With Billions In Development Riches In Play, The Bears Are Bullish On The Burbs
The Chicago Bears will most likely leave their Soldier Field home and launch a giant mixed-use complex out in northwest suburban Arlington Heights. Although the team’s $197M purchase of Arlington International Racecourse from Churchill Downs Inc. is still pending and may not close until early 2023, such a move would be in accord with several trends in the sports and commercial real estate worlds, according to experts.
The wealth that can come from surrounding a new stadium with retail, residences and entertainment uses is an almost irresistible draw for team owners. That’s especially true for teams like the Bears, currently locked into a small stadium that sells tickets for a handful of home games per year but offers few opportunities for additional revenue streams.
“You want to create, as best you can, an environment where you have activity going on 365 days a year,” said Enoch Lawrence, who leads the capital markets team for Cushman & Wakefield’s Sports and Entertainment Advisory Group.
To do that takes available land, a commodity in short supply near Chicago’s Soldier Field. And the Bears can point to numerous examples of other sports teams that settled on vast expanses of suburban land, constructed new on-site commercial enterprises, then watched revenue streams rise, Lawrence added.
Jerry Jones’ Dallas Cowboys were in some ways the pioneers of this strategy. In 2009 they moved from suburban Irving to AT&T Stadium in nearby Arlington, founding The Star in Frisco, a $1.5B, 91-acre mixed-use complex with retail, restaurants, training facilities, a hotel and a sports medicine clinic. The Atlanta Braves launched The Battery at Truist Park in 2013, a suburban complex that now boasts hotels, retail and dining.
These trends are bad news for Chicago Mayor Lori Lightfoot. Since the Bears’ September announcement, Lightfoot has stated repeatedly that she’s willing to negotiate with the Bears for a better deal that would keep the team in downtown Chicago after the current lease expires in 2033. But whatever deal sweeteners the mayor adds to any offer, she can’t match what Arlington Heights has: 326 acres of open land, which the Bears can use to become a commercial real estate player in their own right.
“The Bears saw what happened with the Braves, so they know the money is in launching new development,” according to David Swindell, director of the Center for Urban Innovation at Arizona State University’s School of Public Affairs.
In 2013, when the Atlanta Braves announced plans to develop The Battery, the team was valued at about $629M. Four years later, the value had more than doubled to $1.5B. By 2021, it had increased to more than $1.8B.
The Bears will also have opportunities to forge new partnerships with corporations eager to attach their names to suburban properties that attract relatively affluent game attendees, shoppers and other visitors, Lawrence said.
That has been the experience of the Los Angeles Rams and Chargers, which since 2020 play in suburban Inglewood’s $5B SoFi Stadium. It’s the nation’s most expensive sports arena, and adjacent to Hollywood Park, a redevelopment of 300 acres launched by Rams owner and Chairman Stan Kroenke.
“The demographics there are just so unbelievably positive,” Lawrence said.
Paying for all that has been helped along by lucrative corporate partnerships. In addition to San Francisco-based SoFi Technologies’ purchase of naming rights for the stadium, worth about $30M annually for the next 20 years, American Airlines agreed to pay $90M over 10 years to place its name on the plaza between the stadium and an on-site concert venue.
Kroenke said he plans to eventually fill out Hollywood Park with up to 5M SF of creative office space, an 890K SF retail district, several thousand residences and a 300-room hotel, as well as an artificial lake and public open space.
Neither the Bears nor Arlington Heights officials are saying much about what potential uses they see rising next to any stadium on the former racetrack, but brokers and developers who know Chicago’s northwest suburban market say a similar kind of development could happen in Arlington Heights. Along with entertainment uses, the location is well-suited for high-end residential development, stadium or no stadium, and that could draw in both retailers and office users who would see potential customers and employees.
The Bears team is already valued at about $4B, according to an analysis by Forbes, but owning a stadium, along with a massive mixed-use development, could boost the Bears up to the level of the Dallas Cowboys, New England Patriots and New York Giants, suburban-based teams worth between $4.85B and $6.5B.
Even small-market teams are getting in on the action. Last week, the Green Bay Packers announced that Wisconsin-based U.S. Venture signed a naming rights agreement for a 150K SF office building in the team’s Titletown District, a mixed-use area with shops, restaurants and other entertainment near the city’s Lambeau Field.
“It’s not that surprising that the Bears are thinking outside the box, and by that, I mean outside The Loop,” Swindell said.
Swindell has worked with several professional sports teams, including the Indianapolis Colts and the Indiana Pacers, to analyze possible stadium deals, as well as help groups opposed to Jerry Jones’ plans to shift the Cowboys from Irving into Arlington. One controversy that always crops up is how hard cities like Chicago should fight to keep their teams.
“What it all boils down to is, these are private businesses, so taxpayers should ask whether it makes sense to make it more lucrative for the team owners to stay,” he said.
Many municipalities found themselves buried in debt by financing sports stadiums, as these venues, typically left empty and unused throughout most of the year, don’t generate enough revenue to cover the costs of construction and maintenance. Furthermore, even cities willing to plunk down cash can no longer match the values now generated by privately financed complexes such as suburban Atlanta’s The Battery or Inglewood’s Hollywood Park.
That’s why although Swindell sympathizes with Lightfoot’s dilemma, it’s usually unwise for politicians to open up their cities’ wallets to benefit sports teams.
“It can put a politician in a tough spot, because it’s a question of civic pride,” he said. “There can be an intense attachment to a team, and it’s real, but from a purely economic perspective, it’s small potatoes, and the economy doesn’t care where the Bears play.”
“Back in the 1950s, people hooted and hollered when the Dodgers left Brooklyn, but it was a psychological cost, not an economic cost,” he added. “It’s not like Dallas or Irving went bankrupt because the Cowboys moved a few miles away. No city has collapsed as a result of a team leaving.”