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Volume 20 No. 42
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Concessionaire Centerplate back on the market

Editor's note: This story is revised from the print edition.

Centerplate, one of the big four in sports concessions, is for sale again, according to a document issued by an investment bank and sent to prospective buyers.

The document, a one-page summary sheet issued by Harris Williams & Co., a Richmond, Va.-based investment bank focused on mergers and acquisitions, contains specific language stating Kohlberg & Co.’s intent to sell the company, say three industry insiders familiar with the document. Kohlberg & Co., a private equity firm, has owned Centerplate for about 3 1/2 years.

Centerplate President and CEO Des Hague confirmed that his company has hired Harris Williams, though not necessarily to sell the concessionaire.

“We are currently exploring a recapitalization of Centerplate and exploring the best way to do that,” Hague said. He would not provide further information.

A recapitalization would indicate that Centerplate is seeking additional investors, but sources said the language in the document pointed toward a sale.

“This company is for sale, pure and simple,” said one source who has seen the summary sheet.

Centerplate added the Notre Dame sports account in 2011.
A sale would fit the business model used by Kohlberg, which buys distressed companies, turns them around financially and sells them at a profit. Centerplate was a publicly held company strapped for cash when Kohlberg closed a deal in January 2009 to buy the vendor for about $200 million, and the concessionaire has thrived under Kohlberg’s leadership, winning or renewing some important accounts and adding others through acquisition. It has food and retail accounts at 10 NFL stadiums among its 20 big league deals.

The single-page summary is a precursor to a “book” Harris Williams will release to prospective buyers containing terms and financial details on Centerplate’s deals with sports venues and other public assembly facilities.

Before receiving the book, interested parties must sign nondisclosure agreements prohibiting them from sharing that information. In general, serious potential buyers are eventually given access to computer records to determine the true value of those accounts, sources said.

The Harris Williams sheet estimated Centerplate would generate total revenue this year of $825.1 million, with EBITDA (earnings before interest, taxes, depreciation and amortization) of $80 million, said a source who has seen the document. Without knowing the exact financials and Centerplate’s debt load, those numbers are most likely on the high side as Kohlberg officials attempt to generate the highest return, sources said.

Those figures are significant because the book will almost certainly be offered to the rest of the big four major league concessionaires — Aramark, Delaware North Sportservice and Compass Group, owner of Levy Restaurants. The last time Centerplate was for sale, however, those three firms plus Comcast-Spectacor, owner of Ovations Food Services, took a pass because of the large number of contracts the concessionaire held that their competitors thought were unprofitable deals, sources said. For that reason, the book is also expected to reach the hands of investment banks, and the buyer could be another private equity group.

As a public company, Centerplate struggled with cash flow and suffered a big blow after losing the New York Yankees deal in 2008, its longest-running and most profitable account.

But 10 months after Kohlberg took over Centerplate in early 2009, Centerplate merged with Boston Culinary Group, which had several BCS football stadium accounts, in addition to Sun Life Stadium and BankAtlantic Center. Around the same time, the vendor renewed deals with the San Francisco Giants and Seattle Mariners at AT&T Park and Safeco Field, two key accounts.

Last year, Centerplate won the San Francisco 49ers’ food and retail business for their new stadium under construction in Santa Clara. The concessionaire already has the account at Candlestick Park, the 49ers’ current home.

On the college front, Centerplate won the University of Notre Dame food contract in 2011 after the school made the decision to outsource sports concessions for the first time in many decades.

Conversely, Centerplate lost the Minnesota Twins and Miami Marlins food business after those two MLB teams moved to new ballparks.

Centerplate has flourished at AT&T Park, recognized for having some of baseball’s best food. The same is true at Safeco Field, where a local magazine voted The ’Pen one of Seattle’s best new restaurants in 2011.

All told, Centerplate has about 85 sports accounts, in additon to nonsports accounts.