Red Sox Follow Other Baseball Teams Into The Field Of Neighborhood Development
The Boston Red Sox are the latest pro sports team to play ball with commercial real estate developers.
Last week, Boston developer WS Development announced that it formed a joint venture with the team’s corporate parent, Fenway Sports Group, and the D’Angelo family, owners of the Red Sox Team Store, to develop 5 acres across several sites near iconic Fenway Park.
FSG has been acquiring adjacent property to Fenway Park for nearly two decades as it spent $350M refurbishing the 108-year-old ballpark, according to the Boston Globe. The partners plan a mixed-use development with residential, retail office/lab space and possibly a hotel. They expect the development review process to start later this year.
“Fenway Park is not just a local icon, it’s a piece of Americana, it’s part of the soul of our nation,” WS Development Senior Vice President Yanni Tsipis said in a statement to Bisnow. “It is incumbent on us to think about how to create a place that is anchored by the character of Fenway Park while also embracing the bright future of our city. Boston also has a long tradition of innovation and creativity done in close proximity to its beautiful historic architecture and is one of the best cities in the country for being able to embrace the future while preserving its heritage.”
For professional sports teams, commercial real estate development is an increasingly important part of their business plan, especially as the U.S. continues to grapple with the coronavirus pandemic, the worst public health crisis in more than a century.
Teams need to make commercial real estate development part of their financial game plan because of the pro sports business' changing nature, said Joe Favorito, a sports communications expert who teaches at Columbia University.
“You can't just build a stadium and hope people are going to show up to watch a game,” he said in an interview. “One of the things we have learned from the past seven months now is people have all different kinds of interests now. They may not want to spend a large amount of money on 25 games a year and go home. They want to be entertained before and after.”
"If you are looking for a subsidy for a sports venue, it really muddies the waters a whole lot if you can say, 'Well, sure, we are asking for a whole lot of land and tax breaks and or cash, but it's not just for sports. It’s for a mixed-use development,” he said.
The Los Angeles Angels of Anaheim, the Atlanta Braves and the Chicago Cubs have all taken ownership in development around either long-standing existing stadiums — Fenway is the only MLB stadium older than Chicago's Wrigley Field — or around new ones.
In September, the Anaheim City Council sold Angel’s Stadium and the adjacent land for $150M to the family of team owner Arte Moreno, whose development company is planning a mixed-use development including 5,175 residences, 2.7M SF of office space and 1.1M SF of retail and entertainment space.
The Ricketts family, which owns the Cubs, has invested $500M in refurbishing Wrigley Field and redeveloping the surrounding community where a slew of new office, retail, entertainment and hotel space has been added in recent years, according to Crain's Chicago Business.
The Braves opened SunTrust Park in 2017 (it has since been renamed Truist Park, after SunTrust Bank merged with BB&T) and set up a development company to lead the building of a mixed-use community called the Battery Atlanta, with retail, entertainment, office and residential properties.
The development secured $360M in tax breaks, and it has drawn office and retail tenants, as well as renters to the hundreds of new apartments. Cobb officials boasted in the months before SunTrust Park opened that land around The Battery was trading at soaring premiums compared to before baseball arrived.
Baseball took longer to arrive in the 2020 season than ever before, and the truncated season hurt the revenues for the businesses around the stadium, compounding the financial issues for the Braves, which lost millions in gate receipts this season — as well as a 3-1 lead in the National League Championship Series to the eventual champion Los Angeles Dodgers.
“This is a hand we all got dealt, and the only way we're going to get out of this is to collaborate, cooperate and have a real strong spirit of partnership,” Braves Development CEO Mike Plant said on a Bisnow webinar this summer.