Two of the country’s most iconic sports teams are now partners in selling beer, sodas and hot dogs.
The New York Yankees and Dallas Cowboys announced Monday they will be part owners of Legends Hospitality Management, a new company that will control food and merchandise sales at the teams’ new stadiums and other venues.
Legends, created with financial backing from Goldman Sachs and Dallas-based private equity firm CIC Partners, will seek to address common fan complaints of long lines, cold food and poor selection.
“Customers and fans want value,” said Legends CEO Mike Rawlings, a former president of Pizza Hut. Value is quality and price, and we’d like to get that quality higher.”
Rawlings said the company, to be based in Newark, N.J., will institute a new “progressive cookery” system that prepares food closer to when orders are received, thus preventing items like hot dogs from sitting out for long periods of time.
“Our food’s going to be fresher and better,” Rawlings said.
The Yankees and Cowboys each will have about a one-third ownership share of the company, with the rest split between Goldman and CIC. To get the company off the ground, Goldman provided $100 million in financial backing, Sports Business Journal reported.
The formation of Legends follows a trend of sports teams branching out into other areas of business. The Yankees are involved in several other off-the-field ventures, including the YES Network, which carries most of the team’s games. The rival Boston Red Sox, meanwhile, also started their own regional sports network and are part the Fenway Sports Group, a conglomerate that includes the ownership of minor league sports franchises and a NASCAR team. Revenue from these ventures is often invested back into teams on the field but is not always included when leagues are determining the salary cap or revenue sharing.
Under the terms of the agreement, Legends will pay the Cowboys and Yankees a rights fee to operate in their stadium, which would be set at a market rate. That fee would be subject to revenue sharing, but any revenue derived from business with other teams would not.
“While the deal being brokered is currently between the Yankees and Cowboys, it does create another diversified asset for both franchises to leverage outside of the MLB revenue sharing system for the Yankees and the salary cap for the Cowboys,” said Maury Brown, a writer and editor of the Business of Sports Network. “It further shows that no matter how hard sports leagues work to level the playing field, low-revenue making franchises will always be fighting an uphill battle with the ’kings’ of their respective leagues. In this case, it’s the Yankees and Cowboys.”
The concession business is a competitive one, with a host of companies, including Aramark, Centerplate and Delaware North, vying for business. The Yankees had used Centerplate for nearly 40 years before announcing it would drop the company after this season.
Both the Yankees and Cowboys will open new stadiums next year, each at a cost of more than $1 billion. Fans at the new facilities are expected to be some of the most upscale in sports. Both teams have advertised prices for tickets and suites that are some of the highest in sports.
“We want to be able to take every dollar and give the biggest bang for the buck that [fans] can get,” Cowboys owner Jerry Jones said.
Industry experts said the new company would be smart to focus on the more premier sports franchises.
“They can create an enterprise that focuses on the high-level clubs,” said Marc Ganis, president of Chicago-based consultancy SportsCorp. “If they focus on the highly valued and high-volume franchises, then I think it will be a great success.
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