Uncertainty over 2012 Super Bowl puts hotels in a bind

January 16, 2010

A looming dispute between National Football League players and owners could result in a rescheduled 2012 Super Bowl or outright cancellation of the game—scenarios that have hotel operators in the city pacing the sidelines.

“What can we do but wait?” said Jesse Ghumm, manager of the downtown Hampton Inn. “Right now, booking anything anywhere near the Super Bowl date is a very carefully calculated risk.”

Hoteliers, who arguably have the most to gain from hosting the Super Bowl, also have the most at risk.

Greg Tinsley, the Conrad Indianapolis manager, said he has blocked out the first three weekends of February 2012 to accommodate a potential change in the date of the Super Bowl, which is scheduled for Feb. 5. The Conrad has pledged 90 percent to 95 percent of its hotel rooms and all its meeting space to the event.

“That’s a lot of inventory to lock down for maybe an entire month, and not know what the eventual payoff will be,” said Robert Tuchman, executive vice president of Premiere Global Sports, an Illinois-based sports travel and marketing firm. “From a logistical standpoint, moving the dates of the Super Bowl is a complete nightmare. What happens if the event gets canceled altogether? Who covers that expense?”

Phil Ray, manager of the downtown Omni Hotel, said the issue becomes much more critical in early 2011.

“That’s when reservations for rooms start coming in—12 to 13 months in advance,” Ray said. “That’s when we’ll need answers.”

Planners still optimistic

At issue is a dispute pitting NFL players against owners, and owners against one another over how league revenue should be divided. Owners have already opted out of the existing labor agreement and say if they can’t get a deal worked out with players, they’ll lock them out and scuttle the 2011 season.

Officials with the local organizing committee and Indianapolis Convention & Visitors Association said planning for the game’s scheduled date is proceeding at full speed in spite of the labor issue. ICVA Chief Executive Officer Don Welsh declined to comment on the uncertainty hoteliers are facing.

Mark Miles, the Indianapolis Super Bowl Host Committee’s liaison to the NFL, thinks there is little to worry about.

“In talking to team owners and others within the NFL, we’re very optimistic,” Miles said. “We see virtually no chance the Super Bowl doesn’t happen. It comes down to the date.”

Local Super Bowl organizers and hoteliers have already agreed to hold open the weeks of Feb. 5 and Feb. 12. But an extended labor dispute could easily push the game to late February or even early March. Indianapolis already has a major convention, Dealer’s Expo, set for later in February.

It’s not clear what would happen to the multimillion-dollar legacy project on the city’s east side or other costly preparations if the Super Bowl is canceled altogether.

It wouldn’t be as simple as putting Indianapolis in line for the next year. New Orleans has already been awarded the 2013 Super Bowl, and planning there is under way.

“We feel like we have a real partnership with the NFL and could work through any contingency,” Miles said.

In spite of the assurances, local hoteliers are getting increasingly skittish.

“They’re sitting there holding huge blocks of hotel rooms for two weekends they’re not sure will be used,” said Tuchman of Premiere Global Sports. “Then what do you do with the rest of February and early March?”

The city can hardly risk losing the 2012 Super Bowl, Tuchman said, so city tourism officials and hoteliers will likely have to craft contracts for events and room rentals for those weekends that can be altered or canceled with no penalty.

But that’s no cure-all. The unknowns surrounding the 2012 Super Bowl are enough to scare off convention business, Tuchman said. “A lot of organizations won’t want to sign a deal with such uncertainty.”

NFL strife rare but real

Among North America’s major sports leagues, the NFL has one of the best track records of maintaining labor peace. There hasn’t been a work stoppage since 1987. In 2006, when things looked dire, players and owners came together at the 11th hour.

But the last-minute nature of that settlement planted the seeds of the current dispute.

In 2006, owners agreed to a contract that resulted in higher salaries and bonuses for players.

Instead of 55.5 percent of NFL revenue, the players now are entitled to 60 percent. The salary cap has jumped from $85.5 million per team in 2005 to $127 million in 2009, a 45-percent increase. A number of owners say their profits have dropped from 10 percent a year to 4 percent since 2006, results the NFL Players Association disputes.

Although the owners ratified the 2006 pact, they are not happy about their decision and opted out last year, a move that causes the existing contract to expire at the end of this season. Parties have agreed that next season will be played without a salary cap, but that’s a temporary solution. A new contract is needed for the 2011 regular season and beyond.

Observers say there hasn’t been such a division between players and owners since the historic free-agency and salary-cap pact of 1993 was signed.

“We are closer to labor strife in the NFL than we have been in a long, long time,” said Mark Maske, who covers the NFL for The Washington Post. “These are two sides that are very dug in, very entrenched in their positions.”

Some have argued that, because there’s so much money at stake for players and owners, a deal will get done.

Sam Farmer, who covers the NFL for the L.A. Times, disagrees.

“I think it is most likely that there will be a lockout,” Farmer said. “The simple argument that this won’t happen because there’s too much money at stake isn’t compelling enough. That was the argument [in 2006] when the owners felt they got themselves into a bad deal, and they unanimously opted out of it.”

“I would predict that the start of the season could be delayed and the Super Bowl could be played later in the year,” Farmer added.

The dispute doesn’t just pit owners against players. Owners are also arguing among themselves about revenue sharing, which could further complicate negotiations.

Large-market owners such as the Dallas Cowboys’ Jerry Jones and the Washington Redskins’ Daniel Snyder are looking to keep as much of the revenue as possible. Owners such as the Indianapolis Colts’ Jim Irsay are trying to assure the revenue sharing stays robust enough to keep small-market teams like his financially competitive.

No one knows when a deal will be reached, but if it hasn’t been resolved a year from now, local tourism officials will have real reason to worry.

“If they enter the 2010 season without a deal, I think we’re headed for labor strife,” said Mark Rosentraub, dean at the University of Michigan and an author of two books about major-league sports operations. “Trust me, local Super Bowl planners in Indianapolis don’t want to see the next season start without a labor agreement in place. That would be a very bad sign that there is going to be protracted—perhaps hostile—negotiations.”•


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