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The Score - Anthony Schoettle

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Sports Business

MainGate wins Super Bowl contract, but surprised by bigger loss

September 3, 2014
KEYWORDS Sports Business

You know your company is doing well when you get a piece of Super Bowl business, but you’re still disappointed.

That’s where MainGate Inc. CEO Dave Moroknek is.

Not that officials for the locally based merchandising company weren't thrilled to have recently won a contract to sell Super Bowl-related merchandise at Phoenix-area hotels in February. It’s just that Moroknek was hoping for a bigger piece of the pie. And with good reason.

MainGate is the only company to have managed at least some merchandising operations for the NFL at each of the last four Super Bowls. Yet, when it bid to sell merchandise at this season’s Super Bowl, it was passed over for the lucrative stadium portion of the deal in favor of relative newcomer Aramark.

It’s not that Aramark doesn’t know its way around a sports venue. But the Philadelphia-based company is well-known for managing food venues, not merchandising operations.

On the other hand, MainGate handles only merchandise. It not only makes licensed products but runs on-site locations for some of the biggest sports properties—and other companies—in the U.S. MainGate’s customer list includes a handful of NFL teams, the Indiana Pacers, IndyCar Series, Harley-Davidson, Ford Motor Co., Chevrolet, National Hot Rod Association, Susan G. Komen For the Cure, Big Ten, National Hockey League and the NCAA.

“I was surprised,” Moroknek said of the selection of Aramark by the NFL. “I thought we’d get the stadium. Everything we did [for the NFL] met with the highest of accolades.”

MainGate was especially lauded in New Orleans two years ago. When the power went out at Mercedes-Benz Superdome, MainGate’s operations went on almost uninterrupted.

“The new technology, the new merchandising techniques and the new sales and data reporting” demonstrated by MainGate during the last two Super Bowls left a positive impression on NFL officials, Leo Kane, the NFL’s vice president of consumer products, told IBJ after MainGate was selected to handle merchandise sales at New York area hotels for last year’s Super Bowl. Kane added that MainGate’s “customer service philosophy aligned perfectly with the NFL’s.”

The NFL made a record haul—reportedly selling more than $200 million in merchandise—at last year’s Super Bowl in New York. Again, MainGate got rave reviews from NFL officials for running kiosks and sales booths in dozens of New York and New Jersey hotels.

It’s not just MainGate that found the selection of Aramark to be a surprise. Several sources in the licensed merchandising industry told IBJ they were stunned by the selection.

For 23 years, California-based Facilities Management Inc. had an exclusive Super Bowl merchandise deal with the NFL. But in 2012, MainGate nudged its foot in the door. Since then, the floodgates have opened, with as many as 14 companies bidding on the Super Bowl merchandising contract, NFL sources said. The Stadium part of the deal is often the most sought after piece of the contract.

According to sports business experts, about 40 percent of the Super Bowl merchandise in the run-up to the Super Bowl will be sold at the stadium. Another 40 percent will be sold at the NFL Experience. The remaining 20 percent will be sold at area hotels.

MainGate didn’t bid on the NFL Experience part of the 2015 Super Bowl.

While the NFL confirmed that Aramark would be handling merchandise sales at Super Bowl XLIX, which will be held in 2015 at University of Phoenix Stadium, league officials would not give a reason why the company was chosen. No press release was issued.

MainGate got no indication why it wasn’t selected, Moroknek said.

At this point, Moroknek is looking forward.

The planning and buying process for Super Bowl merchandise has already started, Moroknek said. At the end of this month, MainGate officials will visit the Phoenix area to start talking to hotel operators and mapping out an operations plan for Super Bowl XLIX. That will be followed by internal tactical meetings to hammer out staffing and scheduling.

And MainGate already has its sights set on the next Super Bowl—the 50th edition of the big game—to be played at Levi’s Stadium in Santa Clara, Calif., the new home of the San Francisco 49ers. Due to the increased interest in the 50th Super Bowl, bidding will take place earlier than usual, possibly beginning as early as November, league sources said.

“Interest in this [contract] will be high, no doubt,” Moroknek said.

MainGate will bid on all parts of the Super Bowl 50 contract including the stadium, hotels and the store at the NFL Experience. Moroknek feels good about MainGate’s chances.

“Is it getting more competitive? Yes,” he said. “In our opinion, we do it differently and better than anyone else. This is all we do. We focus solely on merchandise.”

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