RUSH TO DEVELOPMENT
Oriole Park at Camden Yards changed the sports landscape when it opened to great fanfare in Baltimore in 1992. Its single-sport design and architectural flourishes called to mind ballparks of yore, launching baseball’s retro stadium craze that rendered concrete-bowl, multipurpose facilities obsolete. Many urban planners saw its downtown location as a model for sports venues to spark revitalization. And with its ample number of revenue-producing amenities, such as luxury suites, club boxes and roomy concourses with expanded retail opportunities, Camden Yards became the prototype that launched the nation’s sports-facilities building boom—one that continues to entice investors today.

All told, nearly 60 new Major League Baseball parks, National Football League stadiums and National Basketball Association or National Hockey League arenas have been constructed in the United States since the early 1990s. This does not include existing facilities that were modernized and expanded, or even new minor league venues like the one in Gary. Most of these stadium projects were funded through public-private partnerships that offered investors an opportunity quite appealing in the eyes of any real estate developer: a public-private deal that leaves investors to collect most of the facility’s revenue.

Professional sports is an alluring business, but few investors want to pony up nearly nine figures for an outright purchase of a major league franchise (the most valuable NFL teams are approaching $1 billion). Instead, some smart investors are leveraging the revenue-generating capacity of sports venues as an alternative way to secure equity in the multibillion dollar sports industry. “These deals are happening now, and that means there are opportunities for substantial returns,” says Steven Stern, managing director at ScheerGame Sports Development, a Milwaukee-based company that develops sports and entertainment facilities. “How much so depends on the market and the combination of public incentives and available private opportunities.”

Although the market has cooled somewhat in major league cities—and in many top-tier minor league cities—after a decade of frenzied activity, a number of large projects are either in the early build-out stages or hitting the drawing board. In New York, city and state officials, along with the New York Jets, have proposed a $1.4 billion dollar Manhattan stadium and convention center that might also serve as a showpiece for the 2012 Olympics (New York is among five finalists competing for the Summer Games). In nearby Brooklyn, developer Bruce Ratner is planning a $2.5 billion, 19,000-seat arena designed by superstar architect Frank Gehry, along with an area of mixed-use development, for the slated-to-be- relocated New Jersey Nets. In St. Louis, a $646 million downtown development project involving the St. Louis Cardinals’ new ballpark and an adjacent planned urban neighborhood is in the works.

But industry insiders and investors alike admit that getting into the game is not easy, and many experts confess that pure-play investments in sports venues basically do not exist—at least for the average investor—because the sports franchise is typically the private party in a public-private partnership, and sharing stadium revenue with outside interests is usually anathema to team owners. Nonetheless, there are proven strategies for tapping these opportunities, and they range from limited  partnership stakes in a team (with accompanying rights to revenue streams and venue-related tax benefits) to investing in surrounding real estate projects that are increasingly a valuable adjunct to many new sports venue projects. “The question you have to ask is, ‘Are you trying to invest in sports or are you trying to be a real estate developer?’” says Steven Edelson, managing director at International Facilities Group, a sports development company in Northbrook, Ill. “You have to answer that question before you decide what to do with your money.”