SBJ/January 14-20, 2013/Facilities

Devils end Centerplate concessions contract

The New Jersey Devils terminated Centerplate’s concessions contract in early January over a long-running financial dispute, said a team executive, and have brought in Aramark to operate food and retail for the shortened NHL season.

Rich Krezwick, president of Devils Arena Entertainment, the club’s facility management division, claimed that Centerplate refused to pay the team its share of food and beverage sales for the better part of a year.

Centerplate spokesman Bob Pascal responded to questions for this story by saying, in an email, “We are unable to offer any comment at this time due to pending litigation with the New Jersey Devils management, however … our performance as hospitality partner at the Prudential Center speaks for itself.”

The deal between the Devils and Centerplate was ended Jan. 4, one day after the Devils announced that team owner Jeff Vanderbeek had bought out partners Michael Gilfillan and Peter Simon as part of Vanderbeek’s refinancing of $178 million in debt.

Centerplate was the Prudential Center’s food and merchandise provider when the arena opened in October 2007. Centerplate had five years remaining on a 10-year deal with an option for a five-year extension. The team had worked with Aramark at Izod Center, its previous home.

Centerplate’s retail deal with the team was not renewed after its contract expired in September, Krezwick said. The Devils finished in the bottom tier of in-arena NHL merchandise sales last season, he said, and the team store has been closed during the lockout. Aramark plans to have it open for the first Devils home game.

The two parties had an arbitrator’s help resolving a previous dispute that dates to the summer of 2011.

In February 2012, an arbitrator ruled in favor of Devils Arena Entertainment after the team and its vendor could not reach a compromise on about $1.7 million, a combination of revenue that Centerplate owed the team and food invoices the concessionaire submitted to the Devils tied to the arena’s all-inclusive catering program. Krezwick said the Devils believed Centerplate was overcharging the team.

KPMG, the New York accounting firm conducting the audit of expenses and the arbiter in the case, decided in favor of the Devils, providing about $1.2 million in financial relief for the team.

Since the decision was handed down, Krezwick claimed that Centerplate has not paid the team its commissions from general food concessions and merchandise, leading to the termination of both contracts.

The acrimonious split is the culmination of a relationship that was shaky from the beginning after Centerplate, under former President and CEO Janet Steinmayer, signed on to run Prudential Center’s food and retail.

A spreadsheet of concessionaires’ proposals obtained by SportsBusiness Journal in 2005, a few months before Centerplate and the Devils signed their deal, revealed Centerplate would commit to investing $13 million at the arena over 10 years, including a $5 million signing bonus. By comparison, runner-up Levy Restaurants proposed an $8 million investment over 10 years with no signing bonus.

Centerplate’s proposal called for paying the Devils a combined commission rate 3.5 percentage points higher than Levy, according to the document.

The final terms are not known, but the deal has generally been regarded as a bad one for Centerplate among industry insiders.

Aramark’s first official event at Prudential Center was last Wednesday’s Seton Hall men’s basketball game. As of last week, the Devils and Aramark were still negotiating contract terms, Krezwick said.
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