For a top sports executive who recently helped convince voters to allow a major expansion of a stadium, Adam Barrett doesn’t sound quite as celebratory as you might think.
The director of the Sony Open tennis tournament presided over November’s successful ballot initiative that saw Miami-Dade voters approve a $50 million renovation of the county-owned facility that houses the annual two-week event.
There was a catch: no public dollars can go into the project, just tournament revenue. But for the profitable tournament, the victory meant a tacit endorsement of a lucrative 50-year lease and the kind of voter approval a certain professional team slightly north of Key Biscayne can only dream about for now.
But despite the referendum passing with almost 73 percent of the vote, Barrett does not describe the expansion as a done deal. The plan is to expand the current main court facility and build two other permanent courts to replace the temporary stands and facilities IMG sets up each year.
In interviews with Business Monday, Barrett emphasized that a lawsuit and the local regulatory process still could undo a privately-funded plan he said is crucial to keeping the tournament in the Miami area. Without more revenue that comes with an expanded facility, Barrett says Sony can’t keep pace the rival tournaments, including the prize money offered players. That prize money lures the stars that, in turn, drive dollars from fans and sponsors.
Sony looms large in the U.S. portfolio of Barrett’s employer, IMG. A sports conglomerate, it has investments throughout the tennis industry that sustains the tournament. It trains aspiring players, manages pros, owns tournaments and runs businesses tied to the marketing and merchandising of various tennis entities, including the Wimbledon tournament in the United Kingdom.
Barrett said it’s tough comparing Wimbledon to Key Biscayne’s corner of the tennis industry. But in his interview, he discussed why Sony needs better facilities, what a lack of celebrity players means for the tournament, and how champagne easily outsells beer even on the hottest day at the tourney.
Q. Can you explain IMG’s role in the tennis industry — you run an academy, you represent players and you run major tournaments.
It’s a global business divided into three parts. Sports, entertainment and media. They cross over into the sports area in both the media and the sports realm.
We’ve always represented Maria Sharapova. Venus Williams has always been one of our players. Up until last year, we represented Roger Federer and Rafael Nadal. We’ve had them for the majority of their career.
IMG also trains players to compete professionally. They have an academy. But the IMG academy is not just tennis, they also have golf, they train the professional players prior to the combines for the NFL.
On the sports side as it relates to tennis, they represent media rights for Wimbledon, and marketing rights for the Australian Open. They own events around the world. Two events in the U.S., events in Paris, and they also run events for a lot of different emerging countries, including India. This is all tennis. They do the same for golf. We’re the single largest event in their portfolio that they own.
Q. What are the other tournaments that compete with Sony?
It’s Indian Wells [in California]. It’s Cincinnati. It’s the Canadian open. Globally, it’s the Rome Open. It’s Paris. It’s Madrid. It’s Shanghai.
Q. How does the Matheson lawsuit affect the construction timetable?
It’s 100 percent contingent on the Matheson lawsuit. Our first step was to start with the public. It wasn’t necessarily required first. We chose to start with it.
Before we went down that road [of pursuing an expansion] we wanted to make sure that the public agreed. Since we had this [referendum] requirement anyway, we said let’s start with it. If the public wants us to be here for the long haul and make these improvements without them paying for it, then we’ll go ahead and take all of the other necessary steps after the vote.
Our goal is to break ground in April 2014.
Q. Why do you think Bruce Matheson is opposing this?
In my opinion, I believe that Bruce has his own vision of the park, which is to return it to 1948. I think he has his own recollection of the history. If you hear him speak, he talks about the family’s donation. And they did donate 800 acres but it was in exchange for a bridge. It gave the family the ability to develop another 1,000 acres on Key Biscayne. It was a commercial venture.
I’ve actually never met him. I know about him. I know a lot of the history...This is a one-person crusade who believes his vision of Crandon Park overrides the citizens of Dade County.
Right now there is only one stadium. We have to build temporary stadiums. The only bathrooms are either in the clubhouse or in the stadium. If you’re out on the far court, there is nothing there. There are no bathrooms, there is no shade, there are no concessions. When we come in , we have to put up tents and we have to build stands. During the tournament, we bring 300,000 people—citizens plus tourists from all over the world. It should be a completely first class experience. Instead, they’re sitting in temporary bleachers.
[In a separate interview, Matheson accused IMG of trying to circumvent a settlement his family reached in 1993 with Miami-Dade over the donated park land. The previous owner of what was then the Lipton tournament wanted to build a tennis facility there in the 1980s, but the Mathesons sued to stop the county from allowing it.. A court fight over the family’s deed restrictions led to the settlement, which included restrictions on growth and a panel that must approve changes. Matheson sits on the committee. Of IMG, he said: “They’re trying to create a situation that suits their needs. The settlement and the master plan don’t allow it. They obviously read that document before they bought the tournament.”]
Q. Was there talk of going for public money for the stadium expansion?
There is always talk of going for public money. You can always justify going for public money. We are in a public venue and a publicly owned site right now. We feel that as long as we have a long-term home, given our relationship with the county, that the money used should come from the operations of the tournament and not from the taxpayers... We decided it was not the time to reach out
The community has been very very good for us. They have supported us through good times, through tougher times, through good weather and bad weather...
Q. How much does the tournament pay to Miami-Dade each year?
They get a share of the revenue—it’s a license fee. It’s in excess of $1.1 million.
Q. So in exchange for building the new stadiums, the tournament receives essentially a 50-year lease. What are the increases in revenue to the county through that?
We’re negotiating the deal with the county right now. The goal is it will be enough [money for Miami-Dade] to cover the operational costs so that the county is not subsidizing the event. Right now we feel the county, through parking revenue and the licensing fee, is actually operating the event at close to or breaking even. For most major sporting events, there is a subsidy. Whether it’s in police or the land or a cash contribution. You bring the Super Bowl in, you start out with a host committee [to raise money]. We don’t have a host committee. We’re here.
Q. Did you see the recession at the tournament?
You had to get very creative to sell more sponsor packages for less money. You had to be more conservative when you looked at where your pricing is for your long-term ticket holders, where your pricing is for your new ticket holders. We’ve been very fortunate that tennis has remained strong during the recession.. It was challenging because throughout this time our prize money has consistently gone up..
Q. Did revenues actually dip?
A little bit. I would call it more “flattened.”
Q. What is the most popular concession item there?
The biggest driver of revenue for adults? It’s the Veuve champagne. We do a lot of beer sales, but the champagne is more popular.
Q. Roger Federer and Rafael Nadal skipped the Sony this year. A ticket broker recently complained to me that once there were no major stars in the tournament, resale value really dropped off. Does Miami have fair-weather tennis fans, too?
We had over 300,000 ticket holders, and we sold out our last five sessions. But Roger and “Rafa” both transcend tennis and they transcend sport. They are superstars. Like any other superstar, there is going to be interest in them above the level of the sport itself.
Do they bring an extra dimension? Absolutely. Can you have Roger and Rafa not show up and feel it to some extent, yes. I think the effect was tops 5 or 6 percent. What that says is you have a true, hardcore base that want to come out to the tournament. But there was a shock factor at first in terms of: What do you mean they’re not here?