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Open weighs outsourcing corporate hospitality

The U.S. Open Tennis Championships may be the next major sports property to outsource corporate hospitality.

The Open, entering its second week, has long been one of the hottest tickets in sports high-end hospitality, given its New York location and cachet as the place to be seen at the end of the summer in the Big Apple. The Open, which draws more than 700,000 people in two weeks and will reap close to $300 million in revenue, has begun discussions with a host of outside providers.

“[W]e have been talking to the obvious sort of candidates, which would be Legends, On Location, CAA Premium, to understand what they might bring to the U.S. Open and could we do something new,” said Lew Sherr, chief revenue officer of the U.S. Tennis Association, which owns and operates the Open. “We have not made any decisions yet, [and] we are not sure there is an economic model that makes sense. We have a great business, we have always had a great business, so I don’t know that I want to share it.”

Nevertheless, the USTA has been hosting the outside agencies during the Open, giving them a sense of the complexities and scope of the business.

Sherr decided to invite the agencies in after his head of corporate hospitality for 19 years, Raleigh Leahy, told him she would step down after this year’s tournament to join On Location. The USTA is also sifting through résumés to replace her, so the group could keep the function internal.

Sherr said he expected to make a decision in the next seven weeks.

One conclusion that has emerged is that no matter how the USTA proceeds, the space within Arthur Ashe Stadium — from office space to the media center — will be repurposed to accommodate more hospitality. Sitting in the stadium office of the head of communications, just off the main media center, Sherr said only half joking that he can’t wait for the day when the office is a lounge.

The Open’s hospitality program does not include sponsor entertainment. That is handled in the partnerships division, so, for example, the 18,000 guests JPMorgan Chase brings through the event each fortnight is not part of what the USTA might outsource.

Corporate hospitality includes 15 suites with 24 sessions sold for each one. Then there are the thousands of stadium tickets that are repackaged with access to the hospitality pavilion and clubs and restaurants.

Travel packages, a key part of the services offered by third-party hospitality providers, are now managed by Steve Furgal’s International Tennis Tours. Asked whether that means travel packages would not be part of what a new agency might sell, Sherr replied, “Not yet determined. Furgal has been a terrific partner. This is all highly exploratory.”

The U.S. Open would join the NFL and MLB in outsourcing key hospitality functions.

On Location controls the license to run Super Bowl and other NFL event hospitality, and is owned by private equity investors. MLB recently struck a deal with CAA Premium to manage hospitality at baseball’s major events.

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