In 1990, you had confusion. Then you had
the quick build-out over the ten or 15 years. Then you hit a lull. Then you had the
privatization of buildings. And now, you’re trying to go to an experiential marketplace. Thirty years ago when the premium seat
industry officially started, confusion reigned. Nobody knew how many suites to build. Nobody knew how to price them. An eight-seat suite for 16 home
games was $10,000 a year, so think about how far that has grown, otherwise, none of us would be doing this business anymore. Nobody knew what a suite director was. I was the Spec… What did I call…
Special Services Public Information Manager, and I managed and leased the
premium seats at the Hoosier Dome, and that was in 1989. The first conference was in 1990. And the Hoosier Dome became the RCA Dome in 1994. The first suite director I ever met? Dr. J at the Spectrum. He greeted me in a tux. Dr. Jerry Buss invented I believe what
was the forefather of club seats or premium seats, which were senate seats. Back then at The Forum, there were no suite directors. There were salespeople that
actually sold those senate seats. As it related to client services
and servicing those people, it was open the doors and let them have a good time. Nobody knew how to service the
accounts with food and beverage. It was an entirely different, new
industry for the sports business. There were no conversations about gluten-free. There were no conversations about healthy foods. There were no conversations as it
related to catering in that building because we didn’t have any room to cater. One thing led to another, and somehow,
we landed with a one-day meeting in Indy, and it was a conference for about 30 people. Chicago was the second year because Jeff Wineman
was the second person to stand up and say we’ll have a real active partner in this. The premium, which because we were in the
restaurant business, was the natural place for us. And the premium business, it represented between
like two and five percent of the total sales. Today, it’s 65 or 70 percent of the total sales. Never in my wildest imagination did I think
there would be three, four, five, six clubs, different kinds of suite products, theater boxes,
all-inclusive, and that just blows my mind today. Premium seating in 1990 was
three percent of the marketplace. Today, it’s 20 percent of the marketplace,
but it’s 40 percent of the ticket revenue. And when you get into the super stadiums like the Rams
and Chargers, when they play in the $4.8 billion stadium, it’s 56 percent of the revenue. As I reflect, premium back then was essentially
something more than a general admission seat. The Palace of Auburn Hills was just built,
which was a very significant project in its time, transitioning from skyboxes, which were
relegated to the top, probably the worst views, but somehow, that was an experience
that became a model for premium. The Palace brought that down. They brought
that down to the concourse level, mid-bowl, and even further down into the lower bowl. At the time, almost all the buildings that
were built were publicly-built buildings, which means they had to pass referendums. They did what was called
contractually obligated income. In other words, what they did was, they sold the
suites and the premium seats ahead of time, and they used that money to basically
float the bonds to build the buildings. And that’s how it happened. With thinking about the waves, they’re
really kind of the cycles if you will of what’s happened in our industry from both a
building perspective, a financing perspective, and a lot of the kind of consumer desires. So the first wave is the foundational wave,
and then we get a little bit more elevated, where you saw this huge influx of arenas
and buildings that were brought to market and really a focus on crafting suites, clubs,
and doing them for the business consumer. Fast forward into 1998-1999
when you had a big explosion. Everybody tried to top each other, so
the buildings started at a certain level and then kept getting bigger and bigger and bigger. And that went on for about ten years. Six, seven,
eight, nine, ten buildings a year went up. And then the building stopped for a
few years in that 2004 and 2005 range. And they started having to reevaluate
the marketplace and every suite. The biggest change was that the public no
longer wanted to fund some of these things. So somewhere around in 2005 or 2006, there
was the introduction of the private buildings. And that created another generation of the buildings. As soon as they went private, the people putting
up the money wanted to create more revenue. Back then, it was just sort of this
basic class of differentiation. To me it was pretty simple, a simple formula. And people started to realize that
we have some different preferences, and you started seeing diversity coming online. There were more club seats.
And then suddenly loge boxes, these four-person suites started
coming in in the last few years. And they’ve become extremely popular because
people don’t have to invite 12, 14, 15 people. On the sales perspective, I imagine
the guys that were selling were like, okay, I’ve got a product for different tiers now, and that can change my pricing
strategy based on the demand, and I no longer have just three products to sell. And then they could package it with
different experiences that go with that. Meanwhile, the pricing changed by sport,
so at one time, suites all cost about same. Now there is differentiation in the marketplace. There’s actually fewer suites now
as we build, much fewer. Why? Well because they charge more. A $100,000
suite in 1990 becomes at Golden State or Madison Square Garden $2 million. That’s sort of the top
price right now, somewhere on that $2 million range. So there’s fewer buyers because the numbers are higher,
but then they created all these alternative options. There’s so much more flexibility.
There’s so much more ability to not feel like you’re just in a private, closed suite. And so, they’re very communal and much more social. The energy that we’re seeing from people that are
having those experiences has been really positive. The lease is dying. Ten years became seven
years became five years became one year. Now they’re suite sharing, and now, they’re reselling their
own suites with or without the permission of teams. And they’re still spending the same amount of money, but they’re reallocating that money into
different sports and different locations. You’re going to see corporate suites
rented out like hotel rooms. It’s no longer going to be a leased product.
It’s going to be a commodity. Then 2009 hit, the financial crisis hit, and
we were coming off of ten-year suite deals, probably about 80 of them at STAPLES
Center at that time when that hit. We were just opening up LA Live during that time,
two hotels, so I think that has changed. And then just recently as you’re
all aware of, the new tax laws. So it’s changed. There’s been ebbs and flows. But at the end of the day, I think that we’ve been
successful because we’ve used our assets. We used to lead with food, and it was about the menu,
and it was what we were going to serve. And the way the world has shifted is we lead
with experience, and so much of that is service. So the service has become, to me,
more important than the food itself. It’s such an important element of the entire
experience. It’s the world we live in today. From a hospitality perspective,
think of the power of food. Food has this incredible power to
bring human beings together and to pause for a moment and to truly celebrate. Now that food has a price tag associated with it. So we need to be very mindful and price it accordingly. But we also need to absolutely lean in to that value
and that benefit of the celebratory power of food. So for us, value is price plus
something really, really special. And it’s actually making that something
special exactly what our guests want. Today, we’re bringing all these great local
and hyper-local, iconic concepts and chef-operated concepts to the premium areas, because the premium guests want the really fun food. And they don’t want the super serious food all the time. Luxury is not a function of price.
Luxury is a function of service. If you want to get a renewal on a suite, give them
good service. Don’t worry about the price. They will pay the price if they believe they’re getting
the value. And the value comes from service. There are times when people are in
concession stand lines for 45 minutes, and you need to try to figure that out. There are times when they’re stuck in parking
structures for 30 to 45 minutes after they leave. We need to figure out how to make that
seamless as venue operators and how to make it so smooth that they don’t even notice
that they’re going through a security kiosk. While we may think that it’s what we’re supposed,
we should be doing on a daily basis, that’s value. Teams are trying to do anything they
can to increase the fan experience. So the entire facility now is becoming gentrified. They’re figuring out clever ways to provide
sort of an upgraded premium experience, while they’re upgrading everybody. The seats are wider. They’re more comfortable. There are ways you can order food through cell phones.
That’s kind of a premium experience. There’s more restrooms. There’s more
women restrooms than men restrooms. They’re starting to understand the nature of the fan. Now we have multiple kitchens and
multiple pantries and cooking everywhere, and it just gets more complicated when you have so
many kitchens and such a complicated infrastructure, but it’s what really gives you the reason to come. It gives you the ability to do amazing
things and make magic happen. Premium seating is everywhere. It’s every sport. About one-third of premium
tickets are sold in the concert marketplace. And now, it’s becoming generalized, where
I think the entire stadium becomes premium. My view looking forward is that in a way, I was
thinking how premium is really relative to something. If it’s just a regular seat, okay, that’s great.
But if you do anything a notch above that, why isn’t that considered a premium of some level? So my view is that there’s maybe
no premium, or there is all premium. Really focusing on that experience, that’s how to me,
I and I think our guests are defining value. At the end of the day, you think about the
drop in attendance at a lot of the venues, all across sports, what’s driving that? What is that?
I don’t think it’s just really the couch. We’re not adapting fast enough to create any kind of
experience that these fans really are interested in. It’s not that they’re not watching sports. In fact, maybe they’re even watching
sports more, consuming it differently. They want meaning. They want events.
And that’s what’s happened in the United States. Well, the premium seat
marketplace realized that right away. We created a space within our home office to
really push the envelope, to test and try things, whether it be cooking equipment, whether it be
technology, whether it be wayfinding or digital signage, or in some cases, even merchandise
and retail offerings. We’re using technology for the
optimization of the experience. And so for the premium industry to capitalize on that hospitality for optimization versus
just cool gadgets is a game changer. One of the things that I have
learned and will always believe is if you don’t have the right people and
the right processes in place, it doesn’t matter how much technology you have. The day technology and touch will be in perfect balance
is the day we don’t talk about them anymore. Technology is finding its true space in
our world, and what I mean by that is, technology is still talked about as a thing. And we haven’t fully grasped that it can
be and should be absolutely integrated. Today as a venue operator, analytics are incredible.
It’s an incredible tool for us to figure out alright, where are our lines? Where our the pinch points? Do we have enough of this food at the concession
stand because it’s coming up on halftime? Are the parking lots full?
Can we direct them to other places? But when I talk about analytics, I want to
know what’s taking place in that venue on a nightly basis, sometimes on an hourly basis. I want to know how many people are
in the building in increments. I want to be able to follow their path of travel. I want to know if I can push out certain things to
them to direct them to various areas of our venue. And that’s why I believe in the importance of analytics. In the next year, they’re going to be so important
to people such as myself as a venue operator. Our premium guests will have the
option, if not part of their relationship, to get driven to and from from autonomous
vehicles in five years from today. There’ll be so many benefits to society, but it’ll also be just such a premium experience,
being able to go to and from in this vehicle. It’s going to change the traffic flow. It’s
going to change the parking situation. And so, it’s going to make the experience
for everybody else better as well. I think in ten years, we aren’t going
to be talking about physical spaces. I think we’re going to be talking
about a sense of community. We’re going to be looking at the gathering aspects, and those gathering aspects may
not be confined to a physical space. And we will learn so much more about the
people who are at those gatherings that what we design and what we do for those
individuals will be so incredibly customized, I can only dream of it today. That’s how
cool and interesting personalization is going to be in the future in wide open spaces. There are going to be fewer suites,
and the stadiums are going to get smaller. But the biggest thing is going to be sports gambling. It’s going to end up being a casino.
People will come there 24/7. When that happens, the concession
companies will be there. When that happens, the business
will become office parks. And then, you’re going to see health clubs and buildings with entertainment districts built
around them, as they are now. A state-of-the-art facility is what a cathedral
was in the 1900s, and that’s going to go on. I don’t know that I’m right. You’re
always guessing when you’re right, but it just makes sense that you can’t build
a $2 billion dollar, privately-owned building and use it 13 times a year. They’re really being designed with a much more
kind of broad understanding of a social consumer and how do we build spaces that
are really based on the user need. Where we’re going in the future is how
do we design for ultimate flexibility.