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AEG is nearing a deal to develop a massive new $1.5 billion sports and entertainment complex in Moscow, a landmark project that will dramatically change the way arenas and stadiums are built in Europe’s largest market.
The sports venues are targeted to open in 2016, with the stadium a centerpiece of the 2018 FIFA World Cup competition. Meanwhile, the NBA has been in preliminary talks with the developers about a new concept, the NBA Club, a themed destination that could be part of the complex’s mixed-use development. The NBA Club, developers said, could include a restaurant, children’s play area, a small gymnasium and a retail store, serving as a way for the league to extend its grassroots development to Russia.
The venues are targeted to open in 2016.
VTB Bank, 85 percent owned by the Russian government, is the country’s largest financial institution and has about $150 billion in total assets, according to the bank’s website.
AEG has been assisting VTB Bank for design and construction of the stadium and arena in the early stages of development, said Bob Newman, chief operating officer for AEG Facilities. Now AEG and VTB Bank, which controls the property through a 49-year lease, are close to signing a deal for AEG to continue working on a more formal basis, confirmed Andrei Peregoudov, VTB Bank’s senior vice president and chairman of the board for the sports development.
The relationship could result in AEG Facilities signing a deal to operate both sports facilities, both officials said. In addition to the World Cup, the stadium will serve as the new home for the Dynamo Moscow soccer club, 75 percent of which is owned by VTB Bank. Two other teams, the Kontinental Hockey League’s Dynamo and CSKA Moscow basketball, will play home games in the arena. VTB Bank does not own those two teams.
The NBA has been consulting with VTB Bank on the arena portion. League officials said they are interested in expanding its role on the project but did not disclose any specific plans.
VTB Bank is close to completing financing for the project, Peregoudov said. Officials have been talking to other international banks about funding, about $1 billion of which is set aside for the 650,000 square feet of leasable commercial space. If nobody else is interested, VTB Bank could finance the project on its own, Peregoudov said. The Russian economy has survived the global recession better than other parts of Europe because of its vast oil reserves and surging oil prices, he said.
The Moscow mixed-use development, the first of its kind in the market, is expected to help transform the city of 14 million residents by providing new sports venues in a community sorely lacking those facilities. VTB Bank executives plan to adopt the Western model of marketing arenas and stadiums by selling naming rights, founding partners and premium seats, while outsourcing deals for facility services such as ticketing and concessions.
AEG views the VTB Bank Arena deal as an opportunity to potentially bring all of its business divisions into Moscow with “bench strength” from the arenas it operates elsewhere in Europe, said Newman. AEG Global Partnerships, AEG Live, AEG Sports and AEG Real Estate could play key roles in selling the project, he said.
No deals have been signed yet, but Peregoudov knows the AEG model and says it works well in other buildings.
“It is the largest city in Europe and they have no modern arena to serve the sports and entertainment community,” Newman said. “It is a vibrant marketplace with a dynamic capital market. You start adding up all of its attributes, you can’t help but feel some energy toward the potential success of this project.”
VTB Bank Stadium VTB Bank Arena Total seats: 33,000, expandable to 45,000 for FIFA World Cup Total seats: 12,000, expandable to 15,000 Suites: 98 Suites: 82 Club seats: 6,750 Club seats: 1,632 Stage-end restaurant, conference and meeting rooms on club level, 5,640-square-foot LED video board Stage-end restaurant; ice floor; four-screen, center-hung scoreboard, total display exceeds 900 square feet
If those deals are completed, they would further extend AEG’s global footprint. The Moscow site is similar to AEG’s O2 London, an arena surrounded by retail shops and restaurants inside the old Millennium Dome. In Moscow, the old Dynamo Stadium, built in the 1920s, is being demolished except for the exterior wall, which will frame two levels of new commercial space. The plan is to build the new stadium and arena above the retail development.
“They feel it’s a great fit for AEG’s global strategy with Moscow being next in line,” Peregoudov said. “This one will be bigger than London, which has an arena but no stadium.”
Peregoudov last month met with NBA executives at the NBA All-Star Game in Los Angeles and toured the AEG-developed L.A. Live.
The conversation between the NBA and Peregoudov about the arena project began in earnest last October a month after the NBA opened a new office in Moscow. The league and VTB Bank have a relationship that started three years ago when VTB launched a pro basketball league and consulted with the NBA on that venture. This time, VTB Bank asked the league for advice on arena design.
The arena/stadium project will include a high-end commercial district and a five-star hotel.
The NBA Club’s mix of education and entertainment appeals to project officials and fits with their vision for the overall development.
“Not everybody here likes soccer,” Peregoudov said.
The NBA has staged a few preseason games in Russia, most recently in 2006. The New Jersey Nets, owned by Russian billionaire Mikhail Prokhorov, would be a natural fit to play exhibitions at the new arena. The Nets conducted a preseason basketball clinic last October in Moscow during a one-day visit to Russia, have marketing deals with Russia companies Aeroflot and Stolichnaya, and their games are broadcast on Russian television.
VTB Bank officials have met the Nets’ new ownership group, with early talks on how the two groups could work together to expand business at the Moscow arena and Barclays Center, the $800 million arena the Nets are building in Brooklyn, Peregoudov said.
The NHL is aware of the project but does not have any plans to play games there, said Deputy Commissioner Bill Daly.
David Manica, an independent architect in Kansas City who spent 13 1/2 years with Populous until leaving the firm in 2007, is designing the arena and the stadium. Manica helped AEG develop Mercedes-Benz Arena in Shanghai in accordance with NBA standards, one of the three arenas operated as part of AEG’s venture with NBA China. The other arenas are in Beijing and Guangzhou.
The Bud Light Batter’s Eye, the stadium’s indoor lounge in center field, is one example. The Cubs are reconfiguring the long, narrow room, replacing two rows of long countertops with round tables to provide more space for people to move around.
The lounge opened in 2006 as part of the Cubs’ $13.5 million renovation of the outfield bleachers. The Batter’s Eye did not always sell out during the regular season, in large part because its press box-style layout restricted movement, Cubs officials said.
The Bud Light Batter’s Eye at Wrigley Field looks in on the action from straightaway center field.
As of last week, the Cubs had already seen a 9 percent increase in sales for the Batter’s Eye compared with last season, said Wally Hayward, executive vice president and chief sales and marketing officer. Tickets cost $165 to $295 a person, and the price includes a buffet meal.
Patrons told the Cubs to make the Batter’s Eye a more lively space, Hayward said. Throughout sports, teams have heard from their customers that they want the freedom to come and go as they please without being tied down to one location.
The new Batter’s Eye setup will be ready May 1, one month after Opening Day, Hayward said.
Separately, the Cubs have improved the look and feel of the Captain Morgan Club, an indoor-outdoor space just outside the ballpark. A new circular bar in the tented area should create more energy and excitement.
The Cubs had their concessionaire, Levy Restaurants, take over operations of the Captain Morgan Club from Harry Caray’s Restaurant Group, its proprietor since it opened for the 2009 season.
On the mezzanine level, 15 of Wrigley Field’s 60 suite holders took the Cubs up on an offer to renovate their individual units, Rice said. Each skybox owner paid for their own upgrades to refresh the interior and install new televisions. The minimum investment was $15,000.
The Cubs brokered a rate with a local construction firm and will not see any of that money, Hayward said. Those improvements should stay intact through the 2013 season at which point all suite interiors could change as part of the team’s proposed $300 million ballpark renovation.
For 2011, the biggest addition to the grandstand was installing 3,000 cup holders on the first row of every section except for the field boxes. Bank of America, which sponsors the 34,000 existing cup holders, asked the Cubs if they could put more in to provide greater brand exposure, Hayward said.
Rice could not say why those front rows never had cup holders other than to say it is always a challenge to retrofit existing seats at Wrigley.
All told, the upgrades add up to more than $3 million.
GIANT STEPS: The San Francisco Giants, always on tech’s cutting edge, have made several upgrades at AT&T Park to improve coverage for mobile devices and boost revenue at Centerplate’s concession stands.
In conjunction with AT&T, the Giants expanded the stadium’s distributed antenna system, which was installed before the 2010 season to enhance 3G smartphone coverage.
The original system quadrupled coverage compared with 2009 after the ballpark’s infrastructure “felt the load” from an increased number of fans using iPhones and other mobile devices, said Bill Schlough, the Giants’ senior vice president and chief information officer.
During the 2010 postseason, the ballpark’s IT backbone “again felt that pressure” with a dramatic increase in smartphone users uploading content and sharing that information with others during the playoffs and World Series, Schlough said.
The expanded system adds 119 antennas and 63 remote units and positions the facility to make a smooth transition to 4G technology in the coming years.
For concessions, the Giants decided to test 51 digital menu boards at 13 food and retail stands at a fraction of the seven-figure investment required to install a complete Internet protocol television platform, Schlough said.
Those LG flat-screens are powered by Ping HD technology that can show live video and produce commercials for specific products as fans wait in line to buy food, drink and merchandise. Coors Field and Safeco Field are also wired with Ping HD systems this season.
“The ability to do a pilot and clearly measure the result appealed to us,” Schlough said. “If we see a 6 percent lift in sales, which we expect it will, it would pay for the system in one year.”
The Giants and their food and retail vendor, Centerplate, shared the $200,000 investment.
Separately, AT&T also upgraded the stadium’s wireless network after the team’s data showed there were 10,872 mobile devices used during the first game of the World Series, compared with an average of 3,335 during the regular season. For 2011, AT&T has boosted Wi-Fi coverage by increasing access points to a total of 325 and migrating to a newly designed system first used during the Super Bowl at Cowboys Stadium.
JORDAN ON THE MOVE: Sports facility developer Bob Jordan has formed his own consulting firm after leaving his old job as vice president of design and construction for New Meadowlands Stadium.
Jordan’s new company is Venue Research and Design in Cold Spring, N.Y. Jordan has been hired by the University of Washington to assist with the school’s $250 million renovation of Husky Stadium.
Separately, Jordan is working for VTB Bank in Moscow as the Russian financial institution plans to develop a new stadium and arena in that city. Both groups toured New Meadowlands Stadium last fall.
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NBA star Tony Parker is playing a key role in developing a new arena in France.
The plan is to build an indoor facility with 12,000 to 15,000 seats in Villeurbanne, a suburb of Lyon, said Marshall Glickman, the project’s senior adviser and former president of the Portland Trail Blazers. Lyon has 1.4 million residents and is the country’s second-largest market.
Parker, a native of Belgium who grew up in France, is the second-largest shareholder of Gones & Sports, whose firm SPSM is representing the city to build the arena. Gones & Sports also owns Asvel, the country’s most successful pro basketball team, which will play in the new arena.
Construction costs are estimated between $168 million to $196 million, but that could change after the final design is completed, said Antony Thiodet, vice president with Gones & Sports in charge of Asvel’s daily operations.
Parker’s interest in Lyon dates to a 2006 preseason game his San Antonio Spurs played in the city’s 5,800-seat Astroballe arena, Asvel’s current home. Asvel officials started having conversations with Parker about their vision for expanding the sport locally, and those talks ultimately led to developing a new facility for Asvel, Thiodet said. Parker bought a piece of the team in 2009.
“In the beginning, it was about Tony’s passion and dedication to basketball, but it turned out to be something else, a business proposition,” Thiodet said. “He put a significant amount of money into the project, and he is really paying attention to all the details.”
Parker has played in every NBA arena and has ideas from some of them that he would like to see incorporated into the French facility. The tower suite configuration at Air Canada Centre in Toronto, the loge boxes at new Amway Center in Orlando and the new event-level club at AT&T Center in San Antonio are three examples of facility design Parker has mentioned to Gones & Sports officials, Thiodet said.
Attempts to reach Parker through the Spurs were not successful.
Plans call for two public concourses and a club/suite level, a permanent ice floor for Lyon Hockey Club and a design to accommodate major tennis tournaments, said officials with Global Spectrum Europe, a joint venture between Global Spectrum and the United Kingdom’s NEC Group that is a partner in the arena’s development.
Thiodet expects the arena to play host to 165 events annually.
The developers have selected an architect but were not ready to release that information last week. The arena is targeted to break ground in the fall of 2012 and open in October 2014.
The marketing of minor league ballparks as multipurpose facilities has grown to the point where one promoter is booking three events in about 30 buildings this summer.
Last month, ESI Concerts, part of Entertainment and Sports International, announced that the Boston Pops orchestra with special guest Kenny Loggins will perform its Hollywood Hits Tour at 10 minor league parks in August.
The Boston Pops and Kenny Loggins will perform at 10 minor league ballparks in August.
In addition, ESI is scheduling the Big Apple Circus for five minor league parks in mid-July. The circus will perform on a platform set up on the infield, the first time it has performed outside its signature tent setup.
For the concerts, ESI rented a 73-foot semi-trailer that opens up into a 2,500-square-foot stage with a roof and trusses to hold lights and sound, Owens said.
ESI’s ventures continue the trend for booking special events at minor league parks. In the past decade, Jam Productions of Chicago has promoted exclusive tours of those venues with Willie Nelson, Bob Dylan, John Mellencamp, Bryan Adams, Def Leppard, Counting Crows and Collective Soul.
Since 2004, ESI has produced the Family Fun Fest, a parking lot carnival that has made 350 appearances at minor league parks and attracted 1.6 million fans. This season marks ESI’s first venture into concert promotion, and the company’s goal is to double the number of dates to 60 next year and do more than 100 shows by 2013, said Owens, a veteran concert promoter who has worked with The Rolling Stones, Bruce Springsteen and Aerosmith.
ESI promoted the Boston Pops/Kenny Loggins show last September at McCoy Stadium in Pawtucket, R.I. Despite a one-week delay due to Hurricane Earl, the event was successful enough to persuade Owens and his ESI partner, Bert Gould, to set up a small tour of minor league parks.
“There are 200 minor league parks and probably 40 to 50 of them are in markets where there is no summer amphitheater,” Owens said. “The parks provide a whole new set of venues for artists to play.”
The deals ESI makes with the acts distributes a small portion of ticket sales revenue to the teams besides income they collect from concessions and parking, Owens said. For major concert tours in bigger buildings, the artists and promoters typically keep 100 percent of ticket receipts.
The acts and their agents recognize that being flexible up front on sharing ticket revenue will pay dividends in the future with more opportunities to perform at minor league parks, Owens said.
In Buffalo, one of the 10 stops for the Boston Pops tour, the date fits with the Class AAA Bisons’ strategy to supplement baseball with several special events, said Mike Buczkowski, the club’s vice president and general manager.
Six years ago, the Bisons took over operation of Coca-Cola Field, and they are responsible for its upkeep. The team books two annual concerts tied to local radio stations, in addition to the National Buffalo Wing Festival, which attracts up to 50,000 people every Labor Day weekend.
Every year, the Bisons’ front office aggressively pursues non-game-day events to help pay for ballpark upgrades such as the park’s new $2.5 million Daktronics high-definition video board, the largest in the minor leagues, Buczkowski said.
The same is true at AutoZone Park in Memphis. Global Spectrum has managed the building since August 2009 on behalf of the nonprofit group that owns the stadium and the Class AAA Redbirds.
This will be the first concert at the park since Dave Matthews Band in 2007. Global Spectrum is also negotiating to bring TNA Wrestling to the stadium, but as of last week no deal was signed, said Ben Weiss, the facility’s general manager. The park is also part of the St. Jude Memphis Marathon.
Ticketmaster’s recent launch of its new research division, LiveAnalytics, is being positioned by the ticketing giant as a key step in its evolution from a more limited software solutions company to a full-service sales, marketing and distribution entity.
LiveAnalytics will seek to provide a wide array of data and analytics, leveraging its global database of more than 180 million fans, and pooling purchase histories, browsing behaviors, fan surveys and many other inputs.
The company has partnered with Ohio-based data technology firm Teradata Corp. to develop LiveAnalytics, and the Los Angeles Dodgers have signed on as an initial beta client.
The output from LiveAnalytics will include demand forecasting, investigation into customer preferences and industry benchmarking. That data will be incorporated by some clients into dynamic pricing strategies, though company executives said the intent of LiveAnalytics is far broader than just price modeling. LiveAnalytics will be led by John Forese, recently hired from Nokia-owned mobile analytics company Motally Inc.
“Historically, Ticketmaster didn’t do a good enough job taking advantage of its bigness, its scale,” said Nathan Hubbard, chief executive for Ticketmaster. “Looking at the business, we’re a top-five e-commerce company, but have not really done enough with that at all. We’re trying to transform what this business is about.”
The Dodgers, for some time looking to better understand the interplay between the primary and secondary ticket markets, cheered the arrival of LiveAnalytics.
“Considering that Ticketmaster is our ticketing platform, ideally, our best information will come from that partnership,” said Peter Wilhelm, Dodgers chief financial officer. “Yes, we can learn a lot from the secondary and tertiary markets, but our primary partner should produce the biggest inroads in terms of analytics and market intelligence.”
Hubbard acknowledged that the company has an uphill climb in changing the long-battered brand image of Ticketmaster. Additionally, the live event industry is seeking to recover from a tough 2010 that showed double-digit percentage revenue declines in many segments.
“We needed a year like last year to prompt some of these important changes. And we need to start really obsessing about the fan experience,” he said.