Dallas’ American Airlines Center is a testament to what is happening in venues’ premium areas these days.
Undergoing two renovations in the last four years, the arena overhauled its suites to create theater boxes in 2013.
“We started with 22 boxes and added 12, because these sold so well,” said Andrew Silverman, the venue’s chief revenue officer. “Now we have 32 boxes with a four-person capacity and four with an eight-person capacity.”
In 2016, the arena removed suites and added 25 four-person loge boxes. Its three suite tiers include Flagship, Platinum and Admiral levels.
“In most new and existing arenas and stadiums, the number of suites has decreased and hybrid products are being built,” said Silverman. “This gives clients different products to look at.”
The arena’s theater boxes are semi-private on the Admiral Level, accessible through a private club. These include four to six or eight to 12 box seats that are available for all preseason and regular season Dallas Mavericks and Stars games, with the opportunity to purchase National Basketball Association (NBA) and National Hockey League (NHL) playoff seats. The seats also are available for most other events, including concerts. Amenities include VIP covered parking; a private entrance; all food and beverages; access to a private lounge; a theater box attendant; LED/HD TVs and access to meeting rooms and other club areas. Prices are $115,000 for a one-year contract, $107,000 for a three-year contract, $65,000 for a half season, one-year contract and $60,000 for a half year, three-year contract.
“Suites provide the ability to entertain clients without having to submit expenses for $600 dinners, since everything is included,” said Silverman. “It’s self-contained and provides a great return on investment.”
EFFECTIVE MARKETING TACTICS
A big challenge is attracting the right clientele for VIP spaces. Ideally, venues want long-term purchases to minimize suite and box turnover.
American Airlines Center’s operating company, Center Operating Co., is in charge of marketing its premium spaces.
“Instead of utilizing my staff, we have 100 people who work with the Mavericks and Stars selling our suites and boxes,” said Silverman. “We hold sales events, having the coaches speak and show our products off, but it’s still hand-to-hand combat.”
When new clubs are being built at the arena, and one is planned for 2018, hard hat events are held prior to completion.
“People love these, it’s fun to go, get dirty, put on a hard hat and goggles. This allows them to touch it and feel it as it’s taking shape,” said Silverman.
When it comes to suite and box holder retention, it pays to get creative. American Airlines Center’s one-year subscribers who re-enroll on time are treated to a VIP trip, such as a Stars game at the Staples Center in Los Angeles.
“If the all-inclusive area is not a 10, they won’t come back,” said Silverman. “Premium areas are about the experience and stepping away from the game to be taken care of in a cool, trendy and fun environment.”
EVOLVING OFFERINGS
Miami’s AmericanAirlines Arena, built in 1998, reinvests capital annually, constantly evolving its premium offerings.
“Instead of reinvesting every five to 10 years like most facilities, we do it yearly,” said Kim Stone, executive vice president of the Miami Heat and the arena’s general manager.
In the last five years, the venue has renovated its flagship lounges or top tier offerings. This now includes a chef’s table featuring local restaurateurs and their specialties.
“It’s like going to a new restaurant every day,” said Stone. “It encourages our guests to dine here, rather than at an outside restaurant beforehand.”
In 2015, the arena began working with Levy Restaurants to renovate an attached restaurant after the independent operator left. The eatery, 601, opened last year. It includes an upstairs restaurant with a full menu, exclusive items and cocktails, in addition to a downstairs meeting room that accommodates up to 200.
“When we first opened, we considered creating a restaurant that was open daily, but we knew there was a need for indoor meeting space and higher-caliber meals,” said Stone. “We’re able to use 601’s event space for games, but also regularly rent it out for occasions like weddings, corporate events and galas. It has worked out really well.”
Five years ago, the facility partnered with Los Angeles’ SBE to open Hyde, an exclusive 250-person nightclub-type operation that offers food and beverages to its members.
“The biggest challenge is making sure we’re not cannibalizing spaces,” said Stone.
AmericanAirlines Arena’s hierarchy of premium offerings include the AmericanAirlines Lounge, which provides access to the North and South Lounge, Dewar’s Suite Level and Dewar’s Clubhouse; AmericanAirlines Lounge and Hyde, which provides access to the North and South Lounge, Hyde, Dewar’s Suite Level and Dewar’s Clubhouse; Dewar’s Suite Level, which has access to the Dewar’s Suite Level and Dewar’s Clubhouse; and Dewar’s Clubhouse access.
The AmericanAirlines Lounges provide dishes from local chefs and craft cocktails.
This year’s culinary line-up includes The Forge, Quality Meats, Dolce, SugarCane, Cibo Wine Bar, STK and Area 31.
Dewar’s Club members can dine in Dewar’s Rail seats, VIP booths and casual bar seating. Located on the Suite Level, the Club features an upscale multimedia dining and lounge atmosphere, two grand bars and a view of the arena floor.
A new mobile app-friendly reservations system has been implemented to allow guests to make a reservation and pay directly from their phones.
The venue also has a unique setup for its suites and loges, which include a social space divided by a walkway to encourage guests to mingle.
Because the arena has only 22 suites, its revenue percentages are less than at other facilities.
“We’re constrained by what we can earn, with premium areas, excluding 601, accounting for 31 percent of our food and beverage revenues and 601 accounting for 8 percent,” said Stone. “In terms of ticket values with those purchasing premium tickets, we invest a lot in everyone having a great experience, while not losing sight of the total value of premium guests.”
Unlike most big cities, the mix of individuals and corporations that purchase suites is 50/50, hence the limited number of premium seating options.
The arena is currently working with Levy to do a total analysis of its premium areas, keeping cognizant of the millennial demographic, which is having the biggest impact in this market.
“The younger ticket holders are looking for a more social experience in terms of interacting and socializing, so we’re looking at that this year and will make changes next year,” said Stone.
A DIVERSIFIED APPROACH
After opening its doors in July of 2014, Levi Stadium in Santa Clara, Calif., kept an open mind when it came to its premium spaces.
“While there were different suite tiers, these were traditional setups with 20 to 40 guests per area,” said Paul Epstein, director of sales and business development for the San Francisco 49ers’ home stadium. “We’ve known there would be 2.0 in terms of the latest in what new premium hospitality amenities we’d have.”
The first couple years were utilized as a massive research project, querying peers, architects and others in the industry to see how the facility could become more diversified and better cater to its market.
The result was more customization, flexibility and versatility across all verticals of its premium spaces, including product types, sizes, content and amenities.
“In our second year, we started to hear more about how these spaces needed to meet the needs on National Football League (NFL) and non-NFL fronts,” said Epstein. “These are different fans, so we needed a subset to get people engaged.”
The key was looking at the platform and leveraging this as a relationship-building tool, while focusing on the true value of the space. Similar to AmericanAirlines Arena, the challenge was selling through one-year suite rentals.
“Flexibility was an issue, as companies would be working on budgets once during the year and had many events to consider,” said Epstein. “The days of mega suites being the only premium asset is challenging; we had to figure out how to capture that client more creatively.”
The result was the creation of Club 49 in 2016, which provides those looking for premium offerings flexible packages at different price points that can be customized.
“As long as we can get financial security, or a longer-term lease, we can get them a customizable look,” said Epstein. “While we did this exclusively in premium suite spaces, we likely will follow this with loge boxes and suites that are on another tier. We’ve found people will pay a premium if you right size it.”
The goal isn’t to adapt its business model to one or two prospective clients, but rather understand the market in order to put a series of platforms in front of people that are appealing.
In terms of today’s trends, Epstein echoes the opinion of others in the industry, saying premium spaces are no longer one size fits all.
“Yes, there are trends and momentum, but ultimately each venue and team has to offer these products independently and use data points, because each market is unique,” he said. “I’ve worked in facilities in New York, Los Angeles and now the Bay Area as well as New Orleans and Sacramento, and each one speaks a different language.”
In marketing these upscale offerings in new builds, which can be more difficult, it’s about painting a detailed picture and thinking tech-forward.
“The problem is engaging with the return on investment, since the bells and whistles sometimes only resonate when the market is good,” said Epstein. “There has been a market for suites for decades, and the investment levels are rising so much that we feel the need to add so many amenities. However, what truly sells is a customized, engaging plan that achieves the ROI; amenities are icing on the cake.”