Why The Next Wave Of Big Stadium Developments Could Be Harder To Pull Off
Professional sports teams are getting set to embark on a stadium development boom, but as the price tags of their ambitions have ballooned into the billions, negotiations for taxpayer help are drawing ever more scrutiny, and the risks of a public blowup have grown.
Take the saga of the Los Angeles Angels. The Major League Baseball team has been playing at Angel Stadium in Anaheim since 1966, and when owner Arte Moreno was looking for a new ballpark for his club, he struck a deal for 153 acres of city-owned land on which he could build a new stadium, as well as 4M SF of commercial space, nearly 950 hotel rooms and multiple apartment buildings.
Until the FBI got involved.
In May, federal law enforcement revealed that it was investigating then-Anaheim Mayor Harry Sidhu for soliciting campaign donations in exchange for information on the land sale. Sidhu resigned the same month, and Moreno is now looking to sell the team he’s owned since 2003.
The collapse of the Angels’ attempt at developing a stadium-anchored mixed-use district shows the modern pitfalls franchises face as they seek to build the next generation of sporting venues.
“I think that politics have always been an issue. I think the difference is the level of scrutiny and transparency is higher. And the immediacy is much greater,” said Andrea Austin, a partner with the Denver law firm Husch Blackwell who was on the team negotiating the Angels stadium. “That changes the dynamic of the dialogue.”
Professional sports teams are predicted to spend upward of $10B by 2030 for new or upgraded stadium developments, CNBC reported, and the vast majority of new venues are proposed as the centerpiece of a larger commercial project, not as standalone stadiums sitting in the middle of oceans of parking lots.
A wave of contracts and leases with teams for stadiums built in the mid-1990s to early 2000s are coming up for renewal, spurring more teams to explore these expansive development projects, Austin said.
The Buffalo Bills, the Chicago Bears, the Kansas City Royals, the Oakland Athletics and the Philadelphia 76ers are among those exploring deals with local and state governments for these projects, but they are subject to far more scrutiny than they were during the last U.S. stadium boom.
“The optics, narrative, become very much part of the conversation now,” Stroock partner Ross Moskowitz, a real estate attorney who has negotiated stadium deals, told Bisnow. “There's a bigger light on the project now. It gives them more pause. Government can't be wrong if they say no.”
While many of these deals are likely to come to fruition despite a crucible of public scrutiny, some deals go sideways under the spotlight. Earlier this year, David Tepper, the billionaire hedge fund manager and owner of the Carolina Panthers, stopped construction on the team's practice facility and headquarters in Charlotte after failing to make payments on more than $135M in bonds that the city planned to market for the project.
Even deals that have been seen as unabashed successes can have political consequences. The Atlanta Braves had played their baseball games in Downtown Atlanta since moving from Milwaukee with their star outfielder, Hank Aaron, in 1966. The team built a new stadium, Turner Field, in 1997, but just 16 years later, shocked the city when it announced a move to a new development in suburban Cobb County.
Their $622M stadium, now called Truist Park, was built with more than $390M in taxpayer financing, but what set the deal apart was the development around it. The Battery at Truist Park, owned by the Braves, includes trophy office buildings, apartments, hotels and street retail, and it hosted throngs of fans in its public spaces during the team’s 2021 World Series run.
The Braves dealt with rabid criticism including accusations of backroom dealings with Cobb County politicians — the chairman of the county commission, Tim Lee, lost his re-election bid after the deal was struck.
The Battery is nevertheless viewed as a model for a successful, team-run mixed-use development centered on a new stadium. The Braves have been approached by other teams to consult on their developments, Braves Development Co. CEO Mike Plant previously told Bisnow.
“The most successful [team owners] in their communities have a strong sense of what the community needs,” Austin said. “That is not universal. There are many team owners out there who do not view themselves that way.”
Austin is currently working with the NBA’s Charlotte Hornets to renovate its existing arena and build a new training facility as part of a mixed-use project, and working with the city of Oakland in its talks with the Athletics for a new waterfront ballpark.
Even amid the heightened public scrutiny, most teams — with notable exceptions in Los Angeles — are still chasing taxpayer financing to help them build new projects.
“For the team itself, what the owners are looking for are tax incentives. I think what owners are looking at is whether or not it's feasible to have jurisdictions duke it out with one another, similar to what Amazon did,” said Nihar Shah, vice president with Perseus TDC, a development arm of Transwestern. “Sports is a for-profit business. Wherever the incentives are, where the subsidies are, is where they are going to go.”
But given inflated construction and labor pricing as well as more ambitious developments, new projects are coming at a higher price tag than previous stadiums.
The average cost of an NFL stadium is $1.2B, followed by $620M for the average National Basketball Association arena and $440M for the average MLB stadium, according to the Berkeley Economic Review. Seven of the 10 most expensive stadiums ever built have opened since 2010, according to USA Today, led by the $5.5B price tag for SoFi Stadium in Inglewood, California, which Rams owner Stan Kroenke developed and which hosts Chargers home games.
But public coffers have not increased enough to keep up with those prices, Austin said.
“Those fan experiences are driving costs that the public simply can't pay. Back in the ‘80s and ‘90s, it wasn't the arms race that it is today,” Austin said. “The public sector is simply not equipped to enter into that arms race.”
To justify public backing — and win crucial political support — some teams have acceded to provisions such as affordable housing or other community impact programs as part of the grander project, Moskowitz said.
Moskowitz said he typically encourages teams to hold public meetings on how the stadiums would benefit the communities, a model he considers for how future stadium deals could work in the age of heightened scrutiny.
“Most people will probably focus on the political support, which makes sense,” he said. “But especially if you're not from the community ... you have to build up that community, you have to build up that relationship.”
CORRECTION, OCT. 3, 3:30 P.M. ET: Stroock Partner Ross Moskowitz's comment about the need for teams to engage with local communities when they plan to develop new stadiums has been updated for clarity.