SBJ/March 11-17, 2013/Opinion

Paradigm shift: Treat suites as real estate, not event option

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A little more than four years ago, I wrote a column, “Activating a suite: Contemporary view of a traditional product” (Feb. 2-8, 2009). In that column, I emphasized differentiating suites and branding them so they stand out from any other suite in the venue. The suite would look different, feel different and, in some cases, depending upon the product(s) of its owner, smell and/or taste different. These areas would become more than suites and more than marketing platforms.

Fast forward to 2013. The Orlando Magic has a sponsor deck for Kia and one for AirTran Airways (now Southwest Airlines) at the new Amway Center. These are very effective sponsorship activation areas and draw a lot of interest, but they are not suites. No one, to my knowledge, has effectively differentiated their suites through customization and branding, with the notable exception of the Mercedes-Benz Arena in Shanghai.

During a presentation on suite customization at the AEG Expo in Los Angeles, Mercedes Yao, director of sales and marketing for the Mercedes-Benz Arena, offered several interesting and powerful observations about why and how this was implemented:

The customization investment is made by the suite owner.

Suite owners who have made such an
investment appear to be more involved and vested in utilizing their suites.

The suites are branded and customized in terms of color, furniture, decoration and lighting.

There has been noticeable competition between suite owners to have their suite perceived to be a destination or to be the best.

Competition between different brands within the same category (for example, car companies) leads to a higher investment and customization of the suite.

“Customization of a suite is the key to personifying the character of a brand,” said John Cappo, president and CEO of AEG China. “It brings the brand to life and creates a more memorable experience for the guests. Each customized suite becomes a destination
Corporate suites at Mercedes-Benz Arena in Shanghai take on the personality of owners.
Photos: AEG (4)
of its own and differentiates it from the others in the venue.”

From the observations thus far, building management has hypothesized that the increased investment, combined with satisfaction and the portrayal of their brands should affect retention, renewal and even up-selling.

Why is this more important today than when I first broached the topic in 2009?

One reason is the amount of unsold suite inventory and the concept of fractional ownership that has been introduced by teams to reduce that inventory. The opportunity to buy less and perhaps have less inventory to manage (number of games/events) is causing suite owners to consider purchasing partial suites.

A second factor is the emergence of the secondary premium market that provides tickets to the important games (at a higher price). But it is also buying unsold suite inventory and combining the premium assets of all the teams and venues in the market into a blended offering. It gives buyers access to all of the suites and games/events without the initial investment or the restriction of a five-, seven- or 10-year contract, or even a one-year lease in some cases. In most cases, it is a buyer’s market. The exceptions would be a highly desirable sports property and venue, such as the Miami Heat at AmericanAirlines Arena, or in a one-team market where there are no other competitors or alternatives.

The industry is at a point where it needs to change the paradigm. Already teams are reducing suite inventory by converting suites to larger party suites (single-game rentals at a higher rate) or additional club areas, or replacing the suites with loge or opera boxes that seat either four or six and are ideal for smaller firms and new buyers in the premium market. This requires a much greater selling effort followed by a much greater retention effort.

What can the industry do differently?

Teams and/or venue operators need to connect the suite buyer and prospects more to the suite as a real estate sale and less as an event option. In a real estate sale, the prospect is purchasing a showroom — it needs to look a certain way and convey the image and properties associated with the company brand. While entertainment is an integral part of the purchase, the function as a business solution is most important.

As an event option, the focus is not on the suite but more on the building and what is happening there. With that type of focus, there is no need to invest and have an extended presence. When the event has passed, so is the need to be there. The event philosophy also can be overly dependent upon team performance, the number of concerts and other forms of entertainment, and the star power of those events. This has often resulted in overloading the buyer with the number of events, even though the buyer may have little or no interest in those added events. And those additions might make it difficult to encourage ticket utilization and cause another point of dissatisfaction.

A philosophical shift is needed that focuses on the lifetime value of a suite and views a prospect as a buyer/owner and not a renter. A renter leaves at some point. A buyer/owner looks to improve the property, give it a personal touch and share it with others.

How is that accomplished?

Begin by allowing owners to customize their suites through painting, furniture, lighting, decoration and, most importantly, branding, at their expense.

The second stage is to allow physical modification to the construction (again at the buyer’s expense), and that will occur when there is a comfort level between the parties and a level of trust and commitment to take the relationship to the next level.

Bill Sutton (wsutton1@usf.edu) is the founding director of the sport and entertainment business management MBA at the University of South Florida, and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_Impact.


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