A local company that sells ticket and event packages associated with major sporting events has secured groundbreaking deals with the Ryder Cup and Churchill Downs Inc.
Indianapolis-based Sport Events Ltd. will be one of the first two companies to sign an official deal with Churchill Downs to sell ticket and hospitality packages to the Kentucky Derby, run this year May 3.
Previously, the fabled racetrack had chosen to run everything-including corporate hospitality-in-house.
"In many cases, these properties have realized that taking on something like corporate hospitality is too big a job, and outside their realm of expertise," said Andrew Zimbalist, sports economist from Smith College in Northampton, Mass.
The NCAA tried to run its own corporate hospitality services for the Final Four, but in 2006 decided to contract the job out to California-based behemoth RazorGator Experiences.
Greg Shaheen, NCAA vice president of basketball and business strategies, said the deal assures Final Four attendees get an authentic experience. It also guarantees the NCAA $8 million to $12 million from the event, sports business experts said.
Earlier this year, Sport Events signed to be one of two authorized dealers to provide ticket, travel and hospitality services for the Ryder Cup golf matches, held Sept. 16-21 in Louisville.
Companies like Sport Events make deals to buy event tickets at face value from promoters and buy large blocks of hotel rooms, often at a discounted rate. Hotel operators like such firms because they guarantee payment and pre-purchase lots of food, drink and other items and services from the hotels.
Local entrepreneur Steve Briggs founded Sport Events in 1986. In 2005, the operation was bought by father-and-son tandem David and Donald Shuel and Kyle Kinnett, who previously founded and operated locally based Front Row Tickets.
While the company is experiencing tremendous growth, it has its detractors. Earlier this year, Marcus Burnell filed a lawsuit against the company, claiming it owed him $388,715 plus interest. Sport Events has until May 22 to respond. Burnell claims that he loaned Sport Events $415,650 in 2005, but repayment terms were breached by company officials.
"Our legal people are handling this, and I'm sure the issue will be resolved amicably," he said.
In his previous post with Front Row Tickets, Kinnett saw that the industry was going beyond ticket scalping.
"I could see there was a high demand for travel, hotel and hospitality packages involving the nation's biggest sporting events," Kinnett said.
The key to growth in the industry is providing "five-star" services, Kinnett said.
"Our clients expect to be waited on hand and foot, and they're willing to pay for it," Kinnett said. Corporations generally pay $600 to $1,000 per person per event, Kinnett said.
The company's new ownership doubled revenue from 2005 to 2006, Kinnett said. He wouldn't divulge revenue, but said it "was well north of $10 million" annually.
"We think we can maintain 20-percent annual growth for the foreseeable future," he said.
Sport Events has eight full-time employees. It ramps up to 20 workers to handle major events like the Kentucky Derby, which-along with the Super Bowl, Ryder Cup, Masters and Final Four-figures to be among the firm's biggest money makers.
The firm acquired a key piece of land across the street from where the Masters is played in Augusta, Ga., and built a 16,000-square-foot hospitality center with room for 600. "We already have a waiting list for next year," Kinnett said.
The industry has matured from a seemingly seedy ticket-scalping sector to one that is getting lots of attention from Wall Street investors and various venture capitalists, said David Lord, former CEO of RazorGator.
Stub Hub last year sold to eBay for $400 million. Ticketmaster recently paid $305 million for Tickets Now, a software company serving the industry.