For Redskins profits, sky box is the limit

December 26, 1993|By Jon Morgan | Jon Morgan,Staff Writer

The proposed Washington Redskins stadium at Laurel, loaded with an unprecedented number of cash-generating sky boxes and luxury seats, could transform the team into one of the richest in sports with revenues of $100 million or more a year, according to unofficial projections.

In fact, if the team maintained its sellout tradition in the new facility and could lease all of its luxury seats -- two big ifs -- it could make almost as much money at the privately funded Laurel stadium as at the publicly funded one proposed for an expansion team in downtown Baltimore.

But the risks are high with do-it-yourself financing, and, say Baltimore football boosters, more sky boxes could be added to the proposed downtown structure at Camden Yards, increasing its profitability.

Industry dogma, and history, suggest that privately funded football stadiums never pay for themselves and can threaten the financial health of the team. This is because the structures are costly and are limited in their ability to lure events other than the 10 NFL home games each year.

But luxury seats, a relatively new phenomenon in sports, have altered the dynamics. They've grown increasingly popular with corporate customers looking to impress clients. And the league's revenue-sharing agreement with players and between teams excludes most luxury-seat revenue.

The Redskins have not released their income estimates or ticket prices for the proposed stadium, making an accurate prediction about its profitability impossible. But using a combination of league averages and educated guesses about likely costs and revenues, The Sun assembled a projection of how the team's ledgers may be affected by the new stadium.

Shown the projection, Stuart Haney, the Redskins' corporate secretary, said: "The numbers are so far out of whack they are not worthy of comment."

He declined to specify any particular item, citing the team's status as a private company not obligated to share financial information. He declined also to say even if the team anticipates a profit at the new stadium.

"No one will ever know the dealings of a private company," he said.

But some revenues are predictable. For example, assuming an average ticket price of $36, slightly more than the Redskins' current average, and the seating capacity of 78,600 that team owner Jack Kent Cooke says he plans, the club would probably take in about $28 million a year in home-game ticket receipts.

Of that, about $10 million a year would have to be shared with visiting teams; but another $6.4 million could be expected from away games. This leaves the team with about $25 million a year in gate receipts.

Even that, however, would be dwarfed by the real moneymakers at the proposed complex: an unprecedented 331 sky boxes and 15,000 "club seats," a special level with access to exclusive lounges and amenities.

Of the stadium's total capacity, 19,300 seats would be in either a sky box or on the club level. That would leave 59,300 regular stadium seats, only about 3,000 more than the team's current home, RFK Stadium in Washington.

No stadium has been built with so many premium seats -- the Dallas Cowboys currently have the most sky boxes, 268 -- and experts in sports marketing say it would be a stretch for the team to sell them all.

But the proceeds of even a partial sellout would be bountiful. At an average annual rent of $73,333 for a sky box and $1,201 per club seat, the price Baltimore's stadium planners had projected for the Camden Yards football stadium, the new Redskins' park would generate up to $42 million a year from luxury seating.

Even a 50 percent occupancy rate would generate $21 million, assuming the league, following past practice, would allow the Redskins to retain for stadium financing the portion of club-seat revenues usually shared with visiting franchises.

And prices could be much higher.

"It's a new stadium, state-of-the-art facility, a high-priced East Coast market. I would suspect the suite prices could be well over $100,000 and could approach $200,000," said Bill Dorsey, editor and publisher of Skybox magazine.

Those kinds of leases would boost the annual take to more than $60 million a year from sky boxes alone if they all sold out, an unprecedented achievement in a league where the average stadium has 90 sky boxes and often fails to lease them all.

Joe Robbie Stadium, home of the Miami Dolphins, was built in large part upon expected premium-seat revenues. But the sky ** boxes never have sold out, and the team owners have struggled to make the project work, even after selling a portion of the stadium to investors.

"Premium seating has had mixed reviews," said Philadelphia Eagles owner Norman Braman.

He recently announced plans to study building his own stadium. He would have the advantage of no debt service on the team and ready infrastructure at the sites he's considering near the team's current home.

"I don't know if it can work. We are going to try and find out," he said. His preliminary plans call for 125 sky boxes.

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