Friday, October 31, 2008

Yankees and Cowboys Form Concessions Company

Two legendary sports franchises have teamed up to bring you the finest – and possibly, the most expensive – stadium cuisine in the country.

The New York Yankees and Dallas Cowboys, the two most recognizable brands in their respective sports, have formed a concessions company called – appropriately enough – Legends Hospitality Management (LHM) to operate the food, beverage and merchandise operations in their new stadiums. The new company also intends to compete with such industry stalwarts as Aramark, Sportservice, Centerplate and Levy’s for the concession rights to other ballparks and arenas around the country.

The Cowboys have operated their own concessions for 20 years, but concessions at Yankee Stadium have been operated by Centerplate, formerly Volume Services. The two teams will each own 34% of the new company with the remaining percentage shared by two investment banks, Goldman Sachs and CIC Partners LP

LHM was formed earlier this year but the “official” announcement came only after the company raised $100 million in debt last month. The company has been operating the concessions at the newly-named Steinbrenner Field, the Yankees’ spring training facility in Tampa and home to their Class A team in the Florida State League. According to Cowboys owner Jerry Jones, the company will assume responsibility for his team’s concessions operation immediately. Beginning next year, LHM will operate the concessions at the new football palace under construction in Irving, TX as well as the new Yankee Stadium in the Bronx.

Jones referred to the concessions operation as the “blood” of the new stadiums, both of which carry price tags in excess of a billion dollars. The teams intend to emphasize fan satisfaction, in terms of both quality and quicker service. The price of concession products wasn’t mentioned, but you can rest assured that, like the huge increase in ticket prices in both locations – the top seat in Yankee Stadium will fetch $2,500 per game and the Cowboys are selling Personal Seat Licenses for as much as $150,000, tickets not included – food and beverage prices will rise.

While you can debate Jones’ use of the word “blood” to describe the importance of concessions operations at the new stadiums, there’s no denying the financial impact concessions have on a sports team’s bottom line. Documents obtained by the NY Daily News show that the Yankees netted $65.3 million from their cut of concessions in 2007. While that sum may pale next to this year’s player payroll of $208 million, tell that to the average fan paying $5.75 for a box of Cracker Jack.

When teams use a third party vendor for concessions operations, their cut varies from 20-50% of gross sales, depending on the item and the location of sale (suite vs. stands). Keeping concessions in-house can easily add an additional 30-40% to the bottom line. And the team retains full control of the variety, quality and service of the operation, not to mention the marketing and sponsorship opportunities available with vendors.

Per caps also vary, depending on the sport, the weather, the location of the facility, opponent and time of year. The Sports Business Journal reported that Sportservice generated $39.55 per cap for this year’s Game 6 of the NBA Finals between the Celtics and Lakers at Boston’s TD Banknorth Garden. The figures set a record for the 13-year old arena. Meanwhile, when the teams played games 3, 4 & 5 at the Staples Center in lala land, the average per cap was $44.38. The message may be that fans on the left coast are more profligate than their brethren on the east coast.

Quality and variety of concessions vary from facility to facility. Although the staples – hot dogs, peanuts, popcorn and soda – are the biggest sellers, many concessionaires have added upscale menu items such as cedar-planked salmon in Seattle, roasted pork and provolone sandwiches in Philadelphia, and crab cake sandwiches in Baltimore.

The award for the most intriguing new concessions item for 2008 goes to the Sioux Falls Canaries of the Independent American Association. The team added the cleverly named “Fowl Balls” to their menu. If the name isn’t suggestive enough, the – allegedly – delectable item is actually deep-fried turkey testicles. A basket of eight sold for $3.

No word on whether Fowl Balls will make their debut in New York or Texas next season.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at

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