How would you develop a sports field?
How would you develop a sports field?
I don’t know much about this at all but something along the lines of (bare minimum)
Investing - find a suitable location and acquire land (assuming you know number of fields, proper zoning and permits) - mark the ground and level the field for any vegetation and debris - add the boundary lines to the field and goals etc - capex: lights/ bathroom / parking /fencing?
Operational
- management: cleaning bathroom / utilities / field maintenance
- cash flow by renting out fields And having teams sign up for a league on your field
- pay down debt? / waterfall returns to investors
Exit: - exit: would want to hold asset and keep scaling business - potential refi?
Financing -goal is to give as little equity as possible in the form of GP sale. Would obviously do it but I want to know how I can finance this with debt. - what type of loans or financing can I do to make something like this happen?
Anyone care to share some thoughts?
What would push people or leagues to rent out your field vs finding a park that could host games or matches without cost?
Cheaper prices and differentiated leagues. For example in soccer instead of doing 11v11 you do 5v5s for example.
Also with that type of stuff it’s just how well you run a league. Problem is when you’re dependent on someone else to run the field they prioritize their scheduling vs if you were vertically integrated you can manage and scale as you see fit. A lot more upside.
I work for a developer and am in the process of budgeting costs for a highschool football stadium in TX. Shoot away with questions
Thanks man,
I went back and reread your post. A few things for you first: regarding the site, your selection process sounds generally correct. Urban infil land will be more expensive typically vs a 5 acre parcel in the countryside. Do your dd and maybe have a demand study done to identify the right piece of dirt. Next is site work. Depending on the sophistication of the fields you will likely have the following items to consider: excavation and grading, concrete work, landscaping and irrigation. You will reach out to a local GC to have bids put together for this work. I would say it is safe to budget 5% on top of your bid for permits, bonds, and insurance. Happy to discuss those line items and what they really encompass if you so desire. For the larger project I am working on, we have elevators, hvac systems, granite countertops, etc budgeted in our hard costs. If you are building a simple field the cost will be greatly reduced given you will not have these types of line items. Not sure if you want to go grass fields or turf, but that will be one of your bigger expenses. My last bid for turf was 12.50 psf so for whatever it’s worth and is coming out to $1mm alone for this project, so the stuff isn’t cheap. Also think scoreboards etc.
Re revenue sources, yes those sound accurate. Some other considerations are if you have a clubhouse it may be rented out for parties and also if you have concessions that will drive $. Some parks charge for parking as well. You can nickel and dime people for money but that likely won’t incentivize them to use your field so don’t get carried away.
In this case my firm will not own the asset. We are advising on the issuance of municipal bonds (either GO or Revenue) for this asset. Given we are working with a public school they want to maintain ownership. I will say there is private equity available for such an asset if there is a strong lease term present and good credit. I have also seen other structured credit (CTL & synthetic lease) available for financing here. For a simple park I would imagine you could raise money from friends/family and set up a typical GP/LP structure. Financing could easily come from a regional or local bank for something like this. They would likely loan 25-50% of the construction project costs but be warned you will have to sign personal guaranties on the debt or find someone who will sign them for you (for a fee unless it’s your rich dad). Once construction loan term is complete yes you could roll into mini perm financing if negotiated up front or refi into a permanent financing facility. I would encourage you to also reach out to the relevant local agencies/programs to see if you could receive subsidies for this. A good land use attorney in your state would be of help here.
The biggest challenge is development my friend, that’s why developers make cash. Depending on how it is structured the GP takes all the risk on cost overruns, signing guaranties on the debt, etc. Be sure to charge 3-5% of total project costs as a development fee to yourself. That’s your nut for putting this all together. Might be worth googling “Development risk” or “what risk does a real estate developer take”. Not trying to be patronizing, but you will see it’s not as simple as build this thing over there and become a millionaire.
In closing it won’t be as simple as you might imagine. Fields have a ton of risk because kids brake legs, parents get into fights, hobos hang around (and perverts) and people unfortunately have cardiac events from exercise all the time. All that said it can be done and I am happy to address any other questions
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