Saturday, April 1, 2006
Reds add party zones
Team 'using every nook and cranny' to raise revenue
BY CLIFF PEALE | ENQUIRER STAFF WRITER
Postgame concerts, two new party areas and a 20 percent increase in corporate sponsorships should create plenty of buzz at Great American Ball Park this summer.
Most importantly for the Cincinnati Reds' new owners, they also could create several million dollars in additional revenue this year.
But as the Reds prepare to open their season Monday against the Chicago Cubs, don't expect that money to go immediately toward a new closer or leadoff hitter.
Instead, the Reds are targeting most of the new dollars this year to building the organization internally - from corporate sales staff to baseball scouts.
"Where we really want to spend money is in creating a great organization and getting great people," said Tom Williams, vice chairman in the new ownership group headed by chief executive officer Bob Castellini that took over the Reds in January. "We are not holding back in that department."
New dollars are a key part of the Castellini group's long-term plan for building the Reds. As they build revenue, they hope it can create the underpinning for a championship-level team on the field. And they're hoping for a strong start to help add revenue now.
The new owners say if the team is in contention in midsummer, they will consider adding players through a trade, even if that increases the payroll beyond its current $60 million to $65 million.
But for now, they plan on a break-even budget and aren't using the new revenue to pay back past losses. They kept season-ticket prices and almost all single-game ticket prices the same.
Since they're increasing non-player spending by at least 5 percent, they need more revenue to make up the difference.
In the 10 weeks since the Castellini group bought a controlling stake in the Reds from former CEO Carl Lindner and other partners, they have identified ways to produce as much as $2 million in new revenue this year.
In addition, they have budgeted increased ticket sales this year that could add about $1 million more, an ambitious goal that depends on the team getting off to a good start on the field. If the Reds struggle early, increases from things such as corporate sales will hold, but it would be difficult to increase ticket sales.
"We're clearly after things that are going to significantly add to the top line," said Bob Castellini's son Phil, the Reds senior director of business operations. "The magic question is, what do you do with it?"
That's the responsibility of new Reds general manager Wayne Krivsky and the organization's baseball staff, which has made several moves so far this spring that won't cost the Reds significantly bigger dollars. In the trade of outfielder Wily Mo Pena to the Boston Red Sox for pitcher Bronson Arroyo, for example, the Red Sox also sent the Reds $1.5 million, about the difference between the two players' 2006 salaries.
The Reds obviously are not alone. Almost every team is trying to squeeze every possible dollar out of its ballpark and media rights, said Don Schumacher, who runs a local sports-marketing firm in Blue Ash.
"It seems like they're positioning themselves that as the team improves, they're going to be able to implement additional opportunities to offer sponsors and other partners. Some of those stones may have been left unturned."
Castellini and Williams are careful not to criticize the Lindner-led regime. But the consensus has been that Great American Ball Park was underutilized for things such as sponsorships and that the new ownership has taken a more aggressive tack in finding new dollars.
"It's new, and they have the new guy's energy," said Pete Buscani, executive vice president of marketing at LaRosa's Inc., which has signed a deal to sell its products at Great American Ball Park this year.
Things the Reds are doing this year include:
Signing new corporate sponsors. The club now has deals with about 90 corporate sponsors and expects total corporate sales to top last year's by 20 percent. That could add more than $1 million.
For example, LaRosa's will sell its product inside the ballpark this year for the first time and has a sign in left field. With a three-year contract, Montgomery Inn is another new sponsor, and team mascot Gapper will give away a $100 gift certificate each home game this year.
"The Reds said, 'We've got Skyline, we've got Montgomery Inn, we need you, too,' " said Buscani, who wouldn't reveal terms of the LaRosa's contract. "It will help us in our own backyard. But the big opportunity for us is, there's gonna be people coming from a five-state area, and they're gonna be turned on to LaRosa's for maybe the very first time."
Opening a new party tent in the Fan Zone along Main Street. Called the Margarita's Fiesta Tent, it's available for rental now, with a minimum of 25 people in one party. The area can hold up to 200 people at $53 a person and could bring in more than half a million dollars in revenue this year. Also, the Reds will sponsor postgame bands on 22 weekend nights this year - with beer available until 11:30 p.m. - underwritten by new sponsor Taco Bell.
Converting unused space behind third base into a new party area. The area, which the Reds hope to open in June, will hold 48 (minimum of 25) and could bring in several hundred thousand dollars this year. It will be available April 7.
"We're using every nook and cranny we've got," Phil Castellini said.