The 7 Critical Elements of Stadium Predevelopment

Stadiums are more than just game venues. They’re communities. They’re places where fans come together to celebrate their shared passion. That’s why building a stadium isn’t just about raising a physical structure; it's about creating a home for those fans and the team and events they love.

Creating that home is a long and often complicated process. And the predevelopment stage – when plans are developed and decisions made – might be the most involved. There are seven important elements to stadium predevelopment – each one vital to the success of the project. In this post, we'll delve in to all of them with the goal of helping you build not just a thriving venue, but a fitting home for your team, your community, and your passionate fans.

Element 1: Vision

It all starts with a clear and compelling vision. At the core of any stadium project is your vision for how it should perform. And that’s derived by answering some key questions.

·?????? Will it be sport-specific? Deciding whether your stadium will primarily host a single sport or need to accommodate a wider variety significantly impacts the design, orientation, and layout of the stadium.

·?????? Will it serve as a primary training site? For many teams, the stadium also needs to serve as the team’s practice facility. If that’s the case for yours, you’ll need to design, equip, and program it accordingly.

·?????? Will it be home to the team’s offices? If so, the stadium will need to be designed and planned with administrative space, ticketing, retail, and other operations in mind.

·?????? If it will have other uses, what will they be? Beyond sports, stadiums are ideal for hosting concerts, festivals, and other community events. That’s why making them multi-sport or multi-purpose makes a lot of economic sense. If you want this asset to pay off for you, you need to “make it sweat” as we like to say. Deciding how to do that is a crucial aspect of the visioning process.

·?????? Can it fulfill other community needs? As we’ll discuss later on, making your stadium a reality depends on its ability to accomplish a priority objective in the community. It needs to fill a void in the market, solve a user-group need, support economic development, or attract sports tourism, for example. If it can, the path to approval can be a lot smoother.

·?????? How will it relate to the brand? The stadium will be your enterprise’s single largest asset. As such, it's not just a venue; it's a symbol of what the team stands for. It should reflect the organization’s core values and authentically exude what you’re all about.

Element 2: Schedule

You begin with a vision, but the schedule is where the rubber meets the road. If you decide to move forward, you’ll want to start with the end in mind. That means determining a reasonable opening date and working backward from there. It’s a construction project, so of course things are going to change. But if you have a solid timeline and a reliable process, you can avoid costly delays and missed opportunities. Here are some ways to do that:

·?????? Set a delivery date – Programming the building is an easy way to set your schedule. Knowing you want to host a major event on a set date will absolutely focus and drive your timeline.

·?????? Identify key milestones – If you want to hit your delivery date, be sure you identify key milestones along the way. They might include having your funding in place, having the site under control, starting the design process, and your groundbreaking date. Meeting short-term goals will lead to meeting your long-term goal.

·?????? Focus on funding – Recognizing the critical factors affecting the schedule is vital. And one of the biggest is funding. Underestimating how much debt the pro forma can handle or what your equity ask will be can put you in an incredible bind when it comes to keeping your project on schedule.

·?????? Assess the risks – Understanding and mitigating risks is a key part of scheduling. We call these risks “go no-go situations.” They include things like site access and conditions. If you don’t have the site under control or ready to go, you’re not moving forward. Sometimes it requires seeing around corners. But sometimes that’s what you have to do.

·?????? Know the market conditions – Market conditions, both regionally and nationally, can influence the schedule dramatically. Economic or political changes can affect financing and approvals. Contractor schedules and labor and materials availability can dictate timing. Reading the market is essential to setting and keeping your schedule.

Element 3: Public-Private Partnership

Stadium projects almost always require a partnership between the public and private sectors, but public investment is a critical component. The relationship with local public officials and engagement with political leaders is key. Here’s why:

·?????? Facility ownership: Having the municipality own the building is the ideal structure to ensure the team’s long-term success, for tax and other reasons. It’s not mandatory, but it solves several potential problems and makes the transaction more feasible.

·?????? Political factors: Politics, elections, and policy changes can affect the project's fate. You’ll need to anticipate them to avoid making mistakes and enemies. Investing in a lobbyist is money well spent to navigate local politics and facilitate deal flow.

·?????? Financial factors: With interest-rate volatility, city support and, ideally, backing of the project’s financing are a tremendous help in reducing the cost of capital. Risk is a key consideration for all parties. Thankfully other options for capital acquisition and debt structuring are emerging for sports-anchored real estate projects.

·?????? Regulation: Zoning laws, permits, and regulations require intricate negotiations with local authorities. But engaged cities can be very helpful in expediting these processes.

·?????? Site selection: Cities have their own priorities for development and redevelopment. They may even own the land you want to utilize. Helping them solve their problems can help you solve yours.

Whatever the challenge, getting your community on board and having them as a partner is the straightest line to your endpoint.

Element 4: Site Selection

Make no mistake, building a stadium is first and foremost a real estate deal. You have to have the right location and get the site under control to have any chance of moving forward. So how do you do that?

·?????? Get some guidance – Lean on local economic development officials. They know their redevelopment zones and the properties where incentives and redevelopment tools already exist.

·?????? Know your criteria – The right location is both simple and complicated. Knowing precisely what you need and sticking with those criteria are the only ways to get a site that works. It needs to be the right size and shape so the stadium fits and orients properly within the site. Acquisition needs to be feasible. The cost needs to make sense. The topography and environmental conditions can’t be too complicated. Transportation, traffic, and parking need to be easy for your core audience. It needs visibility. And it should encourage ancillary development opportunities.

It’s not simple, as we’ve said. But the right site can be a game changer for both the organization and the community.

Element 5: Budget

Building a home takes time and money. In fact, over the 6-12-month predevelopment process, you will need a substantial budget and seed money to effectively evaluate the opportunity and site as well as cover legal services, market studies and other consultants. That’s how you get to the “real cost” and feasibility of the project.

The facility program determines the layout, space requirements and amenities integral to the venue’s performance, as we discussed in the visioning stage. Our rough order-of-magnitude conceptual budget is determined from this initial program and includes things like seats, lights, a field, locker rooms, broadcast facilities, kitchen equipment, and even things like trash compactors.

The soft costs add up, too, including legal counsel, lobbying, insurance, master planning, design, and civil engineering. Then there’s financing. Exorbitant land costs, property taxes, and the cost of capital are the fastest ways to put the pro forma underwater. It can handle one, probably not two, but likely not three. You need to know what your project can afford and what it can’t. That’s the key to feasibility.

Element 6: Justification

Through the previous five elements, you can start to see your stadium/mixed-use development taking shape. But without public support and investment, creating IRR and making the project investable becomes more challenging. So how do you get that support?

The answer is sales. You need to convince community and business stakeholders that the project is worthy. And that means telling a great story. That starts with what we call a value proposition.

A value proposition is the compelling justification for the stadium. It’s the project’s “why.” And it needs to extend beyond sports and entertainment. Depending on your community’s needs, it might be creating jobs, stimulating the local economy, retaining young talent, attracting new visitors, encouraging ancillary development, improving residents’ quality of life, creating new recreational space for the community, or raising the community's profile regionally, nationally, and internationally.

We all know the galvanizing force of sports and their ability to bring communities together and take them to another level. But if you’re not aligned with the community’s stakeholders relative to the project’s value and community benefit, the complex process to get the project vertical becomes more challenging.

Element 7: Contract

This final element is crucial to minimizing risk and protecting your investment in the stadium.

You need three outcomes from your contract negotiations: a responsible funding plan for the facility, an operational agreement that doesn’t put the team under immediate financial duress and lays the foundation for its long-term success, and terms that meet multiple stakeholder needs. A project like this has to work for everyone involved. Negotiating favorable terms is great but ensuring that all parties are aligned when it comes to their roles and responsibilities is vital. If any side loses, it’s a failed negotiation.

The predevelopment process for a new stadium is not for the faint of heart. It’s a lot of hard work with a lot of twists and turns. It takes a long time, and it’s expensive. But it’s worth it, because in the end you don’t just have a stadium; you have a home. And that’s the foundation all communities are built on.

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