Popcorn, Peanuts, Facility Management
Examining Growth Opportunities for Kraft Sports
Ed Hutchinson, Ryan Lysne, and Peter Marturano (all MBA2)
Issue date: 1/30/06 Section: Sports
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Would working for a professional sports franchise be as cool as it sounds?
That was the question we set out to answer while approaching over 100 different sports teams in the NFL, NBA, MLB, and NHL for a 390 project with Professor George Foster. We heard back from a handful of prospective franchises and in the end, the Kraft Sports Enterprise (owned by Robert Kraft), which includes the New England Patriots and New England Revolution, won our bid (after we begged and pleaded and took the job for class credit). The problem that they were grappling with, and hence needed the expertise of three well-qualified MBAs to pursue, was the following:
The Kraft family owns the $500M Gillette Stadium in Foxborough, MA. They own and operate all of the functions of the facility - facility management and coordination (housekeeping, heating/ventilation, audio, stadium setup, etc.), concessions (premium and general), security (24/7 and event-day), retail (onsite and internet), and parking. Given their expertise in all of these functions, can they expand their business to other sports facilities? Where should they focus? Who should they target? How to segment the market? What is the opportunity? Who are the industry leaders? And perhaps the most important question - why have three MBAs from Stanford answer these questions?
Professor Foster, who leads the Sports Management, Sports Finance, and Sports Marketing classes, helped us set a strategy and provided key resources. Although we compiled the standard industry data, our biggest value add for the Kraft family was to conduct phone-interviews with 35 professional sports facilities throughout the country (mostly NFL facilities). We wanted to find out why facilities outsource certain functions, what firms they use, how happy they are with vendor performance, what metrics they use in new-vendor negotiations, what the economics look like, length of contracts, etc. Along the way, we had some interesting conversations about what makes running a facility such a significant challenge. The VP of Operations for Alltel Stadium in Jacksonville, Florida discussed his frustration with different events every night, "I have the Jacksonville Jaguars game on Sunday, which has tailgates, premium catering services, and significant beer requirements. The next day I have a Neil Diamond concert and I need extra personnel to help the old folks into the building. The following day I have a skateboarding tournament and can't find enough Mountain Dew to save my life. Finally I have a Nine-Inch Nails concert and can't get enough security for the mosh-pitting that goes on…" Needless to say, these conversations were quite helpful in our analysis of what it will take for a new vendor to enter the marketplace and where they can add value.
That was the question we set out to answer while approaching over 100 different sports teams in the NFL, NBA, MLB, and NHL for a 390 project with Professor George Foster. We heard back from a handful of prospective franchises and in the end, the Kraft Sports Enterprise (owned by Robert Kraft), which includes the New England Patriots and New England Revolution, won our bid (after we begged and pleaded and took the job for class credit). The problem that they were grappling with, and hence needed the expertise of three well-qualified MBAs to pursue, was the following:
The Kraft family owns the $500M Gillette Stadium in Foxborough, MA. They own and operate all of the functions of the facility - facility management and coordination (housekeeping, heating/ventilation, audio, stadium setup, etc.), concessions (premium and general), security (24/7 and event-day), retail (onsite and internet), and parking. Given their expertise in all of these functions, can they expand their business to other sports facilities? Where should they focus? Who should they target? How to segment the market? What is the opportunity? Who are the industry leaders? And perhaps the most important question - why have three MBAs from Stanford answer these questions?
Professor Foster, who leads the Sports Management, Sports Finance, and Sports Marketing classes, helped us set a strategy and provided key resources. Although we compiled the standard industry data, our biggest value add for the Kraft family was to conduct phone-interviews with 35 professional sports facilities throughout the country (mostly NFL facilities). We wanted to find out why facilities outsource certain functions, what firms they use, how happy they are with vendor performance, what metrics they use in new-vendor negotiations, what the economics look like, length of contracts, etc. Along the way, we had some interesting conversations about what makes running a facility such a significant challenge. The VP of Operations for Alltel Stadium in Jacksonville, Florida discussed his frustration with different events every night, "I have the Jacksonville Jaguars game on Sunday, which has tailgates, premium catering services, and significant beer requirements. The next day I have a Neil Diamond concert and I need extra personnel to help the old folks into the building. The following day I have a skateboarding tournament and can't find enough Mountain Dew to save my life. Finally I have a Nine-Inch Nails concert and can't get enough security for the mosh-pitting that goes on…" Needless to say, these conversations were quite helpful in our analysis of what it will take for a new vendor to enter the marketplace and where they can add value.