Sodexo’s acquisition of Centerplate brings new life to the sports concessionaire and boosts the overall portfolio for Sodexo, the world’s second-biggest food service company.
Last week, Paris-based Sodexo announced the purchase of Centerplate for $675 million from Olympus Partners, the private equity firm that had owned Centerplate since 2012. The transaction, pending regulatory approvals, is expected to close by the end of the year.
It’s too early to tell whether the 13-year-old Centerplate brand will be eliminated as part of the sale, Sodexo officials said.
Industry experts view the merger as positive for Centerplate, which over the past five years has lost significant market share in both professional and college sports. In possible further erosion, sources said last week that the San Francisco 49ers, a longtime Centerplate account and one of its five NFL clients, are out to bid for foodservice at Levi’s Stadium, where the incumbent still has one year remaining on its contract. Teams typically issue proposals coinciding with the contract’s expiration date.
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Patrons fill a bar at Hard Rock Stadium in Florida, one of Centerplate’s five NFL clients.
Courtesy of: CENTERPLATE |
Sodexo’s financial strength should help bring stability to Centerplate and result in a more aggressive approach to competing for sports deals, sources said. All told, Centerplate has been held by private equity groups for more than eight years, and its hands have been tied in situations where major investments are required, consultant Chris Bigelow said.
Now they’re part of Sodexo, the world’s 19th-largest employer, which generated $24 billion in revenue for fiscal 2016, including more than $1 billion in sports. Centerplate, by comparison, generated just short of $1 billion in revenue for 2016, which includes its convention center business.
“Centerplate has to be happy that it was bought by another food company instead of [another] venture capitalist,” Bigelow said. “It bodes well for long-term business rather than the typical private equity group that always cuts costs to make it attractive to sell.”
As for the industry overall, it may appear to be another example of consolidation, but as concessions executive Ken Young pointed out, the merger doesn’t effectively cut competition in the big leagues. To this point, Sodexo is a bit player in pro sports compared with Centerplate, Levy, Aramark, Legends and Sportservice. (Sodexo’s lone big league account is Toyota Park, home of the MLS Chicago Fire.)
Sodexo does have a major presence in the college sports market, where it runs the food at dozens of arenas and stadiums, including Michigan, Texas, Auburn, Kansas State, TCU, Illinois and Arizona State.
“Strategically, it’s a great move for Centerplate in terms of its growth,” said Peter Luukko, executive chairman of the Florida Panthers, whose arena, BB&T Center, is served by the food vendor. “It makes Centerplate more formidable with the capital of a $24 billion company behind them.”
Centerplate CEO Chris Verros, who came over from Boston Culinary Group in 2009 after that company merged with Centerplate, will lead the combined businesses in the U.S.
“Our bandwidth is now huge … with greater buying power,” Verros said. “It’s no secret the marketplace is very competitive, and with the power of Sodexo as a growth engine, we have the ability to be more aggressive.”
