April 18 (Bloomberg) -- Sam Nazarian, the Los Angeles restaurant and hotel owner, plans to open a Hyde nightclub at the Miami Heat’s AmericanAirlines Arena as sports venues expand their entertainment offerings.
Nazarian’s SBE Entertainment Group LLC, owner of Katsuya restaurants and the luxury-lodging chain SLS, expects to open the club in partnership with the Heat Group in time for the next National Basketball Association season. The club will feature multiple bars, lounge areas, flat-screen televisions and a private dining room.
SBE, which received a $35 million infusion from billionaire Thomas J. Barrack Jr.’s Colony Capital LLC last year, is in talks with other arenas as more sports venues seek to increase revenue by broadening their appeal. The new $634 million Marlins Park baseball stadium, also in Miami, has a nightclub called the Clevelander and two 450-gallon aquariums embedded in the walls behind home plate.
“Arenas want to bring in the next level of experience, such as a nightlife component,” Nazarian, founder and chief executive officer of SBE, said in an interview. “Old arenas like Madison Square Garden or Dodger Stadium are trying to reinvent themselves. People are looking for more than just hot dogs and pizzas.”
Danny Elmaleh, executive chef at the Los Angeles-area restaurants Cleo and Mercato di Vetro, will help develop the menu at Hyde AmericanAirlines Arena, and a mixology team will create cocktails with ingredients such as red pepper, some prepared with liquid nitrogen.
The 5,000-square-foot (465-square-meter) club will have its own entrance and accommodate 200 people, Nazarian said. Admission would be free for game- and concert-goers, and patrons without event tickets would be charged a fee, he said. The venue may be rented for special occasions when the arena is dark.
“In one respect, Hyde will be a new amenity for our best customers,” said Eric Woolworth, president of business operations for the Miami Heat. “It adds a hip quotient and panache, and it’s also another space we can market for parties and private events.”
Nazarian, whose company operates four Hyde lounges in the U.S., expects to have deals to provide nightclubs or food and beverage services at as many as 15 sports venues by 2016 and has created a new unit, called SBELive, to lead the effort, he said. The company is in talks with New York’s Madison Square Garden, Cowboys Stadium in Dallas and Angel Stadium in Anaheim, California, among other sports facilities, he said.
“Not every arena is like Staples Center, with 270 events a year,” said Nazarian, who opened the Hyde club at that Los Angeles arena in 2008. “Some only have 30 to 50 true events a year. They want to maximize their business.”
SBE is also negotiating with the Los Angeles Dodgers as the Major League Baseball team’s new owners -- a group led by Guggenheim Partners LLC Chief Executive Officer Mark Walter and former Los Angeles Laker Earvin “Magic” Johnson Jr. --consider transforming the stadium’s surrounding property to generate additional revenue, Nazarian said.
The company’s ambitions may be hampered because many new venues incorporated upgraded food and entertainment options into their design, using such vendors as Stamford, Connecticut-based Centerplate Inc. and Aramark Corp. of Philadelphia, said Richard Krezwick, general manager of the Prudential Center in Newark, New Jersey. Offerings at the arena, home to the National Hockey League’s Devils and NBA’s Nets, include a fine-dining restaurant and private-membership club, he said.
“For independent club and food and beverage operators, the issue may be what already exists,” Krezwick said.
Space limitations, such as at the AmericanAirlines Arena, may also cramp SBE’s expansion plans, said Woolworth, the Miami Heat executive.
“I don’t know if we can ever have any of their restaurants at the arena,” he said.
SBE, which has a 50 percent investment and revenue stake in the Miami Heat venture, expects an increase in demand from game-goers to aid future growth.
“People want to connect when they go to a game or a concert but there’s no place for them to intermingle,” Nazarian said. “With Hyde,” he said, “it gives people a chance to stay.”
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