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

Top customers want closer to the action

Twenty years after the fact, Madison Square Garden is finally putting its best customers down low in the bowl.

The plans for MSG’s $800 million renovation call for putting most of the project’s 96 suites much closer to the action, compared with the 89 units that were added at the top of the arena in 1991.

MSG, hamstrung in large part by the constraints of its location over Penn Station in the heart of midtown Manhattan, built its current suites on the ninth and 10th floors to avoid having to gut the seating bowl.

Spending the most money to sit up top did not prevent MSG from selling those suites. They were hot property when both the New York Knicks and New York Rangers made the NBA and Stanley Cup finals in the mid-1990s, said Mike Ondrejko, MSG’s senior vice president of suites, premium seating and service.

“Those were healthy times both from a financial industry standpoint and team performance standpoint,” Ondrejko said. “But just like the rest of the premium seating world, we have gone through a number of changes since that point in time.”

Moving forward, 20 new bunker suites will open next October as part of the first phase of a three-year project. The event-level lounges will have no view of the floor but will be tied to 200 seats in rows 1 through 5 for Rangers games and rows 7 through 12 for Knicks games. MSG is selling that prime real estate for $1 million annually per season for each suite, according to multiple sources.

Twenty new event-level suites will open next October.

Ondrejko declined to discuss suite prices, but said that MSG is “essentially sold out” of event-level suites, working out the details on the few remaining contracts. That’s no surprise, considering premium seat patrons’ preferences.

“These were born out of feedback from our current suite holders,” he said. “Two things they told us were they loved having gorgeous hospitality space and the best seats in the building. It’s almost like having an ownership of a franchise-type experience without the P&L of owning the team.”

Two floors above the event-level suites, a traditional ring of 58 suites will put those units 23 rows from the ice and 30 rows from the court. That phase will open in October 2012. The 18 existing suites on the ninth floor will stay intact and will be refurbished and reopened in October 2013.

The 71 suites on the top floor will be eliminated in the renovation, and the same is true for the four VIP boxes and eight loft boxes now in the lower bowl, Ondrejko said. The VIP boxes are near event level where the 20 new suites will be and the loft boxes are roughly 23 rows from the ice.

“We like the loft box product a lot and I would be surprised if over the course of time we don’t find some other spaces we can do it in,” he said. “As we sit today, those products go away after the first summer shutdown.”

An area to be situated on the same level as the traditional 58 suites will serve as the Garden’s club-seat product, something the arena has not previously had in the purest sense of the term, according to Ondrejko.

The space was initially designed as 10 separate suites until officials decided to develop an all-inclusive area where customers can buy four to eight seats and get access to a large lounge behind those seats. It will open up a new market for firms without the deep pockets to spend up to seven figures on a suite.

The club’s location at stage end means it will be operational only for sports events. MSG marketers are still developing a plan for where to relocate club-seat holders for concerts, a decision that will come late in the process, Ondrejko said.

“Our intent is to make sure we are sold out from a suite standpoint before we begin selling that club,” he said.

MSG, similar to TD Garden in Boston and Staples Center in Los Angeles, is packaging exclusive perks such as playing hoops on the MSG floor and skating on the Rangers’ rink as incentives to buy into the arena’s new premium seats.

“We are able to provide a number of assets across all of our properties to provide solutions for what businesses are looking for,” Ondrejko said.

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