Breakaway: faced with mounting losses, the operators of the Office Depot Center get aggressive about new attractions

South Florida CEO, Sept, 2004 by Rochelle Broder-Singer

* If you operate a large arena whose main attraction is a low-draw sports team that loses more games than it wins, looking for new ways to turn a buck becomes a priority.

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So Panther Hockey LLP, which operates the Office Depot Center and owns the Florida Panthers National Hockey League franchise, decided to take back control of the venue from an outside manager and aggressively pursue more non-hockey events.

"The facility was under-marketed because we did not look at ourselves as an entertainment company--We looked at ourselves as a hockey company," says Panthers chief operating officer Michael R. Yormark, who joined the team's management in October 2003.

Average attendance at Panther games was up 3.3 percent last season, to 15,936--in a 19,600-seat arena. Estimates put the team's losses as high as $17 million a year. Yormark reorganized the Panthers as an entertainment marketing company in order to diversify revenue. Part of that reorganization was letting the team's contract with Philadelphia-based Sports Management Group lapse this year. The company had been managing the center and programming all non-hockey events there.

Yormark says the center is on track to host 165 non-hockey events this year, up from 123 during 2003. Although those events are admittedly lower-margin--the ODC charges a facility rental fee but no percentage of ticket sales--the additional events do not significantly increase the center's cost of operations. Yormark says. Money from concessions and parking, among other things, also adds to the bottom line.

The real crux to the strategy is the added draw for the center's sponsors and private suite owners: The concerts and other events give sponsors more exposure to more consumers, while suite owners gain admission to all the events.

Kathleen Davis, executive director of the Weston-based Sports Management Research Institute, which advises the center and more than 30 venues nationwide, says, "They've done a very successful job of trying to incorporate the sponsorship investment as actual real estate."

Yormark sought out new sponsorship revenue through promotions with companies such as Coconut Creek-based Carls Furniture, which furnished the center's patio areas that have been renamed "Carls Patios."

Right now, the team is $2 million ahead of last year's total-season sponsorship revenues and hockey season has yet to begin. Yormark credits the revenue boost to having a single organization selling sponsorships to all events. "To companies that we're working with, it creates a much more streamlined approach," he says.

Hockey fans are responding to the changes as well. Yormark increased Panther ticket sales staff from eight to 50. Season ticket renewals are at 82 percent--the highest level in five years--and sales so far are $1.5 million, higher than in seasons past, though Yormark declined to say by how much.

The Panthers are targeting higher-end consumers with an option between suites and season tickets dubbed the Private Club. For $7,000 to $8,000, members get a seat at every center event, VIP parking, and food. So far, the center has sold 300 of the 400 seats in the club, according to Panther officials.

Sports Management Research's Davis says the move is "in line with the general trend of tapping into the folks that have the money. Obviously the high-end patron is where the discretionary income lies."

Still, luring more well-heeled consumers to the center will not be any easier as the start of hockey draws near. A Sports Illustrated magazine poll this year indicated that 40 percent of Florida sports fans said they had no favorite hockey team, and only 16 percent listed the Panthers as their favorite. The NHL also faces a possible lockout when its contract with players expires on Sept. 15.