America’s sports teams are becoming homeowners.
Professional sports team owners are developing millions of square feet of retail, office and residential space, expanding their influence – and revenue streams – beyond the turnstile at an accelerated pace. If plans for cities stretching from San Diego to Boston are realized, professional sports teams, as a group, will become some of the largest commercial property owners in the country, controlling 28 million square feet of non-gaming space.
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“Control is an incredibly important word in this matter,” said Derek Schiller, President and CEO Atlanta Braves… “The problem with many teams is that someone outside of their professional sports team or their facility determines what is happening directly outside of their venue.”
Schiller spearheaded Braves in the construction of The Battery Atlanta, a 2 million square foot complex around Truist Park, a 41,000-seat stadium that opened in 2017. Tenants that own 99% of Battery include Comcast’s regional headquarters. restaurant by celebrity chef Ford Fry and quirky paper shop Sugarboo & Co. Investment firm Gabelli calculated last year that the construction would add $ 636 million to the team’s value. Why should a developer have control and take profits off the table? Schiller asked.
“Having seats that are only used 30-40 nights a year will no longer work,” said Steve Vogel, managing director of sports. finance group in the US bank. While Vogel’s group usually finances the construction of stadiums, it finds a growing demand for multi-functional projects from teams. “This can help to increase enterprise value and diversify income that simply did not exist. Owners understand that in order to stay relevant and maximize opportunities, they need to be in it. “
The idea of a multifunctional development next to the stadium is not new. The current trend began in 2013, when the St. Louis Cardinals opened their doors in nearby Ballpark Village, and in Buffalo, Terry and Kim Pegula did the same with Harborcenter, which is adjacent to their NHL franchise, Buffalo Sabers. But over the past couple of years, this concept has spread rapidly. Most recently, Churchill Downs reportedly is negotiating the sale of a racetrack outside of Chicago to an unknown sports tenant who will build a new sports facility and mixed-use property on a 326-acre site. This is probably the Chicago Bears, given that last month the team tweeted he applied to buy the property (a representative for Churchill Downs did not respond to a request for comment).
In Jacksonville, Shad Khan is proposing a construction called The Shipyards in the wasteland between Jaguars Football Stadium and the St. John’s River. The City Center will include apartments on the new marina, the city’s first five-star hotel, and a medical tourism center. The San Diego Padres had OK to continue construction on an area of 2 million square feet adjacent to Petco Park. In Boston, the Red Sox and the D’Angelo family, owners of the ’47 Brand and most of the property adjacent to Fenway Park, plans to build 2.1 million feet of commercial space. Across town, the NHL Bruins have just completed 1.9 million feet of shops, restaurants and luxury condos in what was once TD Garden’s player parking lot. The most ambitious plans to date come from Arte Moreno, who wants to build up to 8 million square feet of construction space on 150 acres of parking around the Angels’ home in Anaheim. In the US and Canada, at least 20 teams from the four largest leagues are currently building or planning multi-functional complexes in tandem with their own sports facilities, in addition to a dozen that already have such facilities, such as the Braves.
“Are they the next bastion of significant income for the teams? Yes, ”said Sean Quill, national sports industry leader at KPMG, who has advised a number of teams on real estate matters. “Legalized sports betting may be the # 1 priority, but for teams looking to develop new properties and have the luxury of space, approximate settlements are key in terms of maximizing income.”
Ownership changes have taken place. A generation ago, franchise owners demanded that the bowls be surrounded by parking, preferably in the suburbs. Even the most famous teams in America have longed for it. In 1994, both the New York Yankees and the Red Sox offered to move from their town homes to the New Jersey suburbs and the New England Patriots’ megaplex, respectively. It was shortly after the NBA icons Bulls and Pistons left for the suburbs of Chicago and Detroit. According to Brandon Schneider, president and chief operating officer of Brandon Schneider, the teams eventually found that while the objects themselves may be top-notch, fans lacked pre- and post-game entertainment. Golden State Warriors…
At the former Warriors Arena in Oakland, the nearest restaurants – Denny’s, McDonald’s and a local pizzeria – were a quarter mile walk, across parking lots and six lanes. When the team decided to build the new facility, they realized that the most popular sports include more than just the best seats and large arena displays.
“Think door-to-door travel from the moment you buy your ticket to the moment he is home after the event. We want to control what experiences are available to people not only before and after events, but also to become an asset in the community, ”explained Schneider.
In 2019, Warriors opened the new Chase Center in Mission Bay, San Francisco, and with it Thrive City, a 125,000-square-foot restaurant and store complex including a local farmer’s market and waterfront restaurants from Tyler Florence, chef chef and presenter of the Food Network. As Schneider says, the owners thought, “Let’s flip the script: I want to go to Chase Center and Thrive City because that’s a place to be and there’s always something fun going on there.”
However, mixed development is not just a vanity project. While few admit it, stadium funding is likely the Achilles heel in an otherwise thriving sports franchise world. The facts show that claims that stadiums themselves improve the local economy are grossly exaggerated, according to 2017 data. The federal reserve look in the topic. Public opinion about funding has soured.
In the case of Warriors, the team did not seek public funding, instead opting to find creative ways to fund the billion dollar project in a way that would not hinder the team’s financial activities. It did this by adding an office space component – two office towers in Thrive City, totaling approximately 586,000 square feet. The premise is reserved for Uber Technologies, which shares 90% of the ownership of fully-occupied office buildings with Warriors, according to information contained in a note to the mortgage-backed debt ratings. The developer Alexandria Real Estate owns 10%. “The office component also helps build a critical mass of people to support restaurants and shops in the arena,” Schneider explained.
However, the focus on the before and after experience isn’t just a short-term economic opportunity, it also reflects the changing nature of fandom. Today’s fans range from hardy fans who want to watch the game in their place, to casual fans who prefer to soak up the atmosphere of the game in a bar, to parents with young children who want a controlled taste of the excitement outside the stadium, executives say.
“We insist on having an experience that is more than just watching a game — it starts long before that and ends much later,” said Braves’ Schiller. “They want to highlight a more important moment in their life and spend it with family, friends, business partners and have a much richer experience. What happens outside the stadium is much more important than what defines a successful day. “
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