http://www.bayarea.com/mld/cctimes/business/6923923.htm


Living in the lap of a luxury box
By George Avalos
CONTRA COSTA TIMES

SOURCES: Oakland Athletics, San Francisco Giants

The recession that has ravaged the Bay Area has yet to darken the luxury suites offered by the Oakland Athletics and the San Francisco Giants.

Despite the economic downturn, officials for both baseball teams, which are battling East Coast teams in the playoffs, say the suites are being snapped up at a steady pace. The A's have sold the great majority of their luxury suites at the Network Associates Coliseum. The Oakland team was enjoying strong demand for its first two divisional playoff games, while the Giants have been sold out all season, and the playoffs, with their luxury suites at Pacific Bell Park.

"Our suite business here in Oakland has grown every year the last seven years," said David Alioto, vice president of sales and marketing with the Athletics. "We're growing about 20 percent a year in suite sales."

The A's have about 130 suites that they can offer. About 40 are specifically for baseball and 90 earmarked for football, as a result of the re-construction of the Coliseum to accommodate the return of the Oakland Raiders in 1995. But the A's can use the extra football suites when they have spillover demand.

The Giants have 68 luxury suites, which all are sold out. The team has sold 66 of the suites to customers via multi-year contracts. Two of the suites are sold to a variety of clients on a game-by-game basis.

"The suite sales have a significant impact on our bottom line," said Russ Stanley, vice president of ticket service and client relations for the Giants. "It's a pretty hefty percentage toward our overall revenue target."

Neither team would be precise about how important are the luxury suites to their business operations. But in both cases, they can play a huge part, said Hadrian Shaw, a Monterey-based sport business consultant who runs Shaw Sports Business.

"Luxury suites typically can account for 10 percent of a baseball team's revenue, as opposed to the 25 to 30 percent they get from general admission ticket sales," Shaw said. "Luxury suites are definitely an important revenue stream. And as player salaries continue to climb, especially in baseball, owners are looking for any way to supplement luxury revenues."

It was no accident that during the stadium construction boom of the 1990s, luxury seats became key assets for teams.

"Every new stadium, or a stadium addition, is completely configured with an eye to providing more luxury suites, more club seats, more specialized and expensive seats," said Rodney Fort, a professor of economics at Washington State University in Pullman, Wash.

And even though the Oakland Coliseum was an expansion and not a new stadium, much of the development was undertaken to add a number of luxury suites for the Raiders.

"Luxury boxes are high-profit items for a baseball team," said Stephen Shmanske, a professor in the economics department at Cal State Hayward. "Teams can make a lot of money on them, much more than it costs to build and maintain them."

The economic downturn that has ripped through the Bay Area has been especially brutal on Silicon Valley and the San Francisco area. At first blush, the recession would seem to make luxury suites at a sports complex a likely target for cost-cutting.

Yet even at Pacific Bell Park, no suite holders have given up their luxury boxes altogether. At worst, a few holders have attempted to find other companies to share the rental costs and the number of games they attend.

"We have seen a few companies pick up partners to share the suite," said Amy Quartaroli, director of luxury suites for the Giants. "But they don't let go of their suites entirely. Sometimes they find another company they are doing business with, or have an affiliation with. They might each come out for 40 games or so. But there hasn't been a drastic turnover."

The mix of companies that rent suites at Pac Bell Park has shifted a bit in a few cases, Stanley said.

"A couple of tech companies have cut back," Stanley said. The companies that have come in to share suites during the downturn are in more traditional, non-tech industries, he said. Stanley added, "If you look at the top 100 companies in the Bay Area, most of them would be on our roster of suite holders."

In Oakland, the suite holders at the Coliseum reflect the economy of the East Bay, which has fewer tech companies than Silicon Valley and San Mateo County. Most of the public companies in the East Bay also tend to be smaller than those in San Francisco or Santa Clara County.

As a result, Oakland A's executives have taken a different approach to marketing the Coliseum's luxury suites from the way the Giants market Pac Bell Park's suites.

"A lot of our customers will buy a full-season suite package, but there are small businesses that have smaller packages," said Alioto of the A's.

Some companies will purchase three- or four-game packages for a luxury suite in Oakland.

"That's where our niche market is, in small- to medium-sized companies," Alioto said. "We still have the big corporations that want suites for all of the games. But we also have many suites filled with small businesses."

In some ways, the marketing of the suites mirrors how general admission seats are hawked to Oakland A's fans.

"We're an affordable option," Alioto said. "People know they can come over here and don't have to plunk down $100,000, $200,000, or $250,000 for a full-season package."


LUXURY SUITES

PACIFIC BELL PARK SUITES

The Giants have suites with 12, 16 or 20 seats. The prices typically range from $5,000 to $9,000 a game.

NETWORK ASSOCIATES COLISEUM SUITES

The Athletics have several pricing plans. Here are per-game fees:

"¢ 12-seat suite, $650

"¢ 14-seat suite, $950

"¢ 18-seat suite, $950

"¢ 20-seat suit, $1,100

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