Boca Resorts, Inc.
Boca Resorts, Inc.
Boca Resorts, Inc.
Sales: $421.5 million (2000)
Stock Exchanges: New York
Ticker Symbol: RST
NAIC: 711211 Sports Teams and Clubs; 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities; 721110 Hotels (Except Casinos); 713940 Fitness and Recreational Sports Centers
Boca Resorts Inc. owns and operates six world-class hotels: Boca Raton Resort & Club; the Radisson Bahia Mar Beach Resort and the Hyatt Regency Pier 66 in Fort Lauderdale, Florida; The Registry Resort and the Edgewater Beach Hotel in Naples, Florida; and the Arizona Biltmore Resort & Spa in Phoenix, Arizona. Beyond the luxury accommodations and amenities, each hotel has its own distinctive: history, one-of-a-kind location, or rich, natural surroundings. Boca Resorts also owns the Florida Panthers hockey team, the National Car Rental Center, home ice for the team, Incredible Ice Skating Rinks, and the Miami Arena. Billionaire H. Wayne Huizenga owns 98 percent of Boca Resorts.
Early 1990s Sporting Origins
Boca Resorts originated as Florida Panthers Holdings when the National Hockey League (NHL) awarded H. Wayne Huizenga the franchise for the Florida Panthers hockey team. Huizenga had built his fortune on two highly successful companies, Waste Management, of which he was co-founder, and Blockbuster Video, which he headed during its period of greatest growth. Huizenga secured a $45 million loan to purchase the franchise, and the company put together a team in time to play in the 1993–94 hockey season. The Florida Panthers played at the Miami Arena, home court for the Miami Heat basketball team.
Although Huizenga promised the NHL that he would build a new arena for the Panthers, it was also in the financial interests of the company to have its own arena. At the Miami Arena the Heat held exclusive rights to advertising revenues and luxury suites and paid only $13,500 per game to play there. The Panthers paid $30,000 per game plus 7 percent of ticket revenues for games that exceeded $250,000 in sales; during the first season, ticket revenues averaged $355,000 per game.
The Broward County Commissioners approved the plan for a tax-funded arena in Sunrise in June 1996. Under the agreement, the Panthers received 95 percent of revenue from ticket and merchandise sales and advertising signage and all of the revenue from 50 luxury skyboxes and 2,400 club seats. The team also received the first $14 million in operating profits and 80 percent of additional profits for managing the arena. Construction on the $185-million facility began in 1997.
The future financial success of the team depended on a new arena because Florida Panthers Holdings operated at loss. With revenues of $33.3 million, the company lost $11.1 million on operations in fiscal year ending September 30, 1996. Amortization of the cost of the franchise and interest expense resulted in an actual loss of $25.5 million. The loss was due in part to the doubling of player salaries, from a total of $10.2 million in the team’s first season to $20.1 million in the 1995–96 season, but was mitigated by participation in the playoffs, which earned a $3.3-million profit. To be sure that the Panthers and the Marlins received adequate airplay in the future, Huizenga acquired 50 percent of SportsChannel Florida Associates.
Huizenga took Florida Panthers Holdings public in November 1996, seeking funds to pay debt and to cover losses. At $10 per share, Huizenga offered 4.6 million shares to private investors for a minimum purchase of 100 shares. The general public could buy a minimum of one share as Huizenga fostered fan ownership as a novelty, purchased for emotional satisfaction rather as a serious investment. Trading started at $11.50 per share but ended the day at $11.12 due to the emotional nature of investor interest as more than 8,000 fans purchased one to ten shares. Under the NHL franchise agreement, Huizenga retained a 51 percent ownership of the team. The offering raised $67.3 million after expenses.
Huizenga Changes Direction After IPO
The Florida Panthers became the second professional sports team to be publicly owned without unrelated investments. However, when Florida Panthers Holdings stock remained stagnant after the public offering, Huizenga decided to diversify the company into a sports, leisure, and entertainment conglomerate to attract serious investors. In December 1996 the company purchased two premier Fort Lauderdale hotels, the Hyatt Regency Pier 66 Resort and Marina and the Radisson Bahia Mar Beach Resort and Marina. Both stood out because they were on the Intercoastal Waterway, minutes from beaches and Fort Lauderdale’s Las Olas Boulevard. Huizenga and some business associates held an 80 percent interest in the hotels, and Rahn Properties, which managed the hotel, owned the other 20 percent. Florida Panthers Holdings acquired ownership from Huizenga and Rahn Properties through a stock and cash transaction valued at $125 million. The diversification boosted the company’s stock to $17 per share.
Through a private sale of stock in January 1997, Florida Panthers Holdings raised $68.2 million for further acquisitions. The private placement at $27.75 per share led to an increase in publicly traded shares to $30.62 per share. The stock rate was equivalent to three times the actual value of the company. Investors trusted Huizenga and expected his new endeavor to do well because as cofounder of Waste Management and chairman of Blockbuster Entertainment, he led those companies during their greatest growth.
Huizenga continued to expand the company’s holdings. Florida Panthers Holdings purchased the renowned Boca Raton Resort and Club near West Palm Beach, Florida, for $325 million in stock and cash. Facilities at the 298-acre included a golf club and two golf courses, a marina, and a private beach. The purchase involved development plans, such as the state-ofthe art conference center, then under construction.
Florida Panthers Holdings as a sports business acquired Florida ice-skating facilities. In January 1997 the Panthers bought Incredible Ice, a state-of-the-art, interactive ice-skating facility in Coral Springs, Florida, for $13 million in stock, cash, and debt assumption. The 75,000-square-foot facility housed two full-size ice rinks, spectator seating, training rooms, a sports bar, and a retail store. The following summer the company acquired the lease to operate the Gold Coast Ice Arena in Pompano Beach, the practice rink for the Panthers and also home ice for the Gold Coast Minor Hockey League and the FGC Figure Skating Club.
Florida Panthers Holdings continued to add luxury resorts to its investments. In August 1997 the company acquired controlling interest in the Registry Hotel at Pelican Bay in Naples, Florida, a 474-room, four-star hotel considered one of the state’s top ten resorts. The following December the company gained a majority interest in the prestigious Arizona Biltmore for $288.5 million in stock, cash, and debt assumption. The work of Frank Lloyd Wright inspired the design of the 1929 luxury resort at the base of Squaw Peak.
The Boca Raton’s $46 million, 140,000-square-foot conference center opened in January 1998, allowing the hotel to serve more than one large group simultaneously. The presence of the meeting center lowered the hotel’s rating from five to four stars, but it attracted a record number of conferences. The company planned further expansions and renovation at an anticipated cost of $55 million.
The company also planned a Country Pursuits Centre near the Everglades National Park as a response to growing interest in adventure tourism. The center would offer lessons in fly-fishing, shooting, hunting with dogs, and falconry, hunting wild fowl and game with falcons, though no killing would be allowed. Zoning issues with the county and the water district, however, delayed completion of the project.
In April 1998 Florida Panthers Holdings bought the Edge-water Beach Hotel, a four-star, all-suite hotel in Naples, for $41.2 million. The company began constructing a golf course to serve guests at both the Edgewater and The Registry and acquired complete ownership of The Registry in July. The company also purchased a golf course in Plantation for use of guests of the Bahia Mar and Pier 66 hotels, but zoning restrictions held up planned renovations.
Panthers Attain Profitability in 1998
As revenues from hotels covered losses from the hockey team, Florida Panthers Holdings recorded its first profit for fiscal year ending June 30, 1998. On revenue of $293.3 million, the company realized a net income of $1.3 million. This compared to fiscal 1997 revenues of $54.3 million and losses of $10.3 million. The Panthers became more profitable as the team sold out all home games for the 1996–97 and 1997–98 seasons, but player salaries rose $18.7 million. Losses from the hockey team reached $20.4 million in fiscal 1998, while acquisitions caused revenues from leisure and recreation businesses to jump from $17.6 million in 1997 to $252.6 million in fiscal 1998. The company expected increased revenue from the new hockey arena to improve the hockey team’s profitability.
We are in the business of marketing a one-of-a-kind experience. We specialize in catering to guests, individuals, and groups, with customized service. Our combination of exceptional service and unique locations had earned our resorts a reputation as superior destinations, ideal for business and pleasure.
The new Panthers hockey arena in Sunrise opened as the 872,000-square-foot, multipurpose National Car Rental Center in October 1998. National Car Rental, a subsidiary of Huizenga’s Republic Industries, was awarded the naming rights for the arena for $25 million to be paid incrementally over ten years. In its first year, the center hosted 150 events, including sell-out concerts by the Rolling Stones, Neil Diamond, and ‘N Sync, attended by a total of more than $1 million people.
The new arena did improve the profitability of the hockey team. The Panthers sold 15,500 season tickets to the team’s 41 home games, for an overall increase of 4,000 spectators per game. It held 19,500 seats, 4,500 more than the Miami Arena, and also had 70 luxury skyboxes. The facility increased entertainment and sports revenues for fiscal 1999 more than 50 percent, to $62.6 million, while operating expenses increased less than 10 percent. Overall, Florida Panthers Holdings had a net income of $5.4 million.
The new arena did not increase the stock price of Florida Panthers Holdings as Huizenga had hoped. The company’s stock held at $10 per share, in part because of a general decline in the value of hotel stocks. Another private offering of stock in February 1999 raised $40.3 million, selling four million shares at $10.25 per share. The company also permitted existing investors to buy one share for every ten owned. The offering raised $16 million, but Huizenga wanted to raise $30 million to pay short-term debt from the acquisition of the Arizona Biltmore. With improved profitability of the new arena, rumors began to circulate that Huizenga might sell the hockey team to pay debt, and shift his focus to luxury resorts.
Strategies for Growth
Florida Panthers Holdings pursued internal growth, building on the strengths of its distinguished hotels. Huizenga planned to spread the Boca Raton’s excellence to the company’s other properties and to develop the resort’s Premier Club concept at the other hotels. Premier Club members paid an initiation fee and annual dues for use of the resort facilities.
The company also initiated several capital improvement projects, including guest rooms at The Hyatt Pier 66 ($8.4 million), renovation of the 27,000 square foot club house, an upgraded golf course, redesigned by Raymond Floyd, and a new three-par golf course. Renamed Grande Oaks Golf Club, the facility re-opened in June 1999. The company also completed a new golf course, designed by Rees Jones, for patrons of the two hotels in Naples. In September the Arizona Biltmore finished a new, $12-million wing, adding 122 luxury rooms and an Olympic-size swimming pool. New construction at the Boca Raton Resort encompassed 114 luxury suites with a view of the marina, additional boat slips, and new retail space.
Florida Panthers Holdings did increase both profits and bookings through a strategy to improve sales and reduce over-head by replacing outside management companies at the Pier 66, Bahia Mar, and the Arizona Biltmore with its own employees. The company also raised the 60 percent occupancy rate at the Arizona Biltmore after it increased expenditures for marketing to $4.4 million, compared to less than $1 million previously, and added sales representatives in major U.S. cities and advertisements in Canada and Europe.
In September 1999 Florida Panthers Holdings changed its name to Boca Resorts to reflect the company’s emphasis on luxury resort and conference accommodations. Shortly after, the company announced its interest in selling the hockey team, as predicted, and also considered unsolicited offers to buy the Arizona Biltmore.
Boca Resorts planned to maintain its focus on internal growth rather than acquisitions, continuing to renovate hotel facilities and add new services. Boca Resorts expected to begin construction on a new luxury spa, a golf club house, and a casual restaurant in 2000. In February 2000 Boca Resorts introduced the Premier Club concept at the Edgewater and The Registry hotels, requiring members to pay a $45,000 initiation fee plus $2,300 in annual dues, and an additional $5,000 per year for use of tennis and golf facilities. The company also instituted online, real-time room reservations.
Revenues for fiscal 2000 reached $421.5 million, garnering net income of $13.5 million. Much of the increase was due to increases in the average daily rate for hotel rooms, increased occupancy, and increased availability, as well as higher occupancy at the Arizona Biltmore. The Panthers reached the first round of the Stanley Cup playoffs, generating an additional $1.2 million in ticket sales, but this only offset an overall decrease in sports and entertainment revenues compared to fiscal 1999.
Florida Panthers Hockey Club, Ltd.; Arena Operating Company, Ltd.; Decoma Miami Associates, Ltd. (78%).
Hyatt Corporation; Marriott International, Inc.; Starwood Hotels and Resorts Worldwide, Inc.; Wyndham International, Inc.
- H. Wayne Huizenga is awarded hockey franchise and forms team to begin play in 1993–94 season.
- The Florida Panthers hockey team plays first season.
- Company is incorporated, makes its initial public offering of stock, and begins acquiring luxury hotels.
- Huizenga changes the company name to reflect primary focus of operating luxury hotels and resorts and announces plans to sell hockey team.
Commisso, Marco, “Boca Raton, Fla., Resort Has Helped Transform Once-Sleepy Town,” Knight-Ridder/Tribune Business News, August 7, 1997.
Corbett, Peter, “Phoenix-Area Resort is in Talks to be Sold,” KnightRidder/Tribune Business News, April 4, 2000.
Corbett, Sue, “Broward, Team Could Gain if Panthers Move,” Miami Herald, March 4, 1994, p. 1A.
Fakler, John T, “Boca Resorts’ Plan for Wilderness Center Bogs Down,” South Florida Business Journal, April 14, 2000, p. 4B.
“Florida Panthers Holdings, Inc. Closes on The Registry Hotel in Naples,” PR Newswire, August 12, 1997.
Goodman, Cindy Krischer, “Florida-Based Resort Firm to Drop Hockey Team’s Name,” Knight-Ridder/Tribune Business News, September 15, 1999..
“Panthers Stock Leaps After Promo on CNN,” Miami Herald, January 24, 1997, p. 1C.
Grimm, Fred, “Panthers Fan not Cheering Stock Prices,” Miami Her ald, May 19, 1998, p. 1BR.
Hilton, Lisette, “Boca Raton Resort is Going to the Dogs—Fishy Stuff, Too,” South Florida Business Journal, August 14, 1998, p. 7A.
Jackson, Barry, “Balancing the Book on the Panthers’ Finances ‘96 Playoff Ride Profitable, but Losses Still Top $11 Million,” Miami Herald, November 17, 1996, p. 7C.
——, “Cats Revenue to Soar; Spending Won’t,” Miami Herald, May 9, 1998, p. 2D.
Kay, Julie, “Arena Officially Named for Car Rental Company,” Miami Herald, July 15, 1998, p. 1BR.
Magenheim, Henry, “Huizenga Group to Buy Boca Raton Resort & Club,” Travel Weekly, March 27, 1997, p. 31.
Muellner, Alexis, “Will Sale of the Panthers Boost Boca Resorts’ Stock?” South Florida Business Journal, November 12, 1999, p. 18.
Ostrowski, Jeff, “Wayne’s Shopping Spree—Billions and Billions in Just 7 Months,” South Florida Business Journal, January 31, 1997, p. 14A.
Rafinski, Karen, “It’s official: Florida Panthers Will Make Sunrise New Home,” Miami Herald, June 5, 1996, p. 2B.
Rodgers, Jodi, and Alexis Muellner, “Panthers’ Business Plan: Diversify, Pump up Resort Jewels,” South Florida Business Journal, November 6, 1998, p. 20A.