After losing money on alcohol sales at TCF Bank Stadium last year, the school renegotiated with its concessionaire.
The University of Minnesota is hurriedly moving to renegotiate its contract with its longtime concessionaire to funnel more alcohol proceeds to the school after reporting that it lost money in its first year selling beer and wine at TCF Bank Stadium.
University officials said the new tentative agreement — which comes as the school faces continuing criticism for losing money on alcohol sales during the 2012 football season — would substantially increase its percentage of beer and wine sale proceeds from the stadium’s general seating area. Only two months ago, the school reported it lost nearly $16,000 in its first year of selling beer and wine at the four-year-old stadium, even though it sold more than $900,000 worth of alcohol.
The school and Aramark, one of the country’s largest concessionaires, have since been renegotiating the contract at the urging of university President Eric Kaler and athletic department officials, and a new agreement would raise the university’s percentage from 22.5 percent of net sales to 35 percent of net sales up to $475,000 and 40 percent of sales above $475,000 in the stadium’s general seating area. Using the new percentages, school officials said the university would make $110,000 this coming football season based on last year’s sales.
“I think it was a surprise that we lost money,” said David Benedict, the school’s executive associate athletic director. “We were not happy when we realized the fact that we had not shown a net profit.”
Benedict said Aramark, as part of the new agreement, also pledged to give the school $37,000 to help erase its first-year loss, but he said the move was not an attempt by the company to make sure its university contract was not jeopardized.
A spokesperson for Aramark said the company would have no comment on the renegotiated contract.
A review of the university’s recent agreements with Aramark, a Philadelphia-based company that has had contracts with the school since 1998, suggested that school officials initially might not have aggressively pushed for higher percentages of alcohol sales at the 50,720-seat TCF Bank Stadium.
Within months after the stadium opened in 2009, school officials agreed to get 22.5 percent of potential alcohol sales even though the university had previously agreed with Aramark on a much higher rate of non-alcohol concession sales at the stadium: 33.24 percent of non-alcohol concession sales up to $1 million, and 37.93 percent of concession sales above $2 million.
The school’s earlier agreement with Aramark on alcohol sales at TCF Bank Stadium also came as the school had been getting up to a 40 percent commission on net alcohol sales from the same company at nearby Northrop Auditorium. Leslie Bowman, the university’s executive director of contract administration, said the school subsequently agreed to the 22.5 percent figure at the football stadium and also agreed to lower the percentage at Northrop Auditorium to 22.5 percent “because we had to look at the campus as a whole.”
While Northrop Auditorium — which is now closed for remodeling — had “a bit larger” percentage, it produced “a very small, small dollar amount,” Bowman said.
It was not clear, however, how the deal that led to the school’s revenue loss at TCF Bank Stadium came about or who ultimately approved it. Benedict said he was hired by the school only last July and did not immediately tumble to the possibility the school would lose money.
Other U venues made money
By comparison, the public authority that oversees the Metrodome, the home of the Vikings and former home of the university’s football team, has regularly received more than $1 million annually in alcohol profits from general sales inside the stadium. Last year, the Minnesota Sports Facilities Authority received nearly $1.9 million in alcohol money from general sales inside the stadium, while the Vikings got $615,887.
The public authority that oversees Target Field, the Twins’ ballpark that opened in 2010, gets 10 percent of the net alcohol sales from the limited number of non-Major League Baseball events at the facility and received $169,501 last year. Under an agreement with the Minnesota Ballpark Authority, the Twins keep all concession money including alcohol sales from its baseball games.
School administrators said the new percentages at TCF Bank Stadium would be in place for one year — the school said it hopes to further raise the percentage — and that the 22.5 percent figure would still apply to alcohol sales in the stadium’s premium seating. In addition, the school said it would push to make sure the Vikings — who will temporarily play at TCF Bank Stadium in 2014 and 2015 while their new stadium is under construction — do not negotiate a more lucrative deal with Aramark while using the campus stadium.
University officials also said that first-year alcohol sales in the premium seating at Mariucci and Williams arenas, where the school’s men’s hockey and basketball teams play, had netted $20,673 for the school during the past season.
The decision to sell alcohol at TCF Bank Stadium came after school officials had pushed the Legislature for something else: to sell alcohol only in the football stadium’s premium seating areas. School administrators indicated they had little time to assess the possibility of losing money because they had to quickly prepare an alternative plan when legislators last year insisted that alcohol also be made available in the stadium’s general seating areas.
The political sting of having lost money has not subsided.
“When we read the account that beer was being sold for — what? — $7.25 [and] we lost money, we were taken aback,” said Dean Johnson, a member of the school’s Board of Regents and a former Senate majority leader. “I don’t know a Minnesotan who would believe that you’d lose money with that kind of a gross. I think that a sharper pencil, and better accounting methods, ought to be used.”
Rep. Dan Schoen, DFL-St. Paul Park, who wants to extend alcohol sales to other sports facilities at the university, said the contract left him with questions of how aggressively the university negotiated its alcohol sales deal and showed that school administrators did not like close scrutiny. “Why is Aramark getting such a sweet deal, and how is that even allowed to happen?” he asked.
Board of Regents member Clyde Allen, however, defended the arrangement, and said prohibiting underage alcohol sales — and not making money — was the school’s top priority at the football stadium. “Making money on it is not really the main purpose of it,” Allen said. “We’re more interested in being sure that we can control the sale of it.”