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Checketts sees Legends presence in Europe
Published February 27, 2012, Page 8
■ When did you first start looking at Legends?
CHECKETTS: I started over a year ago raising my own private equity fund for sports. I decided it would be best the next time I bid on a team like the St. Louis Rams [that] I should raise the money first. We’re well on our way to raising $250 million in a fund. I was just finishing that up when Gerry Cardinale, who is the banker at Goldman Sachs, came and started to talk to me about Legends last July. He started to ask me about strategies for growing Legends. I got very excited the more we talked about it. We started in earnest negotiations in October. They ended in December when I bought a percentage.
|Checketts said he was impressed by the quality of experience at new Yankee Stadium.
CHECKETTS: I don’t think it’s a big secret that 2007, ’08, ’09, ’10 have been very tough for sports owners. Very capital intensive. What I found myself thinking in 2010-11 after a very tough ’08, ’09 was that it’s OK if that part of my career goes away forever. I want to be in businesses related to this industry where I have all these relationships, but I want to be in businesses that actually are profitable, that make money.
■ What appealed to you about the Legends opportunity compared with the rest of the sports landscape?
CHECKETTS: They had a business that makes money, but what really turned my head was the first time I went to the new Yankee Stadium. Not only was the quality of the food and beverage better, but so was the quality of the experience. You walk into the merchandise area and they say hello. You get a steak sandwich and they wrap it in a napkin, it’s fresh and they say, “How else can I help you?” When I met Dan Smith, who is the president of Legends, and Mike Phillips, who really created the model of Legends, I said, “How did you hire all of these new people in the Bronx?” And they said, “These are the same people that were at the old stadium.” The Steinbrenners and the Joneses wanted to revolutionize the fan experience when it came to buying food and merchandise, and what these guys have created, the quality of the food and the quality of the service, is unparalleled.
■ Legends hasn’t had much success expanding on the food side at the major league level. Why is that?
CHECKETTS: First of all, it was a very tough putt to get Cowboys Stadium and Yankee Stadium up to par. Those are two enormous parks and this was a brand-new company doing food and beverage, so I think they were very focused on their home buildings. Be that as it may, now we’re going to go out and start bidding on new business. The sales group with Chad Estis is just completing its second project in San Francisco. Now we’re going to go out and start bidding on new business.
■ Where do you set your sights first for new business?
CHECKETTS: I’m going to use a Mother Teresa line. When they asked her where she decided to serve, she said she served where the needs are. I can see us opening an office in Europe within the space of 12 to 18 months. We already have a presence on the West Coast, Dallas, New York. We’ll focus on the U.S. and Europe to begin with. In the U.S., our focus will be on professional sports and colleges. We do the Rose Bowl, UCLA, Nebraska. We’re pitching a number of other schools.
■ Will the priority be the food side or sales side?
CHECKETTS: The food side is a business we’re fully developed and ready to go into — not only arenas, but hospitality, convention centers, airports. There’s lots of opportunity in the food business. The sales side and the research side will work hand-in-hand to grow organically. We’re going to push both businesses hard.
■ How will the revenue pie look?
CHECKETTS: It’s heavily weighted toward food and beverage now because those revenues in Cowboys and Yankee Stadium became a clear part of the business. Premium sales is just a small piece now, but I suspect that part of the business could be 20 or 30 percent of our revenues in the next three to five years.
■ What happened with SCP?
CHECKETTS: It still exists and I’m still the chairman. We’re left with three companies — the [St. Louis] Blues, Real Salt Lake and [entertainment production company] Running Subway. We sold [production company] Tupelo Honey to Raycom Sports. The Blues are for sale, but I expect I’ll keep the other two businesses for some period of time. I carved that out of my agreement with Legends that I’d continue to be the chairman of those two businesses.
■ Did those investments work out well?
CHECKETTS: The final chapter won’t be written until we sell the Blues. It certainly appears that the soccer team is going to be a great buy. We bought an expansion team for $10 million. We built a stadium with $45 million in public money on a $150 million project. We sold 49 percent of it for a very good value two years ago. We bought the Blues, first team out of the lockout, very favorably. We had to plow a lot of money in there, and time will tell. This year’s club, assuming they get into a couple rounds of the playoffs, will get well into the black. It’s just a matter of finding the right buyer.
■ What lines of business will Legends evolve into in the future?
CHECKETTS: We have developed a whole bunch of verticals we’re interested in. I’m working with some of my old friends from Bain & Co. They left and started their own firm called Parthenon and they’re doing a strategy study for Legends. We have a profitable company and we have capital, so we’re going to grow in businesses related to sports and entertainment and media that will tell a consistent theme. That theme will be about the gold standard. Our level of service and quality will be the best and they have to generate a level of cash flow so our shareholders will get an adequate return.
■ Are the Yankees and Cowboys ties an obstacle at all when you try to get in the door with other teams?
CHECKETTS: There may be people who think that way. All I can tell you, having been in London last week, the affiliation internationally is a staggering bonus. They all say, “We could be affiliated with the Yankees and Cowboys?” It’s the same in the college space. If it’s an overhang at all, I don’t think it’s going to hurt us very much.