The launch of The Tournament Club at this year's men's basketball Final Four in Indianapolis is the first shot across the bow of brokers, travel agents, hotel room resellers and others who've stepped in to meet the demand for hospitality packages the NCAA previously ignored.
In December, the NCAA hired rEvolution, a Chicago-based sports marketing and media agency, to launch the association's own hospitality package, including lower-level tickets, access to an exclusive hospitality area at the game venue, premium hotel rooms, a banquet with marquee speakers, and other behind-the-scenes and social activities.
"The demand for this type of hospitality offering around the Final Four is extremely high," which spawned a fast-growing scalpers market, said rEvolution President John Rowady, a 38-year-old Indiana University graduate. Rowady said it's time the
NCAA get more benefit from
the events it stages.
Sports ticket brokers and hospitality packagers fired back, calling The Tournament Club nothing more than a money grab by the NCAA. But they think they can compete.
" T h i s completely legitimizes the entire industry," said David Lord, CEO of Hollywood, Calif.-based Razor-Gator, one of the nation's largest ticket and hospitality brokers. "Now, it's who can provide the best service. The NCAA is just trying to extract more money; we're trying to deliver a superior experience."
The NCAA and firms like Razor-Gator are on a collision course. The NCAA intends to launch its hospitality program by first luring in its sponsors and corporate partners, including such companies as Coca-Cola, DiGiorno Pizza, Pontiac, Lowe's Home Improvement Stores, Singular Wireless, The Hartford, State Farm and Enterprise Car Rental.
Many of these companies have previously paid big bucks to outside hospitality firms. The Hartford, for example, is a client of Razor-Gator, which typically charges $2,000 to $10,000 per person for a package similar to The Tournament Club.
The NFL and PGA tried similar tactics at the Super Bowl and The Master's in recent years.
"Razor-Gator had 6,000 Super Bowl clients this year. That's five times more than the NFL," Lord said. "We're very confident our packages can compete with anyone's."
Lord made no apologies his firm's 30-percent profit margin.
"I'm sure the NCAA operates on a higher margin than we do," Lord said.
Rowady countered that the NCAA's hospitality package will compare favorably to third-party operators' offerings on price.
And clients of the NCAA-sanctioned hospitality program will have exposure to special speakers and access to behind-thescenes activities that a non-sanctioned package can't offer, Rowady said.
Still, Lord predicted Razor-Gator will have its biggest revenue windfall ever at this year's Final Four.
"The NCAA can say they want to take control of the event, but an event organizer can't own a corporate marketplace," said Lord, whose company has sold hospitality packages at the Final Four for a decade.
Dave Brusslan, owner of locally based Preferred Tickets, said the secondary market for tickets and hotel rooms is being driven by corporate demand.
"When we were selling to just fans, demand for tickets and other accommodations was much lower, and so were the prices," Brusslan said. "We didn't create this situation; we're just meeting the demand of our clients."
Membership to The Tournament Club won't come cheap, with packages ranging from $35,000 to $55,000 for parties of 10. There will also be some hospitality offerings sold a la carte. NCAA officials said The Tournament Club could raise $6 million to $9 million in its first year.
"We can't lose site of the fact that this is a business," said Greg Shaheen, NCAA vice president of Division I men's basketball and championship strategies.
And NCAA officials made clear their intention to grow their business.
"The Tournament Club is a small piece of a bigger puzzle we are working on to grow in a manner that benefits all aspects of our operations, and assure that our members and student athletes benefit from our growth," Shaheen said.
All the revenue from The Tournament Club, Shaheen said, will go toward NCAA member institutions and student athletes in the form of scholarships and other programs.
The Tournament Club will initially be offered only to NCAA sponsors and partners, but it could be opened to a wider market in the future. The initial response has been strong, Rowady said.
"We're having the typical first-year issues of letting people know this program exists, but we've still had a ton of demand," Rowady said. "Our [top two level of packages] are well sold, with just a few left."
The Tournament Club is set up to accommodate up to 2,000 people this year.
Mark Rosentraub, a sports economist and former IUPUI dean, said the rapidly escalating secondary market for tickets and hotel rooms almost certainly spurred the NCAA's decision to launch The Tournament Club.
"What I think has contributed to this decision over the last three or four years is the growing eBay market," Rosentraub said. "Suddenly, there was a big piece of business generated by this event the NCAA had no piece of."
Two tickets and a room for three nights at a four-star hotel close to the RCA Dome, where the games are played this year, are listed for $16,057 on the Internet by a thirdparty provider. Downtown hotel rooms typically sell for $200 a night. Even rooms at hotels in outlying areas, which normally sell for $89 a night, are being listed on eBay for $1,900 per night.
Though the men's Final Four has now risen to the level of the Super Bowl and The Masters as a premier U.S. sporting events, Rosentraub said it is far from the only NCAA event drawing ticket scalpers and hotel room resellers.
"What was going on at this year's Rose Bowl was mind boggling," Rosentraub said. "There were people just standing out front of the stadium with $1,500 cash in their hand, looking for a ticket. I'm sure the NCAA wants to take greater control of this to make sure there are more people involved that are supporting the member institutions and the event."
The NCAA's ability to compete with hospitality industry powerhouses such as Razor-Gator, North Carolina-based Premiere Sports Travel and New York-based TSE Sports & Entertainment, Rosentraub said, will depend largely on its private-sector partner, rEvolution, which was chosen over eight other firms that answered the association's request for proposals last year.
"This particular hospitality market has become a multibillion-dollar industry, and I'm just talking about the part surrounding sporting events," Rosentraub said. "Thirdparty vendors will not be eager to let loose of their share."
A full-service sports marketing and media agency, rEvolution has a global client base, including Fortune 500 companies, major media outlets and sports event organizers.
rEvolution has made a name for itself using the platform of major sporting events, leagues, teams and athletes to promote its clients' consumer and business-to-business brands. The firm's marketing division offers such services as creative strategy, sponsorship negotiation, branding, event marketing, promotion, research and hospitality.
rEvolution has represented Team McLaren Mercedes in Formula 1, the eight largest college conferences, Indy Racing League, the U.S. Olympic Committee and National Thoroughbred Racing Association. Its corporate clients include Motorola, Ebay, Suzuki, Michelin, Pontiac, Nissan, Infinity and Argent Mortgage.
Rowady, who has a diverse sports and event marketing background, founded rEvolution in 2001. In the past 17 years, Rowady has worked with Fox Sports, FIFA World Cup, ISL Worldwide, CART/Champ Car, Association of Tennis Professionals, Bowl Championship Series and CBS television network.