A Very American Coup By Michael – Louis Ingram, Editor-in-Chief...
A Land Of Empty Cathedrals??
Luxury suite-holders can access a separate deal-room for conducting business. In the sleek, exclusive “Legends Club,” the high-definition screens are so ubiquitous they’re even set into the lavatory mirrors.
For spectators in the premium section’s teak-armed seats, waiters will bring brick-oven pizza to anyone able to shell out $2,500 a ticket to watch a ballgame in the midst of the worst recession in a generation.
“Build the most expensive stadium, charge high prices and have the worst economy. It’s called lack of sleep,” says Lonn Trost, the Yankees chief operating officer.
In a case of monumentally bad timing, this year three of the biggest names in pro sports — the Yankees, New York Mets and Dallas Cowboys — are opening three of the most expensive stadiums ever built, filled with premium-priced seats and luxury amenities.
At a combined cost of more than $3.5 billion, the stadiums were conceived and financed in a vastly different environment, a time when corporations and municipalities were flush with cash. Now they’re opening just as corporate America is going through a massive belt-tightening — and trying to avoid the appearance of extravagance at all costs.
“Let’s face it, if you’re taking TARP funds, it’s really hard to justify getting a [luxury] box,” says Neal Sroka, a luxury real estate agent hired by the Yankees to help sell the team’s premium seats, referring to the funds distributed to banks under the Troubled Asset Relief Program.
With just weeks before their new $1.1 billion stadium opens, the Cowboys still have 2,000 premium seats and about 50 of their 300 luxury suites left to sell. The Yankees have hired Mr. Sroka to drum up buyers for the hundreds of premium seats still in their inventory.
The Mets, who once had deals for all 49 of their luxury suites, say they’ve had to go back to the market after one customer, whom they declined to name, backed out.
Public backlash forced New York Mayor Michael Bloomberg’s office in January to give up, in exchange for cash, luxury suites the city had secured at the new Yankees and Mets stadiums.
Bank of America recently ended negotiations with the Yankees over what would reportedly have been a $20-million-a-year sponsorship deal. Bank of America spokesman Joe Goode said the decision to walk away from the negotiations was due in part to the economic environment and “the mood of the country.”
Citigroup, which has received billions of dollars of federal aid, has been forced to defend its $400 million marketing deal with the Mets that includes the right to name the park Citi Field.
The Mets have endured weeks of jokes about renaming their field “Taxpayer Stadium” or “Bailout Park,” but the deal with Citigroup looks safe for now. A Citigroup spokesman says no taxpayer money will be used for the marketing deal.
Cowboys owner Jerry Jones held out for an even bigger naming rights deal — some experts thought he could get as much as $1 billion, though team executives says they never expected that much — but instead saw the naming-rights market dry up. Mr. Jones said he was a victim of bad timing, but expects the market to recover.
In response to the new climate, teams are offering financing for season tickets, shortening contract commitments on luxury suites, and in the case of the Yankees, re-designating seven unsold suites as “party suites,” sold on a game-by-game basis.
When the Yankees broke ground on the new Yankee Stadium in August 2006, home prices were still rising, stocks were still climbing and Lehman Brothers was still a pillar of the Wall Street establishment. Back then, selling 4,300 premium seats to 81 home games a season seemed like a reasonable objective.
Between corporate sponsorships, naming-rights deals and luxury suites, two-thirds or more of teams’ revenue comes from corporations rather than ordinary fans, estimates David Carter, executive director of the University of Southern California’s Sports Business Institute.
Over the years, luxury boxes, once just a few glass-enclosed rooms high above the regular seats, have become as integral to a new stadium as concession stands — more so, because companies pay for them up front, guaranteeing profits regardless of the team’s success on the field. As team owners crammed in ever-more premium seats, corporations, eager for new ways to entertain clients, happily bid up the prices.
All that corporate money, Mr. Carter says, has created what he calls the “sports ticket price bubble.” Now that bubble is in danger of bursting.
Citi Field will have a reservation-only restaurant and a wine bar, plus gourmet snack food — barbecue, burgers and Belgian-style french fries — by top New York restaurateur Danny Meyer.
The Yankees and Cowboys decided no existing concessions company was good enough for their new stadiums, so they teamed up with Goldman Sachs to create their own company, Legends Hospitality Management, which will focus on high-end, locally themed food. Yankee Stadium promises food cooked up by celebrity chefs from the Food Network, while a sample menu for a Cowboys luxury suite features New Zealand baby lamb chops, Kobe beef with a cognac demi-glace and truffled macaroni and cheese.
No team has hitched its star more closely to the corporate market than the Cowboys. The $1.1 billion Cowboys stadium will hold up to 100,000 fans, the most in the NFL.
Fans will enter and exit through 120-foot-tall retractable glass doors at either end zone. The scoreboard alone — a mammoth, 160-foot-long high-definition screen — cost more than $35 million, as much as the entire Texas Stadium, the team’s former home.
Paying for it all are the more than 15,000 premium seats, costing as much as $340 per seat, per game. When the team broke ground in April, 2006, the stadium was designed to have 200 luxury suites; Mr. Jones added another 100 during construction.
Top-level ticket holders can actually park inside the stadium building, then relax in the more than 200,000 square feet of clubs and lounges. The priciest boxes are at field level, with patios just feet from the Cowboys bench. Players will pass through the attached club on their way to the field.
Season tickets along the sidelines at Texas Stadium used to cost $129 a game, compared with $340 a game for similar seats in the new stadium. To earn the right to buy season tickets, fans must buy “personal seat licenses” — a one-time, up-front fee that can run as high as $150,000 a seat.
Dallas-area real estate agent Linda Taylor says she was shocked to learn that the $130-a-game Cowboys seats she’d had for years at the old Texas Stadium would jump to $340 in the new building — and require a $35,000 seat license.
“It just seemed crazy, especially for true fans. It’s different if we were a corporation,” she says. Ms. Taylor and her family ended up paying license fees of $16,000 per seat for seats that aren’t as good as their old ones.
Cowboys Chief Operating Officer Stephen Jones, son of owner Jerry Jones, says the team has sold plenty of seats to families, not just corporations. He still expects to sell out all the team’s games in the end.
The Mets’ chief operating officer and co-owner, Jeff Wilpon, says the new stadiums have better amenities and their novelty will draw fans.
“I’d rather be opening up a new stadium in this economy than trying to sell seats in the old Shea,” Mr. Wilpon says.
Fans can still get bleacher seats in Yankee Stadium for $5, though their view of the field is partially blocked by a glass-enclosed sports bar. Bleacher seats with unobstructed views will go for $12, and grandstands for $20 to $25, same as in the old stadium. The high-priced seats, Mr. Trost said, effectively subsidize everyone else’s tickets.
But the affordable seats are fewer and farther away. Mets tickets will start at $11, but there are 15,000 fewer seats in the new park than at Shea. The Cowboys will have seats that go for as little as $59 a game, but they’re much farther from the action than in the old Texas Stadium.
Mr. Jones notes the game can still be seen clearly on the video board. Even with slower-than-expected sales, the teams aren’t lowering published ticket prices.
Jay Jaffe and a group of friends shared Yankees tickets for 11 years, but they won’t be making the move to the new stadium. The 20-game packages of $25-a-game grandstand seats they hoped to get were sold out. Instead, the Yankees suggested $85 seats deep in right field.
“Literally, my words were, ‘Are you f- kidding me?’” Mr. Jaffe recalls.
Sports executives acknowledge the current environment has disrupted their marketing plans. “If the economy were certain, these would’ve sold out in about six seconds,” Mr. Trost said recently as he showed off the $500-and-up Legends Club.
“The problem is, people don’t want to be seen in a space like this.”