Expansion check point Cities begin to sell more than themselves

July 01, 1993|By Jon Morgan | Jon Morgan,Source: Van Horn AssociatesStaff Writer

NFL expansion -- one of the longest-running dramas in sports -- opens its box office today.

In Baltimore and at least two other cities vying for a franchise, municipal leaders and investors will begin taking deposits on more than $200 million worth of pricey club seats and sky boxes in an effort to demonstrate the football fanaticism of their communities.

Through the campaign, the league will get a chance to shift its attention from presentations at its New York headquarters to actual fans. Even in an era of multibillion-dollar TV contracts, ticket buyers still make a sport a success. And increasingly, it is the high-rolling clientele in the premium seats that determine the financial winners and losers.

The two-month sales effort that begins today will be the first tangible show of community support other than pep rallies, preseason games and lobbying. It has been a long time coming: Although NFL expansion officially began with a 1990 vote of team owners, it had been discussed for years before that.

In addition to Baltimore, four cities are seeking one of two franchises to be awarded this October: St. Louis, Jacksonville, Fla., Charlotte, N.C., and Memphis, Tenn.

Only premium seats will be sold, but from that effort the league will draw conclusions about the city's hospitality to football.

"I think it's going to show great enthusiasm and support for the game -- we eagerly await the results," said Joe Ellis, NFL director of club administration. "But it's just one of several factors" that will be considered in awarding a team.

Though important to all the cities, the exercise is vital to Charlotte. That city also is peddling one-time season-ticket fees that will drive the cost of attending the inaugural season there to an average of $2,500 a seat. The money is needed to finance stadium construction.

The premium seat sales campaign -- which is technically voluntary, but practically a requirement for each city -- already has shown signs of winnowing the candidates. Jacksonville and Memphis have delayed the start of their campaigns, raising questions about their viability.

In Jacksonville, prospective team owners are seeking enhancements and rental concessions on the city-owned Gator Bowl. Negotiations, after seeming to snag earlier in the week, appeared to be moving again yesterday. Memphis' investment group has said it needs additional partners to continue the effort.

In Baltimore, city leaders today will open a special NFL headquarters at the Inner Harbor -- a command center for reclaiming the city's lost NFL heritage located at the symbol of its renaissance. The storefront, carpeted in AstroTurf and decorated with Baltimore Colts memorabilia, is on the second floor of the Gallery at Harborplace.

Maryland National Bank planned to announce today a lending program for club seat buyers. The bank will offer fixed-rate installment loans and variable-rate lines of credit to credit-worthy borrowers. Applications can be obtained from a MNB branch or by calling (800) 222-3222.

Club seat and sky box buyers will have to put down deposits equal to half the first year's rent. The money will be put into an interest-bearing account at Maryland National, the escrow agent, and will be refunded if a team is not awarded to Baltimore.

There were hints that several of the competing cities would manage partial sellouts today. Charlotte claims already to have obtained "commitments" for all of its sky boxes and thousands of queries about its seat fees. Jacksonville and St. Louis also were said to be close. Organizers of the effort in Baltimore won't disclose their tallies.

"We're not going to play that numbers game," said Herbert J. Belgrad, chairman of the Maryland Stadium Authority and coordinator of Baltimore's NFL bid.

"I believe that based on the tradition of football here and the demographics and the facility and the super fans that we're entering the homestretch No. 1," Belgrad said.

Although they were prohibited by the NFL from accepting deposits before today, organizers of Baltimore's bid have been at work for weeks targeting likely buyers and making inquiries. Mailing lists were culled from old Colts season ticket-holders, demographic profiles, business surveys and other sources.

Club seat prospects get special mailings and applications. Likely sky box customers receive personal visits from members of the expansion committee. About 100 "hot" prospects are getting a football autographed by former Colts greats Lenny Moore, John Unitas and Art Donovan. The ball comes in an AstroTurf-lined box labeled "Now that you've got their autographs, can we have yours?"

Apart from expansion, the seat campaign demonstrates how important luxury accommodations have become in sports. Once a curiosity, they have grown into one of the fastest growing sources of revenue, said Paul Much, a sports finance consultant with Houlihan Lokey Howard & Zukin in Chicago.

"It's extremely important," Much said. Unlike revenues from television broadcasts and ticket sales, the rent from luxury seats is not split among team owners -- it goes right to the home team's bottom line.

Sky boxes appeal primarily to corporate customers. Club seats, their less expensive cousins, are finding favor with small- and medium-sized companies as well as individuals willing to pay a premium. Club seats are roomier than regular seats and have access to the same lounges as sky boxes.

A PREMIUM ON SEATS

Leases on premium seats are a big moneymaker for teams in all four major sports. Here is the money they bring in, per season, based on a 1992 study:

League ... ... ... ... ... ... Premium seat revenue

Baseball ... ... ... ... .. .. $82 million

NBA ... ... ... ... ... ... .. $70 million

NFL ... ... ... ... ... ... .. $113 million

NHL ... ... ... ... ... ... .. $65 million

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