The name definitely encapsulates the partners’ reputations in their given leagues and by no stretch the status of their owners as well. By the fall of 2008 the New York Yankees, Dallas Cowboys and Goldman Sachs had formed a food and retail company in Legends Hospitality Management LLC. George Steinbrenner’s Yankees and Jerry Jones’ Cowboys will each own 34%, with the rest being owned by Goldman Sachs and CIC Partners LP. Goldman Sachs and CIC will provide financing for the company.
The move was a change for both teams as Centerplate Inc. operated the Yanks Park for 40 years and the Cowboys had operated their concessions at Texas Stadium for the past 20 years. Their entry into the industry was well timed. With the Yankees unveiling their $1.3 billion coliseum and the Cowboys unveiling their $1.1 billion dollar playground in 2009, pair with the fact Legends identified a dozen professional sports venues with food service contracts expiring in 2009. Former Pizza Hut President and managing partner at CIC Mike Rawlings was named the CEO.
Dallas’ new stadium has been hyped like no stadium before and Jones has been quite successful at acquiring numerous and highly lucrative events to his new castle. The Yankees Randy Levine planned to have a “market-rate” rights agreement with Legends. That money made under this “market-rate” agreement will be subject to Major League Baseball revenue sharing. However, Legends’ company profits will not. Thus, the more the Steinbrenner’s and Jerry can book up their venues the greater the revenues and profits Legends can generate, and the more money the Yankees will have in their Duck Tales like payroll pool. Perhaps a future article will cover how this venture impacts the Cowboys in relation to its caps and revenue sharing.
Legends mission is to improve stadium dining by serving fresher food, faster, with Celebrity chefs and locally themed menus, as stated by Rawlings. The deal is not the first of sorts for the Yankees, as in 1999 they merged operations with the NBA’s New Jersey Nets, creating YankeeNets LLC. Also, in 2001 they signed a partnership with the world’s richest soccer club, Manchester United Plc and began airing taped games in 2003.
Sunburst Entertainment Group
By the fall of 2009 the Tampa Bay Rays launched their subsidiary unit, Sunburst Entertainment Group. In the short term SEG plans to double the events held at Tropicana Field. In a consulting role, much like FSG and Giant’s Enterprises, Sunburst Entertainment Group shines to be the go-to source (regionally at first) for sports and entertainment consulting, investment and event management. SEG believes they are able to formally transfer their intellectual capital to become a leading sports and entertainment consulting company.
Part of this expansion strategy was taking a minority stake in the recently established Florida Tuskers, the Orlando franchise of the developing United Football League. Rays President Matt Silverman and executives are eager to draw more concerts, exhibitions, NCAA playoff games, Cirque du Soleil, charity events and eventually Tuskers games at the Trop as well.
Though work had already begun, officially Silver Chalice launched in the fall of 2009. It is a digital-focused division working with clients to create, implement and monetize new media assets online and via mobile platforms. In leveraging a combination of experience, skill sets, and senior-level relationships across various industries to create competitive advantages for clients seeking to grow their businesses in the intersecting worlds of new media and sports entertainment, Silver Chalice is full of potential.
The COO Jason Coyle, was formerly the President of Intersport’s digital media division. In October of last year it announced the launch of BullsTV. It was a logical client relationship with the Bulls and White Sox sharing the same Chairman. Leveraging those teams’ assets should only enhance Silver Chalice’s possibilities. Silver Chalice developed and implemented an integrated digital strategy for the Bulls to include interactive platforms and the aforementioned BullsTV, debuting via bulls.com. Also launched was a full package of mobile offerings for the Southeastern Conference’s SEC Digital Network. With a relationship with XOS Digital in place, their iPhone application climbed as high as the number two paid sports application on iTunes. Silver Chalice also has an office in Boulder, Colorado and a planned downtown Chicago location is in the works.
Notice anything different about Silver Chalice, than the other ventures? After learning more about these ventures, most of them had one common dominator that jumped out at me. Though many of these ventures made a great deal of sense and schematically work very well, the majority of their cash flows still seem related to the same issues of event based marketing and overhead costs. These ventures strengthen their team’s brands and bottom line, there is little doubt there. In relation to how effective they are in generating revenue that is not subject to MLB revenue sharing, some may have greater advantages than others.
The thing I like and find fascinating is the reach and scope potential for Silver Chalice. With their digital platforms and wider distribution probabilities, profits can register quicker than costs. Being less event based and with digital distribution; location, weather and lines are never an issue. And while you can’t serve a Legends sampler platter to the fan watching on his couch, you can serve him fantasy updates, video highlights stats and other interactive content. With other college conferences in the works and a plethora of other avenues to explore, Silver Chalice shall soon be as stated. Giving the White Sox a new stream of cash in bulk up Kenny Williams’ lineup.
It will be interesting over the next few years to see how these how these companies develop and what other MLB or teams from other leagues will do to begin to find their ways of securing additional revenue streams. Regionally these organizations that are more events based are spaced well geographically. Time will tell how competition transpires and the economics of sport continues to evolve.
If anyone has any other resources or information on other MLB, NFL, NBA or NHL ventures, please DM me on Twitter @TylerDJohnson or post a comment!