STAMFORD Conn. Centerplate Inc., the sports and entertainment foodservice specialist, confirmed Thursday that it has ended its 40-year contract with the New York Yankees and will not be the concessionaire when the team moves into its new stadium in 2009.
Centerplate, which derives approximately $71 million, or 9.6 percent, of its net sales from the Yankees contract, will continue to provide foodservice this season at the team’s original ballpark. Concessions will be self-operated at the new stadium, which is located next to the old Yankee Stadium. The new $1 billion stadium will house 60 luxury suites, eight party suites, a variety of restaurants and about 55,000 seats.
According to an industry insider who requested anonymity, the Yankees' new stadium will be the first major league ballpark to self-operate its foodservice.
Centerplate, which said it inked deals during the past 12 months that represent more than $110 million in annualized new sales, noted that if it doesn't obtain any new business to offset the loss of the contract in 2009, it would have a "material adverse effect" on the company's earnings. The Yankees have been Centerplate’s largest client to date.
“Even though they have booked $110 million in new business this year, I doubt it is as profitable as [their] Yankees [business is],” the industry source said.
Separately, Centerplate's shares plunged 50.7 percent on Wednesday after it said it may have to stop paying dividends to shareholders as early as June. The company's stock fell by another 15.35 percent on Thursday, to close at $3.75. The stock has traded between $3.50 per share and $18.85 per share for the past 52 weeks.
In the past, angry shareholders had favored the sale of the company.
“There’s no question that as the stock plummets and they tell their stockholders there’ll be no dividend, those stockholders may be more interested in being bought out than they were in years past,” the industry insider said. “I would think all of the company’s competitors would be taking another look at them.”
On March 10, Centerplate said it narrowed its fourth-quarter net loss by $1.1 million to $2.1 million, or 9 cents per share, from a loss of $3.1 million, or 14 cents per share, in the same quarter a year ago. It also reported that quarterly sales for the 13 weeks ended Jan. 1 increased 6.6 percent to $168.4 million.
For the full year, also ended Jan. 1, the company's net loss was $1.9 million, or 8 cents per share, compared with a profit of $3.5 million, or 15 cents per share, a year earlier. Centerplate attributed the loss primarily to increased interest expense from a higher debt burden, changes in the value of the company's derivatives and costs associated with a secondary offering in December 2007. Net sales for the year rose 8.7 percent to $740.69 million.
Centerplate did not return requests for comment by the time of this posting.