|
|
Money Pit
Fins Forward March: Dolphins Enterprises CEO Joe Bailey in the locker room at Dolphins Stadium.
In the 40 years since the Super Bowl era began, the National Football League has always viewed South Florida as a prime locale for its championship game. The combination of warm weather, plenty of hotel and convention space and spacious stadiums has resulted in this region hosting eight of the games. Miami Dolphins owner H. Wayne Huizenga wants to capitalize on Miami's championship allure, and he knows his best asset to do that is Dolphins Stadium. Huizenga, who purchased the stadium and the franchise in the mid-1990s, has ordered a reported $400 million renovation of the 19-year-old facility. The three-phase project includes refurbishing luxury suites, replacing the stadium's two Jumbotron-screen scoreboards with multi-million dollar high-definition video scoreboards, and eventually adding hotel, retail and convention space on approximately 270 acres of property around the venue.
Huizenga hopes to convert Dolphins Stadium into an entertainment megaplex that will yield millions of dollars a year in revenue by attracting concerts, sporting events and business conventions.
“We're hoping to host as many events as possible,” Huizenga says. “In order to do that, you have to do that first class. You have to step up and be ahead of the pack.”
Huizenga's primary goal, however, is to make Dolphins Stadium a permanent home to the Super Bowl, which has an estimated $400 million economic impact on the area that hosts the internationally televised event.
The NFL keeps all of the revenue generated at the stadium during the game, so Huizenga and the Dolphins hope to grab the lion's share of revenues generated outside the stadium — and they feel a renovated stadium is the key to do that.
To oversee the effort, Huizenga hired longtime NFL executive Joseph (Joe) Bailey III to be CEO of his newly created holding company, Dolphins Enterprises LLC. The company combines the franchise's football and stadium operations under one business.
Huizenga says Bailey's relationships with executives in various sports, which he formed during his two years at New York-based executive search firm Russell Reynolds Associates Inc. and two decades in the NFL, may help attract future business at the stadium.
“There are more pieces now than what we had before, and we needed someone to coordinate those pieces,” Huizenga says of the creation of the holding company and CEO position. “[Bailey] has a lot of football experience. Working in the sports industry, he talks with a lot of commissioners in other leagues. Because he was in the recruiting business, he knows a lot of people. He thinks about operations other than ones on the football field.”
Making Miami super for good
Huizenga and Bailey are confident that renovating and expanding Dolphins Stadium, along with team officials lobbying the league hard for the region to host more Super Bowls, will make it almost impossible for the NFL to pass up Miami as a host site every few years. “The combination of a team but also … the potential of what will go [in the area] around the stadium is unprecedented in the United States,” Bailey says.
The Dolphins have already had success luring more title games. The team and South Florida's Super Bowl host committee, which is made up of local hoteliers and other area business leaders, successfully bid to host Super Bowl XLI in 2007 (awarded before Bailey arrived) and most recently, Super Bowl XLIV in 2010. It is the first time the NFL has awarded any city more than one Super Bowl before any of the games were played. The 10 Super Bowls South Florida will have hosted after 2010 will put it ahead of any other locale as a repeat host.
The push to make Dolphins Stadium a permanent Super Bowl site got off to a disappointing start, however. The crux of Huizenga's master plan for the stadium renovation was for the NFL to designate it a league “Supersite” for the Super Bowl and the Pro Bowl, the NFL's all-star game. That event typically takes place the first Sunday in February in Honolulu, and drums up approximately $40 million for that city. Dolphin Enterprises wanted the stadium to host the Super Bowl once every three years and the Pro Bowl annually, and having league approval of the idea would make the renovation a safer investment.
Bailey says the league and some owners liked the idea, especially because Dolphins Stadium is one of the few NFL venues around the country surrounded by so much empty, developable land. Huizenga — who wants to build an attached eight-story atrium, an office tower above the atrium, a mile-long esplanade for interactive activities, hotel rooms and residential space — presented the plan to NFL team owners in March 2005. However, he failed to get the required 24 of 32 owners' votes needed for approval.
Shortly afterward, the NFL awarded Super Bowl XLIV to Dolphins Stadium after plans for the intended venue for the game, a proposed stadium in New York, fell through. South Florida beat Houston and Atlanta, which have newer stadiums and have also hosted Super Bowls. Still, no permanent site status means Huizenga will pour less money into the renovation project, he says. He declined to specify how much the project will cost, though The Miami Herald reported it to be approximately $400 million before NFL owners voted against making it a permanent Super Bowl site.
“If the NFL wants to become a global sport and wants to be considered on the same level as the two other primary global events, the World Cup and the Olympics, … instead of moving the Super Bowl in an uncertain manner around the United States, [the NFL should] consider having the Super Bowl so that it's permanent once every three years,” Bailey says.
Historically, cities with a favorable climate, hotel and convention space and entertainment have hosted the title game. Those cities have included Miami, New Orleans and Pasadena, Calif., near Los Angeles. But in recent years, the NFL has used a combination of merit and league favoritism to award Super Bowls. For example, some cities that have built new stadiums, such as this year's host Detroit, have been awarded Super Bowls.
All of the revenue generated directly from the game, including ticket sales, concessions and parking, goes into the NFL's revenue sharing pot. That means if the 2007 Super Bowl is an overwhelming financial success, NFL owners may have a change of heart about Dolphins Stadium as a permanent venue, says Kathleen Davis, CEO of Sport Management Research Institute, a Weston-based firm that does market research for the sports, entertainment and tourism industries. “It lays the groundwork for momentum from owners to say maybe this is something we may want to consider, to have game on a rotational basis,” she says.
Though Dolphins Enterprises would keep all revenue from the planned hotel, retail stores, restaurants and convention center adjacent to the Stadium, Bailey claims the team's push to lure the game to South Florida is more about benefiting South Florida than Dolphins Enterprises' direct financial gain.
“Using the Dolphins and Dolphins Stadium to attract a major international event like that is leveraging your assets for the benefit of everyone else,” Bailey says.
Maximizing his investment Making the most of his assets is something Huizenga has done well since he bought the franchise, according to many reports. He purchased the team and the debt-ridden stadium, then known as Joe Robbie Stadium, in 1994 for $138 million from the family of founding owner Joseph “Joe” Robbie. The value of the Dolphins franchise has risen 18 percent since then to $856 million, according to Forbes magazine.
While NFL team values have gone up an average of 14 percent annually, only the Dolphins and the Seattle Seahawks (20 percent) surpassed that number, according to the Sept. 19, 2005 issue of Forbes. The Dolphins ranked No. 12 in the league in revenue, raking in $190 million in 2004, and rated No. 23 out of the NFL's 32 teams in debt value, Forbes reports. The NFL's most valuable franchise is the Washington Redskins, worth $1.2 billion.
Forbes bases its franchise values on multiples of revenue. The publication values most teams at approximately four times their annual revenue, but teams playing in new or upgraded stadiums are valued higher because of an expected increase in revenue.
Under the NFL's revenue sharing system, each team's ticket sales and broadcasting revenues are pooled together and equally distributed throughout the league. Currently, approximately 95 percent of the Dolphins' revenues come from revenue sharing, and other revenue streams such as merchandising, concessions and parking make up the difference, Bailey says. Each franchise receives approximately $80 million a year from national television deals with Fox, CBS, ABC and ESPN.
Huizenga's ownership of Dolphins Stadium maximizes his ability to keep sponsorship revenue, as well as money from luxury suites. He says a sleeker-looking stadium will attract more fans and events, which translates into more advertising dollars.
Hank Goldberg, a sports talk show host on WQAM radio in Miami who has covered the Dolphins and the NFL for more than 20 years, says the chances of Miami hosting the Super Bowl every three years are slim as many NFL owners are unwilling to give up a year when their stadium might host the game. Instead, he thinks it makes more sense for Huizenga to keep the Florida Marlins baseball team, which he once owned and which calls Dolphins Stadium home, playing on property he owns.
“To think you will be in a regular rotation when you have [the possibility of] a new stadium in [the] New York [area] and the possibility of expansion in Los Angeles is naïve,” Goldberg says. “The thing that makes the most sense is baseball. It's an opportunity to have 80-plus events per year where you can bring life into that area.”
The Marlins have been trying for years to secure public financing for a new ballpark in Miami-Dade but have continuously failed. The team's current lease at Dolphins Stadium expires in 2010, and while Huizenga has said publicly that he is willing to work out a deal that is favorable to the cash-strapped Marlins, the baseball team's future in the stadium and in South Florida is in limbo. Bailey says Dolphins Enterprises' preference is to keep the Marlins and their 81 annual home games at Dolphins Stadium.
Though Bailey says owners have shelved the idea of making Miami a permanent Super Bowl site, the Dolphins hope to capitalize on the two upcoming Super Bowls and other events the stadium hosts by having entertainment venues on the grounds that spur visitors to spend their money. Aside from baseball, Dolphins Stadium hosts college football's FedEx Orange Bowl game, soccer tournaments and other events.
So far, more than 60 percent of the stadium's luxury suites have been renovated and the two $13 million, high-definition video scoreboards will be in place by March, Bailey says. Huizenga says the upgrades are necessary because he wants to continue to attract championship-caliber events for all sports at Dolphins Stadium.
In November, the team opened a Dolphins Hall of Fame, a collection of exhibits within the club section that show pictures of players and coaches throughout the franchise's history. The exhibits also display actual jerseys worn by players, Hall of Fame quarterback Dan Marino's locker and legendary coach Don Shula's desk. Fans pay $5 to enter the Hall of Fame, and Bailey says all of the proceeds go to charity.
“We have a lot of different options about what we can do around the stadium,” says Bailey, declining to give specifics because he is still formulating the plans. “We've got some planning space here for next four to five years. We think by doing a lot of things and continuing to grow these assets, we can generate more visitors.” –By Jaime Hernandez
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
|
|
 |