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Volume 20 No. 42
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Compass deal lets AEG bring food to the table

Compass Group’s deal to buy 49 percent of AEG Facilities forges a stronger bond between the world’s largest food service provider and a leading operator of major league venues, but because of their long-standing relationship it’s difficult to tell how much of an effect the purchase will have in the facilities space.

The deal closed in August, according to the annual report issued by Compass Group PLC, London-based parent of Compass Group North America, but was not announced until Nov. 23. No purchase price was disclosed.

Compass-owned Levy Restaurants has handled food at AEG’s Staples Center since 1999.
It expands a partnership between AEG and Compass-owned Levy Restaurants that began in 1999 at Staples Center, the year the arena opened. Levy operates the arena’s concessions and premium dining and has more than 50 big league food deals. Compass Group, which has owned 100 percent of Levy Restaurants since 2006, reported worldwide revenue of $25 billion this year.

For AEG Facilities, the Compass deal made sense because many of Levy’s accounts are at NBA and NHL arenas where AEG has an ownership stake, manages the building or books and markets events. Internationally, Compass/Levy runs the food at arenas AEG owns and operates in Berlin, Hamburg and London.

“This deal is a natural extension of the familiarity our two companies have developed with each other,” said Bob Newman, AEG Facilities’ chief operating officer. “Our paths are crossing in many locations worldwide.” Compass Group North America officials in Charlotte declined to talk about the deal.

Before the Compass deal, AEG had been the only facility manager without an investment in a concessions firm, sources said. Now it can bring that important aspect of operations to the table.

That has been the case in Philadelphia where Comcast-Spectacor subsidiaries Global Spectrum and Ovations Food Services compete against AEG and Levy, said Peter Luukko, Comcast-Spectacor’s president and COO. But as Luukko has learned over his career, both with Comcast-Spectacor and with SMG, a firm once co-owned by sports concessionaire Aramark, building operators and food vendors sometimes must take separate paths to grow business.

“Our model was to create two companies because in certain situations you are offered only the management and are working with other food service companies,” Luukko said.

“When you are in the facility management business, 99 percent of the time you deal with some form of government,” he said. “In some bids, food and management go together. Most aren’t, and you must follow the bid process.”

The same principles hold true for AEG Facilities and Compass Group as they pursue new business, Newman said.

Food consultant Chris Bigelow said, “Levy already serves most of the AEG accounts, but AEG also looks for what is best for their venues on an individual basis and sometimes that means going with another concessionaire such as Sportservice at Target Center.”

Sources say the deal with Compass Group could also provide AEG with more financial resources to help develop high-profile sports projects such as Farmers Field, the NFL stadium AEG wants to build with private funds next to Staples Center. The stadium’s concessionaire has not been selected, Newman said.

Industry sources said AEG had conversations with at least one other food service company about buying a minority stake in AEG Facilities before reaching an agreement with Compass Group. Newman would not comment on whether AEG had talks with other concessionaires.