Sports Stadiums Are Becoming The New Anchor Properties At Mixed-Used Developments

In years past, retailers like The Home Depot or Nordstrom were the ideal anchor properties at mixed-use real estate developments. That paradigm is beginning to shift, and the big-box retailers are being replaced by a new type of anchor property: professional sports stadiums.

The Rise Of Luxury Sports Stadium

Many of today's professional sports franchise owners are billionaires, and one common trait they have is a nose for making money. This is what fueled the push by franchise owners to build luxurious new stadiums in the last 25 years. During that period, multiple Major League Baseball franchises such as the Houston Astros, Seattle Mariners and New York Yankees and NFL teams have gotten new buildings. In many cases, the billionaire owners secured public financing to build them.

You might wonder what was wrong with the old buildings where these teams played. In most cases, the answer is nothing. The truth is that the wave of stadiums that were demolished to make way for their newer counterparts had more than enough seats for all the fans. What they lacked, were luxury boxes, posh restaurants and team stores that looked more like they belonged in a shopping mall than a sports stadium.

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An All-New Set Of Revenue Streams

The television revenue for most American professional sports leagues is split evenly between all the team owners. Television revenue is still a big profit center, but the ancillary revenue team owners generate in their stadiums on game day from concessions, parking and merchandise is also a money maker. The difference is that team owners don't have to split that money with their fellow ownership partners.

This, more than any stated desire to build a first-class facility for all the loyal fans, is what motivated so many owners to want new stadiums in the last 20 years. It wasn't long before team owners realized there was another revenue center they were missing out on. Now that the cost of going to professional sporting events puts regular attendance beyond the reach of most families, going to the stadium for games has become its own experience.

An All-Encompassing Game-Day Experience

Team owners began adding to that experience by building promenades and shopping districts that featured restaurants, hotels and other businesses that were geared toward the franchise. One of the first, and best examples of this is Titletown, which is adjacent to the Green Bay Packers stadium. Titletown has become a huge hit, and it was the site of the most recent NFL draft.

According to some estimates, the three-day event generated $94 million in revenue. That's in addition to the money it makes for the eight Packers home games. Best of all, it doesn't even have to be football season for Packers fans to make trips to Titletown. Packers fans can come from all over the country to enjoy the experience and eat at its restaurants.

Similar developments have sprouted up at the new stadiums for the Texas Rangers and Atlanta Braves. L.A. Live, which surrounds the Crypto.com Arena in Los Angeles is another example. Another bonus from these developments is that they make great locations for other events like rock concerts or NCAA tournament games. Team owners don't have to share any of that money.

The Next Level In The Game

Billionaire businessman Stan Kroenke is a pioneer of the stadium zone experience. Kroenke runs a sports empire that includes the Los Angeles Rams, Denver Nuggets and England's Arsenal Football Club. He made most of his early money running shopping malls. It didn't hurt that he married a Walmart Inc. heiress and built many of his developments with Walmart as an anchor.

He also gained valuable experience selling stadium real estate when the redeveloped site of Highbury, Arsenal's original home stadium, was sold as condos and luxury homes. The funds he raised helped to pay off debt for The Emirates Stadium in London, where Arsenal currently plays.

His latest development is 298 acres in Inglewood, California, which sits on the site of the old Hollywood Park racetrack. It houses the 70,000-seat SoFi Stadium where the Rams and the Chargers play. There is also a 6,000-seat theater and millions of square feet under development for luxury lofts, apartments, hotels and office buildings.

A New Future

In every respect, it represents the next and newest level in the multibillion-dollar sports franchise game. The stadium used to do the heavy lifting when it came to ancillary revenue from professional sports teams. Now, it is becoming an afterthought because the big money is in the real estate surrounding the stadium. Kroenke has shown his fellow owners a new way to maximize their revenue. 

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