Atlanta Hawks fans get a home court advantage: cheap food

Bigelow says concession prices at sports games have been rising since the 1970s, when teams first demanded commissions of 30 percent from their hot dog and Cracker Jack sellers. Today, he says, it’s more common for a team to claim around half of food sales revenue. That’s why you might see vendors charging $10 for a beer at a Phoenix Suns game or a $7 hot dog in Miami. Nevertheless, he says, the team’s cut of those sales is usually much smaller than what they’re raking in from ticket sales or TV rights.

Both the Hawks and Levy, the provider that services Philips Arena, declined to comment on financial or contractual details for this story, but Bigelow says industry contracts typically work this way: a team will keep 40 to 50 percent of the revenue generated from concession sales, with the rest going to concessaires like Levy. Under that model, the concessionaires use their share of the revenue to cover expenses like food and labor, and turn a profit.

Bigelow says it’s likely that the Hawks will pay Levy a flat annual fee under the new arrangement, potentially between $200,000 and $500,000, to manage concessions. If there are profits, Levy and the Hawks will split them, and if there are losses, the Hawks will cover them.

“If before, under the old scenario, there wasn’t enough money to pay the operating costs, the concessionaire had to pay it out of their own pocket. That’s part of the deal. The team got their money up front, regardless of whether there was profit or not. They got paid because there were sales,” Bigelow says. “Now you’re reversing the model. I’m [the Hawks] saying to the concessionaire, ‘we’re gonna pay you a small fee to manage, but we the team will absorb all operating losses, if there are any.’”

That model isn’t unheard of. Last year, the Atlanta Falcons, another Levy account, put the company on a management fee structure and slashed prices. The team said the amount spent per fan went up by 16 percent following the change.

Outside of sports, Bigelow estimates that 75 percent of food service companies run on a management-fee basis. Levy, a subsidiary of Compass, the world’s largest food service corporation, would not comment on whether it received management fees to run concessions at ballparks, stadiums, racetracks, and convention centers.

So will cheaper arena food prove to be a marketing slam dunk? (Sorry.) Hard to say. When a team like the Hawks can’t count on winning, maybe it’s cheap food that’ll keep the fans coming. That, or Swipe Right Night.