SBJ/April 30-May 6, 2012/FacilitiesPrint All
Editor's note: This story is revised from the print edition.
Centerplate, one of the big four in sports concessions, is for sale again, according to a document issued by an investment bank and sent to prospective buyers.
The document, a one-page summary sheet issued by Harris Williams & Co., a Richmond, Va.-based investment bank focused on mergers and acquisitions, contains specific language stating Kohlberg & Co.’s intent to sell the company, say three industry insiders familiar with the document. Kohlberg & Co., a private equity firm, has owned Centerplate for about 3 1/2 years.
Centerplate President and CEO Des Hague confirmed that his company has hired Harris Williams, though not necessarily to sell the concessionaire.
“We are currently exploring a recapitalization of Centerplate and exploring the best way to do that,” Hague said. He would not provide further information.
A recapitalization would indicate that Centerplate is seeking additional investors, but sources said the language in the document pointed toward a sale.
“This company is for sale, pure and simple,” said one source who has seen the summary sheet.
Centerplate added the Notre Dame sports account in 2011.
Photo by:GETTY IMAGES
The single-page summary is a precursor to a “book” Harris Williams will release to prospective buyers containing terms and financial details on Centerplate’s deals with sports venues and other public assembly facilities.
Before receiving the book, interested parties must sign nondisclosure agreements prohibiting them from sharing that information. In general, serious potential buyers are eventually given access to computer records to determine the true value of those accounts, sources said.
The Harris Williams sheet estimated Centerplate would generate total revenue this year of $825.1 million, with EBITDA (earnings before interest, taxes, depreciation and amortization) of $80 million, said a source who has seen the document. Without knowing the exact financials and Centerplate’s debt load, those numbers are most likely on the high side as Kohlberg officials attempt to generate the highest return, sources said.
Those figures are significant because the book will almost certainly be offered to the rest of the big four major league concessionaires — Aramark, Delaware North Sportservice and Compass Group, owner of Levy Restaurants. The last time Centerplate was for sale, however, those three firms plus Comcast-Spectacor, owner of Ovations Food Services, took a pass because of the large number of contracts the concessionaire held that their competitors thought were unprofitable deals, sources said. For that reason, the book is also expected to reach the hands of investment banks, and the buyer could be another private equity group.
As a public company, Centerplate struggled with cash flow and suffered a big blow after losing the New York Yankees deal in 2008, its longest-running and most profitable account.
But 10 months after Kohlberg took over Centerplate in early 2009, Centerplate merged with Boston Culinary Group, which had several BCS football stadium accounts, in addition to Sun Life Stadium and BankAtlantic Center. Around the same time, the vendor renewed deals with the San Francisco Giants and Seattle Mariners at AT&T Park and Safeco Field, two key accounts.
Last year, Centerplate won the San Francisco 49ers’ food and retail business for their new stadium under construction in Santa Clara. The concessionaire already has the account at Candlestick Park, the 49ers’ current home.
On the college front, Centerplate won the University of Notre Dame food contract in 2011 after the school made the decision to outsource sports concessions for the first time in many decades.
Conversely, Centerplate lost the Minnesota Twins and Miami Marlins food business after those two MLB teams moved to new ballparks.
Centerplate has flourished at AT&T Park, recognized for having some of baseball’s best food. The same is true at Safeco Field, where a local magazine voted The ’Pen one of Seattle’s best new restaurants in 2011.
All told, Centerplate has about 85 sports accounts, in additon to nonsports accounts.
The promotion is tied to an advertising campaign PepsiCo rolled out last summer in conjunction with the 2011 MLB All-Star Game. Tim Wisecup, a 41-year-old chemist from suburban Columbus, won a sweepstakes to play a six-inning baseball game with 10 of his friends against a team of 11 former major leaguers, nine of whom are in the Hall of Fame.
Populous is responsible for activating the Pepsi Max brand for the event and game operations at Huntington Park, in tandem with the Columbus Clippers, the stadium’s Class AAA tenant. For Populous, whose event design and planning division traditionally works with leagues to stage their biggest events, including the Super Bowl and the Winter Classic, working exclusively for a brand is something a bit different, said Kevin O’Grady, a senior associate in the firm’s Denver office.
A rendering shows the theme for the outfield wall at the Field of Dreams game in Columbus.
In Columbus, the Pepsi Max and MLB logos will be displayed on the field, outfield walls and the players’ uniforms. The graphical presentation will carry a heavy Iowa corn theme revolving around “Field of Dreams,” the 1989 movie starring Kevin Costner and James Earl Jones. Several thousand fake cornstalks will be installed in the outfield, and players from both teams will walk through them as they are introduced. Populous’ original thought was to grow real corn in a greenhouse, O’Grady said, but it would have taken too long to get it to full maturity.
Making up the team of ex-major leaguers, selected by a fan vote during last year’s sweepstakes, are Randy Johnson, Johnny Bench, Frank Thomas, Rod Carew, Mike Schmidt, Cal Ripken Jr., Ken Griffey Jr., Tony Gwynn, Reggie Jackson, Dennis Eckersley and Edgar Martinez.
The former pros will sign autographs for the fans, and if they want to take a breather, a group of stand-ins will be available to take their places in the game, O’Grady said.
Huntington Park has about 10,000 seats. About 80 percent are being distributed free at Kroger supermarkets in Greater Columbus for fans who buy Pepsi Max products, said Ken Schnacke, the Clippers’ general manager.
The remaining tickets cost $10 on Ticketmaster, the team’s official ticketing vendor. As of last week, about 500 tickets had been sold, Schnacke said.
The game will be packaged into a one-hour broadcast shown one week to 10 days later on three regional sports networks. MLB Productions will be on-site getting footage for a special it is producing.
Pepsi Max launched this year’s contest last Tuesday and has committed to holding a second Field of Dreams game next year in the hometown of the 2012 sweepstakes winner, O’Grady said.
The original intent was to build a temporary facility, a “true” Field of Dreams that comes in and goes away with the game, and that option is on the table for next year, depending on the contest winner’s hometown, he said.
COWBOY UP: Legends Sales & Marketing has signed a three-year deal with Southern Methodist University to sell season tickets for football and men’s and women’s basketball.
The deal is a revenue share, said Tim Leonard, SMU’s senior associate athletic director for external affairs.
The move to outsource ticketing was twofold, said Athletic Director Steve Orsini. The athletic department faced a difficult challenge to expand its ticket sales staff in the midst of the school’s hiring freeze, he said.
In addition, a university task force studying how to increase attendance in football and basketball thought it made sense to hire an expert as SMU prepares to move from Conference USA to the Big East Conference in 2013.
Last season, average football attendance was about 21,000 at Gerald J. Ford Stadium, a building with 32,000 seats. Men’s basketball drew about 2,000 fans a game at 8,988-seat Moody Coliseum, though that number figures to increase after the school’s announcement last week that Larry Brown will coach the team.
Legends is co-owned by the Dallas Cowboys. Through its ties with the NFL team, the firm has a database of 300,000 names it can tap for selling tickets to Mustangs events in a market with 6 million residents, Leonard said.
Chris Terwoord, formerly with the New Jersey Devils, has been hired as Legends’ general manager of sales at SMU, where he will direct a six-person staff working out of SMU’s stadium. His group will be a mix of former Cowboys employees and new hires.
“This will be the start of a career path for some of them,” Leonard said. “If they kill it here, they can move over to Cowboys Stadium.”
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Some of golf’s most expensive on-site hospitality tickets — to Berckmans Place at Augusta National — have sold out a year before the private club is scheduled to open.
The coveted Berckmans Place passes, which sold for $6,000 apiece, are good for a week at the Masters beginning in 2013. All 400 of them sold quickly, mostly to Augusta National members, tournament sponsors and other friends of the private club, industry sources said. Sales began in October and Augusta National offered a sneak preview earlier this month during the Masters.
The 90,000-square-foot Berckmans Place is near the fifth green and will have rich interior finishes and high-end food and beverage offerings.
One industry source described Berckmans Place as “very Masters-esque. The highest level of service.” When one executive had breakfast, left to watch golf and then returned for lunch at Berckmans, he was asked if he wanted the same table he had for breakfast. The staff remembered him from earlier in the day. “Every detail is covered,” the source said.
As guests came to Berckmans, they were greeted by Augusta National members, such as Jack Nicklaus, Lynn Swann and chairman Billy Payne. Those who toured the finished part of the permanent structure included high-level agency executives and marketing chiefs from Masters partners Rolex and IBM, among others.
“It is truly a luxury to have a permanent structure and build into it all of the requirements you want for your guests,” said Mimi Griffin, whose company, MSG Promotions, runs hospitality for the U.S. Open and several other events. “For years, you’ve heard about all of the different groups doing hospitality off-site at the Masters, so to be able to offer something like this on-site is great for their event.”
“It really wasn’t a matter of selling it,” one source said. “They already knew who they were going to invite.”
While the club has made several improvements to its on-site hospitality options in recent years, the majority of corporate hospitality has been executed away from the golf course by agencies like Intersport and its Double Eagle Club, and PrimeSport.
Payne said that Berckmans Place is the club’s response to requests from patrons and partners who wanted more upscale hospitality options on the course. Featuring traditional Southern architecture with white columns, rich interior finishes, and high-end food and beverage offerings, Berckmans Place will be the most lavish hospitality setting in golf, industry sources say.
“It’s reflective of the demand for this kind of product now,” said Roger Warren, president of Kiawah Island Golf Resort, where this year’s PGA Championship is being held.
Warren, the past president of the PGA of America, said that hospitality demands in golf are surging again after down years in 2009 and ’10, when the recession made businesses rethink their spending habits.
“When you have a product people want to be a part of [like Berckmans Place], you can get those numbers,” Warren said. “And I don’t think they’ll be disappointed.”
In recent years, Augusta National has added cabins just off the 10th hole for corporate partners IBM, Exxon and AT&T. Near the No. 1 fairway are the Magnolia Suites for CBS, Rolex and Mercedes-Benz. A new Members Retreat debuted this year between holes 13 and 14.
Berckmans Place, which will be concealed from view by trees along the edge and rear of the fifth hole, will offer several levels of food within the same building, from burgers to more upscale offerings.
Some of the revenue, Payne said, will go to the Masters Tournament Foundation.
Prices for hospitality at other major championships are not in the same range as the $6,000 required for a pass to Berckmans Place, except for selected premium passes to the Ryder Cup, which is played once every four years on U.S. soil.
This year’s Ryder Cup at Medinah, just outside of Chicago, is charging $235,000 for 50 people in a chalet, or about $4,700 per pass. Those prices are flat with what was charged the last time the Ryder Cup was held in the U.S. in 2008. A new offering this year is a 10-person table inside Medinah’s clubhouse for $65,000, or $6,500 each, with the room holding a capacity of 200 guests.