Hospitality now includes ‘experiences’
With more private equity money backing it, hospitality now includes ‘experiences’ in addition to tickets
The sports ticketing and experiential space has become a battlefield for private equity firms.
On Location Experiences is owned by RedBird Capital Partners, Bruin Sports Capital and 32 Equity (the NFL’s venture capital arm) along with Jon Bon Jovi. PrimeSport has been majority owned by The Carlyle Group since late 2014. Miami Dolphins owner Stephen Ross owns a small stake in PrimeSport through his RSE Ventures unit, and former Arizona Diamondbacks co-owner and baseball agent Jeff Moorad also owns part of PrimeSport through his Moorad Sports Partners.
As the business of serving well-heeled individuals and corporate clients has moved from a mom-and-pop industry to one with private equity money behind it, the concept of selling “experiences” instead of just tickets and hotel rooms has become a steadfast mantra.
“You’ve had this explosion in asset value within professional sports, but what has lagged is the professionalization of the business elements around them,” said Gerry Cardinale, managing partner and CEO of Redbird Capital, an owner of On Location, which handled 12,000 Super Bowl LI ticket packages, including some that included access to the Patriots team victory party — access made possible by On Location’s NFL partnership.
Ety Rybak, co-founder of Inside Sports & Entertainment, which CAA bought in 2014 and rebranded as CAA Premium Experience, identified social media as one of the biggest factors driving increased demand for premium live event packages. “The absolute requirement now for instant gratification through social media is amplifying these big-event experiences like never before,” he said. “At the Super Bowl, I was posting for all my friends and they were all saying, ‘How and when do I get to a Super Bowl?’”
CAA Premium Experience, whose rights also include a premium hospitality deal with MLB, hosted around 2,500 people during the Super Bowl, with packages ranging from $2,500 to $10,000.
The biggest question is whether the VIP hospitality market will grow enough to support all of the new money trying to exploit it. Corporate clients with big sports investments usually have the same agencies handling hospitality that handle their other sports investments. Will they feel the need to add another agency, even for something as unique as attending the Super Bowl champion’s victory party?
“There’s really nothing new about high-level client hospitality,” said Andre Schunk, senior vice president at Octagon, which entertained around 200 clients at Super Bowl LI for companies including NFL league sponsors Castrol and Dannon. “Hospitality endures because it meets these basic human needs: We want to see it with our own eyes, feel like a VIP and we need to create a memory. … It’s definitely been getting more sophisticated. It used to be ‘Pick up your tickets and we’ll see you at the suite.’ Like other kinds of marketing, we see that as a way to combine passion points, whether that means adding a celebrity chef or a name DJ.”
Tim Brosnan, new executive chairman and acting CEO of PrimeSport, sees opportunity overseas and within trade and incentive programs. “Look at the banking and credit card space that is shifting almost entirely from points for things to experiential rewards. That space is still expanding,” he said.
Rybak added that creating events within events will, by itself, attract more people. “The opportunity is getting bigger across all live events,” he said. “There were way more people in Houston for the Super Bowl than there were seats in the stadium. That’s a trend that will continue.”
Bruin Sports Capital founder and President George Pyne also maintained that his company is growing the market for premium experiences, noting the total of more than 27,000 attending concerts by The Chainsmokers, Bruno Mars and Taylor Swift at On Location’s Club Nomadic in Houston. “We’re creating unique experiences around things people love,” Pyne said. “I’m assuming not all of those 27,000 went to the Super Bowl.”
QuintEvents CEO Brian Learst sees growth opportunities with celebrity chefs and “out-of-the box” events like the Barrett-Jackson classic auto auction in Scottsdale, Ariz., at which his company sold hospitality packages.
Is there enough incremental business to avoid an industry shakeout? “I don’t think we know that yet,” said Learst, whose company has hospitality deals with the NBA and Kentucky Derby. “Any time you see a rush of private-equity money into an industry, you know there will be winners and losers. … But at 78 million strong, you’ve got this huge group of millennials that want to spend money on experiences. You can’t get by on just selling a great ticket anymore.”
By: Terry Lefton