For the first time in more than 40 years, the New York Yankees are taking bids from companies that want to sell food and merchandise at their ballpark. The price of admission to the Yankees’ planned new $800 million home: a promise of a $50 million upfront payment from the winning bidder.
 |
| The Yankees’ in-stadium merchandise contract is also being put up for bid. |
The 10-year deal would start for the 2009 season, when the facility is scheduled to open, and continue through September 2018.
“It looks like you have to give them that much just to get in the game,” one concessions company official requesting anonymity said after analyzing the RFP, which was sent to prospective bidders. “It’s an unusually large number, but it’s an unusually large piece of business.”
The document, which was obtained by SportsBusiness Journal, says major league food providers may submit proposals without the $50 million “capital grant” and present financing alternatives. The team’s request for the grant is in addition to the millions of dollars in equipment costs the concessionaire must invest in the project, and several million more dollars may be necessary to secure the contract.
Concessionaires could theoretically give the Yankees less cash up front and provide them with a greater percentage of sales through the commission agreement to reach the $50 million mark, said Joel White, the team’s director of concessions and hospitality.
Major league sports teams generally receive percentages in the high 40s for regular concessions and 15 percent to 20 percent for food served in premium suites.
“Whatever [cash] the concessionaire would give us would first be used to pay for construction,” White said.
Yankee Stadium generated $62.7 million in food and retail revenue and a $17.27 per cap in 2004 for the regular season and six playoff games, according to numbers the Yankees included in the RFP. Industry insiders consider the ballpark to be the premier concessions account in the sports world.
“I can’t think of anything that comes close,” said Ken Young, a veteran of 30 years in the concessions business and the president of Ovations Food Service.
To illustrate the strength of the Yankees’ business, the Chicago Cubs, another team with a strong fan base, generated a projected $14.77 per cap for the 2004 regular season. The Cubs were on pace to bring in about $41 million in food and merchandise revenue at Wrigley Field, a ballpark with about 18,000 fewer seats than Yankee Stadium.
“The Dodgers do pretty well, but they don’t do near $63 million,” said sports facility food consultant Bill Caruso. “They’re closer to $30 million to $40 million.”
Levy Restaurants paid $60 million in the form a letter of credit and cash to Los Angeles Dodgers owner Frank McCourt in a deal last year to help McCourt buy the team and, in return, Levy received a 20- to 30-year food contract at Dodger Stadium, concessions sources confirmed.
The Yankees’ $50 million request is “hefty in my estimation,” Caruso said, but the team can command the substantial fee because of “who they are and the prices they can charge.”
“I’ve done deals with $15 million to $20 million [proposed up front],” he said. “They’re throwing the hook out to see if anybody takes it.”
 |
| The new ballpark is to open in 2009. |
The Yankees met last Wednesday with representatives of Aramark, Boston Culinary Group, Levy Restaurants, Sportservice, Yankee Stadium incumbent Centerplate and TM Capital Corp., a prospective buyer of Centerplate, to discuss details of the proposal, concessionaires who attended the meeting said.
Modell’s Sporting Goods also had officials attending the meeting and is seeking a joint retail venture with a food vendor.
The bids are due Sept. 23 and a concessionaire could be selected sometime in October, depending on whether the Yankees make the postseason, said a source familiar with the account and the negotiations. If they make the playoffs, the decision could be delayed.
Centerplate has held the Yankee Stadium contract since 1964, when the company was known as Canteen.
“The Yankees decided with the new stadium that they wanted to get a competitive deal,” said the source familiar with the account. “It’s not that they’re unhappy with Centerplate, it’s just that this is a different product.”
The new Yankee Stadium will seat as many as 54,000 with 68 suites, 13,751 club seats and three premium restaurants. The primary retail store behind home plate will encompass about 6,000 square feet, according to the specifications listed in the RFP.
