five and seven years, Schlesinger said.

A few original Founders Suite owners declined to renew but the Brewers found other businesses to come in and fill the gap, he said. Location, size and viewing angles are driving renewals. The 2011 prices are $200,000 a unit, with 3 percent to 6 percent annual escalators.

“Our market looks at those correctly as very high-end real estate, the beachfront property,” Schlesinger said.

“Based on our tracking data, the usage levels are 96 percent, so there are almost no games when they were not being fully used,” he said. “The key thing our suite holders tell us is if it becomes a burden, the value depreciates tremendously, and that’s why we pay a lot of attention to use rates.”

The Brewers do not conduct many mass marketing campaigns to sell premium seats. Instead, they have increased staff dedicated to suite sales and rely on existing suite holders to help them find new customers.

“We’re not shy about asking them if they’re aware of companies or persons interested in suites,” Schlesinger said. The Brewers do not provide incentives for suite holders who help find new business, but “we are working on a few ideas there,” he said.

The Brewers understand they may have to make further adjustments to premium inventory to catch up with changing consumer habits “that we haven’t even projected yet,” Schlesinger said.

“We are taking a one- to two-year hiatus in developing new areas. Frankly, we plan to canvass other teams and see what they’re doing, and if somebody’s got an idea that’s working that we can translate here, we’re going to take it.”

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