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AEG, Bushnell Among Bidders, Stress Local Ties


November 12, 2012

As the state looks for potential new managers of the XL Center and Rentschler Field, the performance of both venues in recent years has been mixed.

While many economic development officials believe the two sports and entertainment facilities could be utilized more, the number of events and paid attendees at both venues has been on the rise, records show.

But both buildings have also been on a shaky financial footing.

The XL Center, which has been run by AEG Management CT since 2007, has seen its number of events increase 24 percent since fiscal 2009-2010, from 148 events to 184 events in 2011-12. Meanwhile, total paid attendance at XL Center events has averaged 665,000 over the past three fiscal years, while actual attendance was about 690,000, according to a recent report published by Texas consultancy group Conventions, Sports, & Leisure International.

Rentschler Field, which has been managed by Bushnell Management Services LLC since fiscal 2011, has seen its number of events hit triple digits for the first time, going from 80 events in fiscal 2010, to 148 events and 134 events in fiscals 2011 and 2012.

But Rentschler Field has also been running an operating loss for the last three years, including a loss of $100,739 in fiscal 2011.

Management teams at both facilities say they are excited about the opportunity to bid for control of the XL Center and Rentschler Field, and, not surprisingly, say they are best suited for the job.

And if one thing is clear, it's that playing up local ties to Connecticut and Greater Hartford is a key part of each company's strategy to retain management control.

"I think at the end of the day competition is a great thing for the market," said Charles Steedman, the senior vice president and general manager of AEG Management CT. "But I think AEG is uniquely positioned given our global resources we can apply locally."

In a recent interview with the Hartford Business Journal, Steedman made his pitch for why AEG should continue to manage XL Center and take over control of Rentschler Field.

And he was quick to point out that even though AEG is a global company that manages and owns sports and entertainment venues around the world, the Connecticut team is locally bred. Steedman got his start in the business, for example, doing sports marketing at the University of Connecticut.

At the same time, the local AEG team can tap into a global network of experts who can provide advice and help route national events to Hartford, Steedman said. Steedman, for example, has leveraged the help of the Los Angeles Kings' marketing team to promote the Connecticut Whale this season.

As a global company, AEG divisions also book, buy and sell events together and are on the front lines meeting with major agencies that control talent.

"We act locally and think globally," Steedman said. "There are 120 general managers that run venues for AEG. There have never been questions that I had that have gone unanswered from other AEG managers."

Since taking over the XL Center from Madison Square Garden in 2007, Steedman said AEG has shouldered a lot of risk and has had to change the perception of the Hartford market.

Events here were on the decline at the time, particularly as the two Connecticut casinos were becoming popular destinations for performers. Steedman said AEG needed to remind shows that Hartford was a viable market and aggressively worked with agencies and promoters to route events to Hartford. And diversity of events has been the focus.

Since AEG took over, the number of events at XL Center has slowly risen over the last few years with acts ranging from Taylor Swift, Carrie Underwood, Nicki Minaj and Drake to the Barnum & Bailey Circus, gospel shows, and professional basketball exhibition games.

Of course the XL Center continues to play host to UConn men's and women's basketball and the Connecticut Whale.

Steedman said one of the biggest victories was attracting the women's gymnastics Visa Championships in 2010, which was broadcast nationally and served as an economic driver for the city. It also led AEG to create a joint venture with USA Gymnastics for a 40-city nationwide tour following the 2012 summer Olympics. That tour wraps up this month with stops at the XL Center and in Brooklyn.

The business of managing the XL Center is complex. AEG leases the arena from Connecticut Innovations, a quasi-public state agency that in turn leases the XL Center from the city of Hartford. AEG takes on 100 percent of the business risk and pays the city roughly $2.6 million in rent and the state $1.6 million annually in admission tax revenue, according to CSLI estimates.

The CSLI report also estimates that AEG turns an operating profit of about $2.5 million. But after rent and state admissions taxes are paid and capital reserves set aside, the XL Center suffers a total net loss of about $3.1 million.

Steedman said AEG didn't disclose XL Center's financials with CSLI, and that those numbers are based on estimates only. He did say AEG has made about $3 million in capital investments in the property and has put up about $20 million in operating risks.

About 40 percent of the events at the XL Center happen by AEG acquiring an act and paying the artist an upfront guarantee. AEG then must promote the show and sell tickets to make money.

About 50 percent of those deals are profitable for AEG, Steedman said, but without taking those types of risks, it would be difficult to attract shows and events.

The recent Boston Celtics and New York Knicks exhibition game would have never come to XL Center if AEG didn't write a check upfront, Steedman said.

"That is a function of how tours get routed these days," Steedman said.

AEG also attracts events through co-promotions, where risk is shared between AEG and an event promoter, or by simply renting out the XL Center to an act. That model has become much less common in recent years.

AEG also runs the business operations of the Connecticut Whale AHL franchise, which plays 40 games a year at the XL Center.

In terms of the future of the XL Center, Steedman said AEG hasn't made a decision about being a potential equity partner of the arena. And he doesn't necessarily think a new stadium is needed, unless the goal is to attract a professional sports franchise. But he warned, even if a stadium gets built it doesn't guarantee a pro team will move here.

A facelift to the XL Center is probably in order, Steedman said, noting that arena gets cramped when it's sold out since the 16,000 seats are fitted into an arena originally meant to host 13,000 people. Shorter concession lines and more efficient use of bathroom space are two things at the top of the to-do list, Steedman said.

Across the Connecticut River, Bushnell Management Services has been running Rentschler Field for the past two years.

The private company, which is a subsidiary unit of The Bushnell Center for Performing Arts, was created a few years ago as the Bushnell moved to diversify its business and expand its brand beyond Hartford. As part of an effort to ramp up that business, Bushnell has decided to team up with a cadre of Hartford businessmen to bid for the management of both XL Center and Rentschler field.

The company, called The Capital Region Sports and Entertainment Group LLC, includes downtown Hartford parking tycoon Alan Lazowski; Paul Pendergast, who is the former president of the St. Francis Hospital foundation and newly hired chief development officer of the Back9Network; James Carter, owner of Carter Realty; former Hartford Whaler Bobby Crawford, who is the CEO of Champions Skating Centers in Cromwell; Eric Zachs, a managing partner of Bantry Bay Ventures; and Peter Stevens, the president of JCJ Architecture in Hartford.

Michael Fresher, Bushnell's chief financial officer, said the goal of the partnership was to build a local team that had deeper resources and a lot of stake in the future of the city.

"The intention is that they all have an interest in what goes on in Hartford," Fresher said.

The Bushnell actually took over management of Rentschler Field from AEG in 2011, after the state wanted to see more activity at the stadium beyond the half-dozen University of Connecticut football games played there each year.

Since then, Bushnell has attracted more events, increasing the total number of events from 80 in fiscal 2010 the last year AEG managed the property to 134 events in fiscal 2012.

Fresher said the main strategy has been to book smaller events to utilize non-playing field sections of Rentschler Field, including the concourse and club room. These smaller events have included brew fests, carnivals, walk-a-thons and luncheon meetings.

Of the 134 events that took place at Rentschler in fiscal 2012, 120 of them took place off the field. There were only 14 events on the playing field, including seven UConn football games, two UConn scrimmages, and five high school football games.

There were no concerts.

Meanwhile, total attendance at The Rent shot up from 243,881 in fiscal 2010 to 279,803 in fiscal 2011, before dropping off again last year to 241,934, records show.

While the smaller events may not be as flashy as large concerts or other sporting events, which many officials hoped would come to Rentschler, they are a key component to driving traffic to the stadium, Fresher said.

"You can only have a limited number of Springsteen or Rolling Stones concerts come to this market," Fresher said.

Reprinted with permission of the Hartford Business Journal. To view other stories on this topic, search the Hartford Business Journal Archives at http://www.hartfordbusiness.com/archives.php.
| Last update: September 25, 2012 |
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