Sports Field Development
Looking for help pressure-testing a niche real estate idea before I go too far down the rabbit hole.
Concept is simple: develop 4–6 lighted turf sports fields in a dense suburb of LA/OC/IE on a long-term ground lease. Total project cost would likely be $2.5–3.0MM all-in. I’d target ~55–60% LTC floating-rate construction debt and raise the remaining equity (probably structured as pref equity) from friends/family. Stabilize, then refinance 2–3 years post-construction.
If the deal pencils to roughly a 9.5–11% yield on cost and trades around an 8.5% cap, it seems like there’s a refinance path that returns a chunk of equity relatively quickly.
Before getting lost in revenue assumptions, I’m trying to validate the structure of this:
- Is this something lenders would actually treat like real estate, or would it get underwritten more like an operating business?
- Is 55–60% LTC realistic on a ground lease for a ~$3MM specialty asset?
- Does an 8.5% exit cap feel reasonable for a stabilized, single-site sports facility?
- What am I missing?
Goal would be to prove one site and then replicate. Would appreciate blunt feedback from anyone who’s financed or invested in niche/experiential assets.
Based on the most helpful WSO content, here are some insights and considerations for your sports field development concept:
Lender Treatment: Real Estate vs. Operating Business
55–60% LTC on a Ground Lease
8.5% Exit Cap for a Stabilized Sports Facility
What You Might Be Missing
Replication Potential
Bluntly, this is a creative idea with potential, but the niche nature of the asset and reliance on operational performance will make financing and execution more challenging than traditional real estate. Focus on de-risking the project as much as possible to attract both lenders and investors.
Sources: Modeling ground lease payments into a pro forma, Debt and Structured Finance Brokerage Exit Opps, Student Housing Model, Sports Private Equity, Ground up negotiations - LP side
I want to get lost in revenue assumptions, namely, where are you getting the revenue from? Local school districts? Club sports? the Little League equivalent for soccer? I think if you can prove a reasonable ability to secure revenue then you'd be ok. 10% yield on cost implies $300k/yr in NOI, or $25k/mo. Assuming costs are negligible, how are you getting someone to pay $25k/mo. for this? If you can get 5 fields, that's $5k a field a month. It just seems hard to justify that kind of revenue, but I don't really know. Maybe schools will pay up for it since there is a lack of open space in a lot of LA.
I imagine it would still be looked at like real estate, the collateral backing the loan is still a piece of dirt with improvements (or a ground lease giving access to the aforementioned). No idea about LTVs. And is an 8.5% cap reasonable? You'll have to be more specific about where in SoCal lol. IE? Doubtful. LA? Probably. OC? Maybe?.
The school districts can finance this sorta thing tax-exempt based on their institutional credit rating. Or you see a city / county finance these (also tax-exempt) and then lease to the local school districts, clubs, little leagues, etc. The money is in developing and building or operating for a government but not owning yourself. Know a few developers who have done similar (not in LA). 0 own the asset and all used public funding. Oh and they also tend to find a way to generate their own demand (ie. develop and operate the asset for the City, leasing some to the local High School for, and then also manage a major youth soccer program).
If you do this privately, your biggest risk is the local government just builds their own in 5 years once they decide they don't need to pay you to do something they can do better.
So how do you make money? Just being a fee developer?
There is money in the private development portion as well, and I can get into the details off the forum. It would be 4-6 5v5 / 7v7 small turf soccer fields side by side. Revenue would be driven by multiple sources: youth soccer, private training, field rentals, adult leagues, etc
There is opportunity to do pickleball as well, but I dont believe in it as much
how tf is the total cost $3M if you're buying enough land to develop 6 fields. That's like half an acre.
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