"We need to be in the food and beverage business and Spectra has done a great job with their accounts, the majority of which are food and beverage, and that is the No. 1 overriding opportunity here," OVG CEO Tim Leiweke tells Billboard. "We now have the ability to compete against the big dogs, like ASM that has 300-plus accounts on a facility management side and is able to bundle food and beverage."
ASM Global is the world's largest facility management company, created in 2019 following the merger of AEG Facilities and SMG in 2019, with more than 300 buildings under management, eclipsing OVG, which has six venues that it owns and operates and another 35 clients it provides services to. Spectra has 300 clients, the majority of which are venues that contract with Spectra for food and beverage.
Leiweke said he considered launching his own food and beverage business, but believed that a merger with Spectra "was a much better path."
A handful of concessions companies dominate the facility business -- Aramark, Centerplate, Delaware North and the AEG-aligned Levy Restaurants -- with only one new entrant in the business, Legends Hospitality, in the last decade. Concessions are a difficult business, often operating at low margins and large scale, with discerning customers wanting much more than hot dogs and popcorn. That demand for high-quality food, prepared and sold at a high volume with significant upfront and operational costs, makes its almost impossible to grow on innovation alone.
"Food and beverage has been one of our largest lines of business and coupled with venue management and our corporate partnership group and we've been pretty successful bundling a nice boutique experience for our clients," Scott tells Billboard. "When you look at what OVG is doing with operations, security, safety and sustainability, there are all big initiatives that make the two companies very complimentary."
Spectra's experience in concessions dates back to the purchase of Leisure and Recreation Services in 2000, which later became Ovations Food Services. Spectra began as Comcast-Spectacor, founded in 1996 by the late Ed Snider, owner of the Philadelphia Flyers, partnering with cable giant Comcast to form a venue management and hospitality company. Comcast would go on to acquire Front Row Marketing, New Era Ticketing and Paciolan, before rebranding as Spectra in 2015 and hiring Scott the following year. In 2018, investment and holding company Atairos acquired a majority interest in Spectra.
The merger of the two firms will add to the momentum of Oak View Group, which now works with over 40 facilities and is building and developing a number of top-tier venues including the Climate Pledge Arena in Seattle, UBS Arena in New York and the Moody Center arena in Austin.
The name of the combined company won't be announced until the deal is approved by regulators both in the U.S. and abroad, and the financial points of the agreement have not been made public.
The deal also expands OVG's offering of services including its venue safety group Prevention Advisors, the sustainability work its doing for projects like Climate Pledge Arena and its partnerships business through its Arena Alliance.
Completion of the merger is expected in the fourth quarter of this year. Following the close of the transaction, OVG will remain headquartered in Los Angeles, with the headquarters for Spectra remaining in Philadelphia.
UBS Investment Bank acted as financial advisor and Kirkland & Ellis LLP acted as legal advisor to Oak View Group. Moelis & Company LLC acted as exclusive financial advisor and Davis Polk & Wardwell LLP acted as legal advisor to Spectra.