• Comcast-Spectacor’s Peter Luukko Talks Venue Management, the Booming Arena Market and What’s Next

Jul
23

Originally published on Billboard.biz | July 23, 2012 | by Ray Waddell, Nashville

 

Sitting in his corner office at the Wells Fargo Center in South Philadelphia, Peter Luukko is at home in the epicenter of Philly good times, with a view of the world. Not only is Luukko, president/COO of sports and entertainment giant Comcast-Spectacor and chairman of facility management firm Global Spectrum, situated within the confines of Wells Fargo Center, home of the NHL Flyers and the NBA 76ers, he is within cheering distances of such powerful Philly institutions as Lincoln Financial Field (home of the NFL Eagles), Citizens Bank Park (home of the MLB Phillies) and XFINITY Live! Philadelphia, where fans of all stripes party before, during, and after events, or if there is no event at all.

XFINITY Live!, a partnership between Comcast-Spectacor and the Cordish Companies, is the dining and entertainment district centered around these landmark venues that represents the state of the art for contemporary live entertainment. For Luukko, who grew up as a hockey kid in Worcester, Mass., dreaming of a job in sports, coming to work every day in the sphere of all this has to feel good. Luukko entered the sports world through the facilities door, and never left either. He went to UMass to learn the business, turned an internship at the New Haven (Conn.) Coliseum into a real job in 1981, then made the move to Philadelphia, by way of Providence, R.I., in 1985.

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Sports and venues merged at the Spectrum under Ed Snider, now Comcast-Spectacor chairman, who founded the Flyers and owned the Spectrum. Snider created Spectacor Management Inc. in 1980, which became SMG via merger with FMG in 1988. That’s when Luukko began in earnest a journey that led to today’s Comcast-Spectacor, a multifaceted firm that touches every facet of the fan experience, from venue management (Global Spectrum), concessions (Ovations Food Services), ticketing (Paciolan and New Era), and marketing/sponsorships (Front Row Marketing). Luukko spoke with Billboard about the journey, and the evolution of sports and entertainment along the way.

Billboard.Biz: When did you move from looking at sports and entertainment less as a fan and more from the “what makes all this work?” point of view?
Peter Luukko: I came to the facility side through sports. When I was around ninth grade, I decided I wanted to get into the business of sports. My dream job then would have been to work for a Boston sports team, probably the Boston Bruins if I could. My Dad was able to, through a friend of a friend, have me go down and meet Jack Nicholson, who was working for the Boston Bruins. I met with him, and he introduced me to guy named Tom Peters, now assistant A.D. at BC. UMass had a new sports management program, it’s a great way to get into the business. My dad said, “well, now you know what to do.” So I played hockey and soccer and I was recruited to play in a couple places, but I went to UMass to learn the business. My advisor there was a guy named Dr. Guy Lewis who ended up starting the [sports & entertainment business] program at the University of South Carolina.

At that time, pro sports were pretty much all family-owned and -run, they were hard to get into and advancing within the organizations was tough, because it was really in many cases run by the family and you could only go so far. So Dr. Lewis said, “you could advance more quickly if you get into the facility side,” and I had a lot of respect for him and I said ok I’ll do that. I got an internship with the New Haven Coliseum in the Fall of 1981, and I was hired halfway through the internship. So that’s how I got into the business.

How did you end up in Philadelphia?
I was hired here in 1985 by Tony Tavares, who had just been named president of SMI. I’d gotten to know Tony; he was running the Centrum in Worcester for a long time, and I was in Providence. Tony brought me into this organization, which then included the Spectrum, Three Rivers Stadium, the Kellogg Center in Battle Creek, Richmond Coliseum, and the Convention Center in Philadelphia. I was a regional manager in ’85, overseeing marketing efforts and then facilities.

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I first met you in 1988 when you came to the Los Angeles Coliseum & Sports Arena.
I was Western Regional VP, Coliseum & Sports Arena, We won a bid for the Coliseum at SMI, and FMG had Long Beach, Salt Lake City, and the Moscone Center in San Francisco. I went out West when the merger happened, mainly because to make the deal equal, we had to hit certain numbers at the L.A. Coliseum, so Tony sent me out to make ‘em.

Thanks for the parking at the Who, by the way.
(Laughs) We had so many great shows at the Coliseum. One year we had eight outdoor shows, I don’t know if that will ever happen again. Four were the Rolling Stones, plus Amnesty International, the Who, Budweiser Superfest.

You had great promoters, a great market, the business was there. I bet you learned a lot career-wise.
For me it was probably the best thing that had ever happened in my career, to deal with running two major facilities and the Raiders and the Clippers. But to be able to get to know all those agents and managers socially; you get to know the person, and then if you’re working on something, you can say, “just come down and we’ll have lunch,” which every other place in the world doesn’t get to do. That was a really fascinating time in L.A., just like that new movie with Tom Cruise “Rock Of Ages,” that’s when I was there, ’87 through ’93. It was really fun, and those people you were dealing with professionally you got to know personally, and those relationships carry over to today. Every now and then we have an issue somewhere and [CAA Managing Partner] Rob Light, for example, has his people dealing with it and we’ve got ours, and Rob will call me up out of the blue and say “let’s work on this.”

Rob and CAA, along with the other agencies, now seem to turn to the building more than ever for help on the marketing side.
Absolutely. To Tony Tavares’ credit, we were the first arena or stadium people to be dealing directly with the agents and managers. We supported the promoters, and we told them that. But they didn’t always believe us and they’d get pissed off, and we didn’t really care. And Rob, from the agency side, was very in tune with what was going on with the buildings. As were Dennis Arfa, Howard Rose, Irving, [manager] Howard Kaufman. I’d say those are the five guys from the management/agency side that really got it. They saw you could work with the buildings, that arenas could help market events, and also could be very heavily involved in the merchandising side.

Why did you come back to Philadelphia?
I came back here in ’93 as President of the Spectrum and I had business responsibilities for the Flyers. The Spectrum was part of SMG in the merger, but still wholly-owned by Ed and paid SMG a management fee. In ’93 I came back as president of the Spectrum to work directly for Ed, so I kind of left SMG.

Was that a tough decision?
No, not at all, because I had come to the dance with Ed Snider.  Ed had wanted me to come back here as they looked at building the new building [now Wells Fargo Center]. I also oversaw all the premium seating and ad sales for the Flyers and the building. So we built the building in ’96, and we were approached by [Comcast chairman/CEO] Brian and [Comcast co-founder] Ralph Roberts, who had an opportunity to buy the Philadelpia 76ers, and they wanted to know if we were interested in combining the Sixers and Spectacor, and forming a joint venture. We did a deal with them to form Comcast-Spectacor, which [operated] the Wells Fargo Center and the Spectrum. Spectacor was the Spectrum and the Flyers and our one-third of SMG.

How did that lead to Global Spectrum?
In ’98 we sold our interest in SMG and had a two-year non-compete outside of Philly. In 2000, Mich Sauers, who had left SMG and started his own company Globe Facility Services, we bought that, and started up again with Global Spectrum. Then we started competing. We’re at 113 facilities now.

What were the initial targets for facility management?
Anything that came out to bid. It was just like when we had SMI and SMG, any contracts that were up for bid we were bidding.

What was the first building outside of Philly that made you feel like you were on your way?
[John Labatt Center in] London, Ont., in 2001 was a game-changer for us in that we invested $10 million in the project with our partners from the construction company. We cut a deal with the hockey team owned by Dale and Mark Hunter, and the building has been an incredible success. The games sell out every night, it’s a great stopover between Toronto and Detroit, we’ve done major, major shows, and the building has been an out-and-out home run. I think our next game-changer was getting the stadium in Phoenix (University of Phoenix Stadium), that was our first major stadium. Then the Greater Miami Beach Convention Center was our first major convention center.

Did you foresee getting into ticketing, marketing and food and beverage?
Let me tell you what happened. SMG was smart, they had Savor, their food services company. And we were looking at situations where we had to bid both the F&B and the building management at the same time. We could have partnered with an Aramark or Volume Services, they’re good people, but [Ovations Food Services'] Ken Young and I had been very good friends for a number of years, and he had started a small company called Leisure Food Services with [Ovations SVP] Todd Whitman. They were growing, but they needed some muscle and capital to get things going, so we made a decision to do a joint venture with them. They retained a fairly decent stake in the company.

It seems you’d want them to have a stake, because they understand that business.
Absolutely, and they’re entrepreneurs and you don’t want to kill that spirit. So we did our joint venture right after we started Global Spectrum, we started Ovations with Ken and Todd. That was really so we could bid on those situations. But we made one strategic decision that turned out to be very smart: we kept it two separate companies, knowing that there would be a lot of bids that didn’t entail food from a facilities standpoint, and there would be a lot of food services bids that didn’t have anything to do with facility management. You wanted people concentrated on facilities, and people that would concentrate on food, and then come together in situations that made sense. Also you have two companies as opposed to one, which I think is the way to go here.

In regard to parent Comcast-Spectacor, how long is the deal with Comcast?
Forever, they own 80% of the company. Ed Snider has a favorite saying, “the fish stinks from the head.” And Brian and Ralph Roberts are two of the greatest people you’ll ever meet. When we did the deal, they were in 4 million homes, now they’re in 23 million. What’s great about them as a partner is, they’re so big, financially our business doesn’t mean that much to them, but they’ve taken a great interest in it. They like what we do, they’ve been very supportive, they’ve supported us in the form of capital to give us the opportunity to grow. The whole play for Comcast in getting involved with us is they wanted to create a network because their competition was the [satellite] dish. We had owned a network called PRISM. If you deliver the signal via landline, you don’t have to uplink it, if you don’t uplink it that means you don’t have to offer it to the dish. In a crazy, nutty sports town, the only way to watch the Flyers, the Sixers and the Phillies was on Comcast Sportsnet. (Comcast now owns NBC Universal, which changes that scenario).One of the factors that has helped your growth is the boom in new buildings in secondary and tertiary markets.
In 1979 or ’80, Dr. Guy Lewis told me this was going to happen, and, to his vision, it has. What’s really happened is colleges and B and C markets are building mini versions of these big arenas. Maybe they have 20 suites, maybe they have 500 or 200 club seats, or 8,000-10,000 capacity instead of 20,000. They’re all smaller versions of these buildings, but they come with the complexities of a big building. You’ve got to sell suites, you’ve got to sell club seats, you’ve got to buy the right video board, you’ve got to sell sponsorships. If you look at a typical city, university or county, their budgets are expense-based budgets, they spend money, and their revenue is taxes, for the most part. Government is not a revenue-generator, they’re an expense-driven animal, so as these facilities progress they need to come in and generate revenue.

There are a lot of opportunities out there, but everything is not the right fit, presumably. What is?
A perfect fit  for us is a decent-sized market, either an under-utilized facility or a new facility in the market. Certainly, new facilities have an advantage, because they create a lot of excitement in a market. In a best-case, you like to be involved in the design process, so you can help it be not only consumer-friendly but revenue-friendly. And for us too, from a business standpoint, the perfect facility is one where there’s a need for food and beverage and ticketing so we can bring in all of our companies.

London was an exciting new market, Old Dominion University (Constant Convocation Center) was an exciting new market, but Roanoke, Va., was a facility that had been under-utilized, and we’re having a ball down there and bringing in a lot of shows. You know how touring is, a building can get a black mark if acts or promoters are going in and they’re not being serviced well, events are not being marketed well. And it’s hard to get that back, but I think that’s one of the advantages of private management. We have a reputation, you can tell [Live Nation Global Touring COO] Gerry Barad, “we have a building manager, you’re going to get to know him and love him, but at the end of the day you get [Global Spectrum COO] John [Page] and I, we’re accountable to you.”

Are buildings more than ever willing to risk and partner on shows?
Most buildings are risk-aversive, which is probably our biggest opportunity at Global Spectrum, we do take risk. Most governments won’t let the building manager take risks, it’s not the manager. We co-promote and we incentivize promoters. Here’s what’s changed since 1981: you don’t sit across from the promoter, you sit next to them.

Why did you get into the ticketing business?
With the advent of the Internet, the barriers to entry to ticketing were blown away. Before that, it was so capital intensive from a hardware standpoint, with these data lines and outlets, it was a very expensive proposition to be in that business. It’s still not cheap, because obviously when you have a technology company you have to manage it, you just don’t say “I’m in ticketing” and it all works. But you don’t need outlets any more.

You’ve managed to be Switzerland in a lot of controversial developments over the years, you understand that today’s competitor might be tomorrow’s partner.
That’s one thing I’ve seen in this industry. From being hockey a player, I learned you don’t take anything personal. All the chirping on the ice, the coach giving you a hard time, that’s all part of the game. The one thing I would tell a young person, and I didn’t understand until I was in it, is you should really, really try and avoid burning bridges. If you’ve got to get in a fight — and we’ll fight if we have to — fight over the issue, not your ego. Because if you fight over the issue, maybe there’ll be a rough time between you and someone, but at the end of the day you’ll regroup with that person.

What’s the next big development for the live entertainment business?
You’ll see more development around arenas controlled by the arena owners. One, it provides another form of entertainment for your fans, and secondly it’s another great revenue source, outside the arena. I don’t think there’s a new mousetrap in arenas right now. In the future there will be. Now the new mousetrap is developing around the arena. Where in the past you saw people negotiate arena rights, now you’re seeing people do like we did and negotiate development rights.

Originally published on Billboard.biz |  July 23, 2012   |    By Ray Waddell, Nashville