Private management of publically owned venues started with a need in New Orleans. The iconic Louisiana Superdome was mired in debt, losing about $12 million in 1976.
Professional venue managers like Denzil Skinner knew there was room for a major turnaround. Skinner enlisted A.N. Pritzger of Hyatt Hotels fame to contract management of the dome for the city. The fee was based on a percentage of debt reduction, recalled Mike McGee, Barmac Consulting (formerly owner of Leisure Management International), of those early days. Interesting sidebar – a young attorney named Fred Rosen worked for Pritzger at the time. Rosen would later be tapped to turn Ticketmaster, which Pritzger also owned, around.
Not long after Hyatt entered facility management, Ed Snider, who owned the Philadelphia Flyers and built the well-run Spectrum, tired of being asked for free advice and decided to go into facility management as well. In 1981, he established Spectacor Management Inc., taking on the Centrum in Worcester, Mass., as his first management account, recalled Tony Tavares, who later worked for Snider and became president of the merged companies.
Tavares, who had worked for FMG at Nassau Coliseum, Uniondale, N.Y., the next big hire after Cliff Wallace was tapped to run the Louisiana Superdome, left a year later to join SMI, where Allen Flexer was president.
The list of industry heavyweights associated with SMG and its history is long and almost comprehensive. If you were a significant player in venue management, you worked for or with or sold to SMG sometime in your career. The stability of the leadership at SMG today, most of them there an average of 20 years, is one of CEO and President Wes Westley’s major accomplishments. The industry of venue management is and always will be about the people.
The merger, what was renamed SMG, was in 1986, when Facility Management Group, Hyatt’s management firm, and Spectacor Management Inc., Snider’s operation, became 50/50 partners and began expanding the footprint, Tavares recalled. “There was no valuation at the time.”
Then Aramark joined the other two, becoming a one-third partner for a valuation of $33 million, in 1991. Tavares recalls that partnership was tied to the realization competitors — LMI and Ogden Entertainment at the time — were bidding for the L.A. Coliseum with a different agenda, offering up capital for renovation.
Snider was willing to invest, Tavares recalled, but the Pritzgers said no unless they could find another partner who could put up some of the money. Charlie Gillespie at Aramark was willing and joined Snider and the Pritzgers in this new level of entrepreneurship for SMG.
But Snider eventually became anxious to de-partner, preferring his lone entrepreneur path, so in 1998, Aramark and Hyatt bought Snider out for a reported $40 million and a two-year non-compete.
In 2000, SMG grew exponentially with purchase of McGee’s Leisure Management International, which had been established in 1984, and acquisition of the facility management contracts held by Ogden Entertainment, which Aramark bought for its food service contracts.
Those purchases settled the industry down, to a large extent. Tavares recalls “Mike and I didn’t get it; how could Ogden manage buildings for the price they offered? We refused to do things on the cheap.” Their best guess was that Ogden was making it up on the food service so they were willing to take less margin.
By the time SMG acquired the Ogden and LMI accounts, several of the firm’s current leadership was in place, including Westley and Doug Thornton, current EVP of Arenas and Stadiums for SMG, who started in 1997 as GM of the Louisiana Superdome.
Thornton recalls the many changes wrought by private management at the Superdome. “Back then sports teams leases were constructed differently. Superdome was probably the first stadium to offer some of the ‘modern amenities.’ It was the first stadium to have a projection video — an eight-sided video screen; the first to have suites at a mid-tier level.” Professionalism prevailed and FMG (later SMG) was charged with selling suites and sponsorships, Thornton said.
“In the early days, private management was doing it all,” Thornton said.
In the 80s, when Peter Ueberroth commercialized sponsorships during the Olympic games in Los Angeles, teams began to realize the value of sponsorships and negotiated and took back those rights.
When Tom Benson bought the New Orleans Saints of the National Football League (NFL) in 1985, his lease was one of the most favorable in the NFL, Thornton said. “At that point, SMG’s main job was to manage and maintain the asset and operate the asset for the non-football events, which is still our value proposition today.”
Between 1993-2001, SMG experienced steady growth, developing a quality operating standard and establishing a core value proposition for clients.
“SMG is the world leader, the gold standard of management firms,” Thornton said. Those legacy accounts, like the Louisiana Superdome, Moscone Center, San Francisco and Long Beach (Calif.) Convention & Entertainment Center have been joined by hundreds of new venues.
SMG also ventured into food service in a formal way when Aramark and Hyatt sold the firm to American Capital in 2007. With Aramark as an owner, SMG could not pursue food contracts independent of management deals. Savor was born.
American Capital paid a reported valuation of $630 million to Hyatt and Aramark for the company. The time had come when the original founder, the Pritzger family, was divesting its interest in several projects following the patriarch’s death, Westley said. Aramark, being a good partner, concurred.
Westley, who was already president and had already restructured the organization, had a free rein to reimagine SMG once again.
The companies that remain in private management today are basically full service with multiple profit centers, Tavares said.
SMG is at the center of that evolution of an industry — 40 years strong and the future is bright. There is plenty of headroom still, Westley said.
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THE JOURNEY BEGINS IN NEW ORLEANS
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