BONHAM AND HINCHEY: Corporate suites at sports events serve a purpose

By Dean Bonham & Don Hinchey

Published November 24, 2007 at 12:05 a.m.

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For many people, attending sports events is a way to flee the office. For others, it's a way to profitably extend their business activities, as is the case with corporate hospitality suites at virtually every sports facility and marquee event.

Corporate suite accommodations have risen to a level of extraordinary lavishness. To outside observers, they may seem like tailgating on steroids. They can range from $30,000 annually for rather modest accommodations to more than $180,000 a year.

According to sports marketing expert Phil Schaaf, author of Sports Inc.: 100 Years of Sports Business and Sports Marketing: It's Not Just a Game Anymore, it wasn't always this way.

"In the early days," Schaaf said, "sports marketing meant nothing more than selling tickets and some billboard space inside the stadium. But as the 'skybox,' or luxury suite, became an endogenous part of facilities (the first ones were at the Astrodome, which opened in 1965), corporate hospitality and sponsorships evolved organically . . . though it took until the mid-1980s for it to become a full-fledged industry, the key event being the 1984 'Ueberroth Olympics' in Los Angeles.

"As facilities installed luxury boxes in the late 1970s and early 1980s, this type of seating did two things. It put a new category, and finite amount, of 'super premium seats' into a facility . . . which gave a sense of separation, or privacy, to the client, and it forced teams to seek a new type of customer - the ones who could afford it . . . essentially, corporations."

And what led corporations to take the bait? "Having access to a major sports property can be a great investment," Schaaf said. "Hospitality is the adhesive that brings people together. It's something that really bonds people."

The arrangement works well for sports teams, too, he said.

"Properties make a lot more money cultivating relationships with companies like Pepsi, H-P and GoDaddy.com than they do selling individual ticket plans to John and Jane Doe. In many ways, the target customer has become the corporate client. This transition of emphasis never would have happened without effective hospitality that worked within the context of diverse events such as golf, tennis, auto racing and the stick and ball sports."

An interesting offshoot of this luxury suite phenomenon has been the sale of fractional suite memberships, which enables smaller companies to partake in the glow of corporate hospitality without having to mortgage the company's future for the privilege. Sports Shares, a Greenwood Village-based firm, provides its members with access to luxury suites at multiple sports and entertainment venues in Denver.

Its management team includes CFO and co-founder Tyler Tysdal, former Denver Broncos wide receiver Ed McCaffrey, who is the managing director, and Vice President of Sales Todd Lindenbaum.

"In business," Lindenbaum said, "relationships are everything. When you have the option to engage your prospects and clients in a let-your-hair-down environment such as a corporate hospitality suite at a sports event, it really helps deepen the connection. The focus is not necessarily on making a sale immediately but getting to know your prospect better so you can build a long-term relationship.

"Fractional suite membership works for venues by making their suite inventory more accessible to a larger universe of businesses and individuals. At the same time, it allows companies access to multiple venues in any given city on a year-round basis. It also lowers the entry costs associated with luxury suite access, enabling many businesses that may have been excluded to fit it into their budget."

Schaaf agrees. "The great news about fractional suite membership is that it gives smaller firms, and their employees, a chance to participate in big league sports, and that's a positive development."

The Bonham Line: Corporate hospitality may seem like an extravagance, but it serves a valuable purpose. We all enjoy being treated special, and with corporate suites we're more likely to remember it and reciprocate when the opportunity arises.

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