Sports Stadiums/Arena Valuations

babybaboon's picture
Rank: King Kong | 1,144

Read an article this morning about the Oakland A's stadium debacle and how they want their own, new, ballpark in the Oakland area. Curious, has anyone worked on a stadium deal/development? Wondering how the valuation compares to that of "standard" real estate. If you're building an office or MF, you have comps etc.

This particular development proposal has "1.77M sf of commercial space, 3,000 homes and a 400-room hotel". Not completely sports driven like stadiums of old (think Fenway, Lambeau Field, whatever).

It seems like it would be a cool project to get involved with. Throwing this out to the community to see if anyone has any experience with this.

Comments (10)

Feb 11, 2020

Bump, interested as well.

In college, I always heard of more public-works driven PPP's like highways, power plants, water, etc. ending with the private owner going belly up and lawsuits abound. Sports arenas seem like they'd go much better without any pricing limitations and easier attendance assumptions.

Feb 11, 2020

cost approach is really the only way to accurately value a special use like a stadium. you cold try the income approach but it would be total BS due to lack of actual cap rates. anecdotally, I read an article about valuing a state prison, and since the only user is a government agency there was only one acceptable way to value and that was the cost approach.

Feb 11, 2020

the commercial and hotel uses would likely be valued separately using traditional methods.

Feb 12, 2020

Fair. So aside from the traditional real estate assets I'm hearing the cost approach. What about the teams that occupy the stadiums? Do they provide any value to the stadium or would that depend on who owns the stadium (city vs. under team control)?

Feb 12, 2020

you value the cash flows through the contracts with the team. The other aspects are valued as resi, hotel, etc. The value you place on the cash flow should account for the risk the resi and hotel dont perform etc.... in today's market, i bet all the traditional RE is being valued at a premium to market lol.. right?

Valuing the contract of the team would be more like a commerical tenant.. what's the lease look like, what risks are there, etc....

The sport staduium itself likely has a ton of public funds in the mix.. wouldn't be surprised if there were multiple institutions involved in the valuation and purchase of the interest in the different RE oriented parts (like a hotel operator does the hotel, etc)..

The actual stadium would probably be a mix of tax breaks from the gov, which is monetized by a private investor who values the tax breaks... debt (which is also an investment) probably from a similar source or institution comfortable with the overall tenants in the deal's risk.

Feb 12, 2020

Basically, there is not 1 end investor. These projects have multiple risks and the dollar volume is too high for all the risk to fit 1 investor. You'll have life co's looking for steady dividends, hotel guys looking to operate, a random rich guy who wants to play monopoly and have his name involved, the city that wants to claim it provided jobs, a random bank that wants its name on the job creation and construction and has to meet other mandated requirements to deploy capital in genetrifyin areas or smoething..... make sense?

Feb 13, 2020

Cool. Thanks all.

Feb 19, 2020
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