UA Athletics Skittish About Skyboxes, Naturals

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(Click here for a graph depicting the companies who leased skyboxes at Baum Stadium.) 

The University of Arkansas athletic department is worried the rookie Northwest Arkansas Naturals will steal away its skybox patrons.

Citing “a competitive advantage exemption,” Scott Varady, UA’s Associate General Counsel, and the athletic department denied a request made under the Arkansas Freedom of Information Act for the names of individuals and/or corporations that have licensing agreements for suites at Baum Stadium.

The UA did release the contract names and amount of the agreements for luxury boxes at Reynolds Razorback Stadium, Bud Walton Arena and all of its tailgating spots. The entire lists of contract names of all suite agreements at the football and basketball venues are on Page 24.

All Razorback venues – suites and pre-game tailgating – are heralded by executives as opportunities to entertain and foster relationships with customers and employees, as well as a place to kick back and enjoy the best of the state’s favorite sports teams.

The Bank of Fayetteville president and CEO Mary Beth Brooks said there is no better space to entertain customers, colleagues and friends than at a Razorback game.

All told, there are about 100 parking spots plus five gazebos and a pavilion for pre-game tailgating events, and there are 208 luxury suites at the three big venues.

The UA did release a list of suite agreements with Baum to the Business Journal in 2004 (see chart).

Total revenue generated by suite agreements for fiscal year 2007 was $3.97 million, or about 7 percent of the $56.31 million total athletic revenue. About $2.75 million of that was from the football suite agreements, which was up 49 percent from $1.84 million in fiscal 2006.

Of the 2007 revenue, $405,000 was generated by suites at Baum. Baum’s 2007 suite revenue was up 173 percent from $148,000 in 2006 because 20 suites were added for the 2007 season.

The cost of those additions was estimated to be about $3.5 million.

Cold Competition

The FOI denial came despite the fact that both UA athletic director J. Frank Broyles and Naturals general manager Eric Edelstein have publicly said there are patrons clamoring for suites at their venues.

On June 3, the Arkansas Democrat-Gazette reported Broyles as saying about 100 individuals or companies wanted suites at Baum and about 400 were waiting for suites at all three venues. Many executives have told the Business Journal they would love to have a suite at any of the venues but, “the list is too long.”

The UA athletic department does not maintain a waiting list for suites. Varady said the Razorback Foundation might, but it would not be obtainable via FOI.

Little Rock lawyer John Tull, who is frequently called an expert on Arkansas FOI, said he understands the UA’s argument, but he doesn’t see the Baum list as “proprietary.”

“It’s not a slam dunk,” he said. “I don’t think that’s something that gives true competitive advantage.”

The publisher and editorial board of the Business Journal had not made a decision as of press time whether to seek a judgment in court regarding the FOI.

“We don’t want to compete with [the UA] in any way,” said Edelstein.

Kevin Trainor, associate Athletic director for external affairs said, “From the get-go, the Naturals have been very open in working with the university and we appreciate that relationship and look forward to continuing that relationship.”

To the extent possible, the two teams are also trying to avoid conflicts over scheduling. Edelstein and UA coach Dave Van Horn have shared their schedules in an effort to avoid game overlap.

So far, the teams will only play six games on the same days next season, three of which will take place at the same time. The only weekend night games to coincide will be on May 9.

The Razorbacks’ season begins the last week of February, with regular season play ending in mid-May.

The Naturals start their season April 3, with the home opener on April 10. The team wraps up the regular season at home on September 1.

There are 25 suites being built at Arvest Ballpark. The 480-SF areas, which include seating for 14, a television and a restroom, will cost $35,000 per year with a five-year contract (a $175,000 commitment). Only two of the suites are officially committed. One will be the team owner’s suite and the other will be for Arvest Bank Group.

Of the remaining suites, 11 or fewer will be up for grabs and might be subject to a lottery.

Although Arvest bought the naming rights for the Naturals’ new stadium for an undisclosed amount, the bank is still invested in supporting the Razorbacks.

Arvest has had a suite at Baum Stadium since 1996 and it picked up a second luxury box in the 2007 season.

Donny Story, president of Arvest Bank-Fayetteville said the suites at Baum Stadium offer one of the best values around for entertaining clients, customers and potential customers.

Tailgating Traditions

Tailgating has long been a part of Razorback games at War Memorial Stadium in Little Rock. But until the 2006 season, there wasn’t an ideal spot near the action for pre-game partying in Fayetteville.

Then came the Gardens, which gave Razorback boosters access to extra tailgating space south of Reynolds Razorback Stadium.

The 6.45-acre grassy area just north of lot 56 includes about 100 spots, which fans can lease from the UA for $800 each per season.

Of that amount, $500 is a required minimum donation to the Razorback Foundation, while $300 covers “terms and conditions,” said Matt Shanklin, UA associate athletic director for marketing and licensing.

Also included in The Gardens are five gazebos and a pavilion, all of which range in price depending on which opponent the Hogs are facing.

For example, the pavilion is $1,500 for either the North Texas or Florida International games. It goes up to $2,500 for the Kentucky, Auburn and South Carolina contests. The gazebos are smaller in size and price tag, ranging from $500 to $750.

But it’s all money well spent, Brooks said.

“I just think it’s a good way to network with customers and it’s a good way to get everybody some food and entertain them,” she said.

The Bank of Fayetteville leased the pavilion for the Arkansas-Kentucky match Sept. 22 and mailed out invitations to the event.

Brooks expected 200 to 300 people for the pre-game festivities, which featured margaritas and catering by The Flying Burrito Co. of Fayetteville. She estimated the party’s price tag to be about $4,000 to $5,000.

Although the main idea is to let the good times roll, there will likely be some business mixed in with the revelry. The game is a natural choice for showing appreciation to customers and associates, “and I guarantee you we’ll end up with some extra business out of it,” Brooks said.

All that fun can be hard work, too, said Jim Taylor, president of First Security Bank for Northwest Arkansas. The bank leases five spots in the Gardens and will be at all of the home football games.

“Entertaining is a serious business for us and we use it as a business development tool,” he said.

The bank also sees tailgating as a community service, “because Razorback sports are such a great part of the community,” said Annette King, marketing director for First Security.

The events are “a good mix of customers as well as prospects,” she said. Although the bank employees aren’t going to hit anyone up for business unsolicited, they will be available to talk on a one-on-one basis with existing and potential customers should those people have any questions.

Banks aren’t the only ones getting in on the football festivities.

“We are the kings of tailgating,” said John Bliss, co-owner and managing partner of Buffalo Wild Wings in Fayetteville.

Bliss said his crew usually grills up about 2,000 chicken wings – and sees about that many visitors – at every home game. The games are a good chance to have fun with customers and employees, he said.

He estimated the company spends about $3,000 for each game, but said the investment is worth it for the good will it generates and as a way to “get our names out there.”

John Ervin, a CPA and principal of Ervin & Co. CPAs in Fayetteville, said it’s possible that up to 50 percent of the cost of licensing a tailgate area could be deducted as an entertainment-related business expense.

Also, a certain percentage of the price of licensing a suite is deductible because it is considered a contribution to the Razorback Foundation.

The foundation determines how much that percentage is, and the suite-holder can deduct up to 80 percent of that amount, Ervin said.

Suite Sensation

The new tailgating spots at the Gardens brought in $40,350 last year, according to the UA’s filings with the Arkansas Department Higher Education.

That’s just a fraction of the amount generated by luxury suites at the three main venues. Over the last ten years, revenue from suites has increased 347 percent, from $889,289 in fiscal year 1997 to last year’s figure of $3.97 million.

Suites vary in price, size, and length and terms of lease. Skyboxes at Baum Stadium are $15,000 per year, with a five-year lease and include the price of tickets.

Most of the skyboxes at Bud Walton Arena run between $24,806 and $13,230 a year. The single largest and most expensive is that of Tyson Foods Inc., which is $37,485. The lease agreements are for a year and the price of the box does not include tickets, which are $20 each.

Luxury suites at Reynolds Stadium are comparable, ranging from $36,000 to $13,500 annually. The largest suite is $49,500 and is licensed to John Tyson. The agreements are for one year and include the price of tickets.

Having a skybox is a great way to show newcomers or visitors one of the area’s premier attractions, said Mary Ann Greenwood, owner of Greenwood & Associates in Fayetteville.

Greenwood has a suite in Reynolds Stadium near the south end zone.

Razorback athletics are one of the amenities that attract people to Northwest Arkansas, she said.

In addition, watching the game from a suite can be comfy as well.

“You get to where you like the air conditioning and the heating,” she said, adding that being able to open the windows of the suites provides an opportunity to take in the sounds of the stadium.

Arvest has suites at all three major UA sports venues, totaling $70,500 per year.

“The boxes aren’t just used for employees of Arvest Fayetteville, but are enjoyed by Arvest team members from all of the bank’s branches.

“We also use [suites] for associate appreciation and recognition of teammates who are doing a good job,” Story said.

Jim Lindsey, president of Lindsey & Associates in Fayetteville, as well as a member of the UA board of trustees and of the 1964 national champion Razorbacks football team, is also a long-time UA supporter.

Lindsey has boxes at all three UA sports venues, with a combined value of $51,743 per year. He shares two of those – at Bud Walton Arena and Reynolds Stadium – with Wallace Fowler, chairman and CEO of Liberty Bank of Arkansas.

Though the suites can be good business tools, Lindsey mostly uses them to watch the game with friends and family.

“But most of the people we do business with are also our friends,” he said.