Sports

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Jason DeCrow/AP
Hal Steinbrenner, left, co-chairman of the New York Yankees, speaks as Jerry Jones, owner
of the Dallas Cowboys, looks on during a news conference announcing the launch of Legends
Hospitality Management, LLC.

Yankees, Cowboys Look to Enhance Stadium Luxury

October 23, 2008 11:10 AM
by Denis Cummings
The Yankees and Cowboys have founded a company to manage concessions, in an attempt to make their new stadiums as luxurious as possible.

Yankees and Cowboys Form Legends Hospitality Management

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The New York Yankees and Dallas Cowboys, two of sports’ richest teams, are partnering with Goldman Sachs Group and private equity firm CIC Partners to create Legends Hospitality Management, a sports services company that will focus on concessions and merchandising. Yankees general partner Hal Steinbrenner, president Randy Levine and Cowboys owner Jerry Jones announced the deal at a press conference Monday in New York.

Both teams are opening billion-dollar stadiums in 2009, each with a wide range of luxury seats that can cost thousands of dollars a game. In order to justify the costs, each team is looking to provide a level of luxury not previously seen in sports stadiums. “Every seat in these new stadiums has a luxury-level price tag and must provide luxury-level amenities,” said Robert Boland, professor of sports management at New York University.

At the press conference, Jones, Steinbrenner and Legends chairman Mike Rawlings said that Legends will provide a fresher, more varied menu, including local specialties and items created by celebrity chefs. They said that fans would be willing to pay the exorbitant prices if they are treated well.

“The one thing I’ve learned over the years is that customers and fans want value. Value is quality over the price,” said Rawlings. “Everybody always wants cheaper prices … but that’s not the real component. So philosophically, our business model’s going to work better by building the quality higher.”

Legends will start at the Yankees and Cowboys stadiums, but it will be available to serve other stadiums. Jones said that there are three NFL teams already interested in working with the company.

Background: Luxury sports stadiums

Luxury seating has become one of the most important components of a stadium, often being the difference between loss and profit. Teams can charge exorbitant prices and still attract corporations and wealthy individuals, generating a profit for the team even if regular seating doesn’t sell well.

“I’ve been saying for years that the most expensive seats are under-priced and the cheapest seats are overpriced,” a former baseball executive told The Washington Post. “If you look at it, the most expensive seats are usually filled and the empty ones are the cheap seats.”

Yankees CEO Lonn Trost says that the luxury seats “subsidize the ability to have Joe Fan come to the game,” allowing teams to keep the prices of other seats down if they so choose.

Luxury seating has changed over the past decade, moving closer to the field and becoming more integrated with regular seating. “The wealthiest of fans do not necessarily love the luxury suite that was once considered the ultimate amenity,” writes The Washington Post. “Suites are too private, too removed from the field, too far away to hear the hitters curse as they pop 3-2 fastballs straight up in the air.”
Both the Yankees and Cowboys will provide luxury seats close to the action on the field. Fans sitting in the lower infield rows at the new Yankee Stadium will have access to a suite club and lounge, while the Cowboys new stadium has field-level suites behind each sideline.

The improved luxury does not guarantee that the seating will be sold, however. Suites at the Washington Nationals new ballpark, which included the $400,000, year-round Washington Suites, were empty for many games, leading many to criticize the team for pricing out even its richest fans.

It will become more difficult for teams to sell luxury seating as the economy continues to struggle. Boland said that this is one of the reasons behind the formation of Legends.

“Clearly, the economy is telling us this is getting harder and harder for teams to sell these tickets, and it's important they come forward with a reason to show fans that these are more than just tickets, that there's something else attached,” he said.

Three baseball teams have cut ticket prices for the coming year due to the economic crisis. The Yankees and their crosstown rival Mets, who are also opening a new stadium, have not been hit by the crisis, however. The Mets have sold out their luxury seating, while the Yankees have only seven $600,000 suites left to sell.

Their success in selling suites supports the Legends philosophy that fans are willing to pay top dollar for extravagant luxury. “Legends was founded on the principle that enhancing the stadium experience will result in a more satisfied fan base,” said Jerry Jones. “Satisfied fans attend more games and show greater loyalty.”
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