Less arena, more technology, more sustainability

Tennessee Titans and Los Angeles Rams fans before an NFL football match at SoFi Stadium on Sunday, November 7, 2021 in Inglewood, California.

Marcio Jose Sanchez | AP

The Buffalo Bills are looking for a new $ 1.3 billion NFL stadium. Chicago bears spend $ 197 million acquire land that could eventually become their new home.

FedEx box falling apartand the Washington football team lobbying for a new stadium in Virginia… Several Major League baseball teams, including Kansas City Royals, Oakland Athletics, and Tampa Bay Race, I want new parks.

The Los Angeles Clippers have already begun construction of their $ 1.2 billion arena at the National Basketball Association. Philadelphia Seventi Sixers is fishing, Dallas Mavericks may be in hiding. And then there is the National Hockey League with Phoenix Coyotes

The teams are looking to modernize the stadium and could invest over $ 10 billion in development by 2030. The major sports leagues in the United States have already received income from national media, so now teams are looking to increase revenues in other areas. New and updated arenas are one of the ways they can do this.

Sports clubs can attract lucrative naming rights and sponsorship deals for new buildings. There is also a potential real estate game: franchises including Atlanta Braves and Milwaukee Bucks are using their new buildings as anchors for massive real estate projects. This development helps to make even more money for the teams.

However, controversy remains over who should fund sports projects and what will change in the post-pandemic environment.

CNBC spoke with executives about the sports stadium and arena landscape, as well as what comes next.

An aerial photo shows the $ 1.66 billion MSG sphere at The Venetian, where construction work has halted due to the coronavirus (COVID-19) pandemic on May 21, 2020 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Less space, more experience

Over the past 20 years, teams have maximized arena revenue by adding larger corporate suites, clubs and general visitor spaces. However, the ongoing Covid pandemic is changing this mindset.

Bill Mulvihill, head of sports and entertainment group US Bank, helped fund the $ 5 billion Rams SoFi stadium in Los Angeles. He has supported others who predict smaller next-generation stadium and arena venues on the horizon.

Mulvihill said more clubs are making plans for arena and TV viewers. “The idea is to have a unique experience for fans, not just increase the total number of people in your building,” he said.

“I think when it comes to arenas, it’s generally talking about less capacity,” added Rob Tillis of investment firm Inner Circle Sports. “Large NFL stadiums will support large capacity.”

To add value to attending games, you may find that your favorite team is using seating, such as NFL pitch-level suites. The Texas Rangers have included new seating options at the Globe Life Field, which is valued at approximately $ 1.2 billion. It includes field suites and two field level lounges along the first and third baselines.

Last August, CNBC toured the new Rangers Park.

The field suites were quite pleasant and sitting in the lounges was like watching a baseball game at a local sports bar with a real field nearby.

“These new buildings are more focused on providing a variety of premium seating designs to meet market needs,” he said. Dan Barrett, President of CAA Icon, Stadium & Arena Planning Division, CAA Sports.

“We’re competing with an 80-inch TV in your living room,” said New York Islanders owner John Ledecky, who opened the $ 1 billion UBS Arena in November 2021.

“All these new arenas should give fans a reason to get up – get in the car and come to the event. If we don’t have a first-class experience, they’ll watch the game at home, ”added Ledetsky.

To paint a picture of future experiences, Mulvihill pointed to Madison Square Garden and New York Knicks owner James Dolan’s Las Vegas project. That Sphere of monosodium glutamate, a $ 1.8 billion entertainment venue, will be equipped with technology that allows viewers to listen to concerts in different languages ​​and an infrasonic tactile system – a vibrating floor.

“I think some of the ideas he talks about, how to look at a concert differently, could be carried over to a sports setting,” Mulvihill said. “If this technology is effective and working, it can be transferred to other sites.”

Climate Pledge arena rendering

Source: Amazon

Environmental friendliness, self-pickup technology

Inside the new LA Clippers arena

Source: Los Angeles Clippers.

The Intuit Dome will include a 44,000-square-foot double-sided Halo video board with LED lights and use concession exit technology.

“In five to ten years, when Ballmer is done, some of the old buildings will look very old, very quickly,” Tillis said. “They will look like dinosaurs and have no additional income opportunities.”

But who pays the bill?

Beyond technological advances, there is still debate over who should fund sports venues.

In 2016 Brookings Institution published an article against the use of government dollars to fund stadiums. Between 2000 and 2014, the report estimates that more than $ 3 billion in tax revenue was lost due to tax-free municipal bonds used to fund professional sports venues.

Leiveke, who tied the islanders with private money to build the UBS Arena, agrees that public funds are best avoided.

“Municipalities and states should spend their money on schools, education, transportation and safety of life,” Leiveke said. “Nowadays, thinking about how we [privately] fund these buildings and manage these teams to find new revenue streams in the future, ”he added.

In most cases, teams have leverage when receiving government money and sometimes threaten to move if they do not receive money. This could damage the local economy. But after St. Louis sued the Rams for leaving in 2016 for $ 700 million in compensation, teams are likely to think twice before moving.

Buffalo Bills owner Terry Pegula.

Brett Carlsen | Getty Images

Consequently, in western New York, NFL Buffalo Bills owner Pegula Sports and Entertainment is expected to share the costs of the new stadium with the state.

Engineering firm AECOM has published an assessment report Price $ 1.35 billion for a new stadium adjacent to the existing Highmark Stadium, and at least another $ 300 million is projected for a stadium in the city center. Bills’ lease at Highmark expires in July 2023 and the team’s goal is to operate in a new, Field for 60,000 seats by 2027.

When asked if inflation concerns could affect funding for sports facility owners, Mulvihill responded, “These are 20-30 year long-term solutions for owners, cities and states. A 10 percent increase in construction costs does not significantly change these decisions. . “

Barrett predicts that up to $ 15 billion will be invested in new professional sports venues over the next 15 years. This estimate rises to $ 20 billion when calculating renovation projects. Both Barrett and Mulvihill anticipate that more teams will remodel than create new ones.

That Jacksonville Jaguars and the Green Bay Packers are among the NFL teams looking to rebuild. In the Packers case, they raised the money by issuing $ 90 million in public shares to help fund the $ 250 million Lambeau Field renovation project.

“You will see significant investment over the next 10-15 years,” Barrett said, adding Major League Soccer franchises, including NYCFC champions, to teams looking for new stadiums.

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