In Which Llenrock’s Blogger Attempts to Discuss Sports – A Guest Post from Llenrock Group
Oct 14, 2015
This post from Eric Hawthorn is part of our Llenrock Group guest post series and originally appeared on the Llenrock Group blog.
We recently filmed an interview with one of the most interesting people in Philadelphia’s business community: Ron Jaworski, former Eagles QB, ESPN analyst, co-owner of the Philadelphia Soul arena football team, successful golf course owner/operator… you get the idea. I won’t give you his entire resume, but it’s obviously quite impressive.
Part I of Mr. Jaworski’s conversation with Llenrock’s Andrew Benioff was published yesterday as our Video of the Week. You can see part two of this great conversation at the end of this post.
Whether we’re talking about professional sports and their enormous stadiums and lucrative TV presence or recreational venues like country clubs and athletic clubs, there’s no question that sports (whether watched from afar or participated in directly) are enormous economic drivers. For the purpose of today’s discussion, let’s think about sports in its most prominent and lucrative form: professional sports–as represented by the likes of the NFL and MLB.
I’m going to do my best to say something intelligent on the subject of sports, but I make no promises. I know about as much about sports as I do about string theory.
Even so, it’s abundantly clear that people love sports, and local economies love sports, and developers working with or near sports complexes–examples of which can be found in every major city–love the industry as well. Let’s look at why this field is considered such an important driver for local real estate:
- Sports venues like arenas often anchor so-called entertainment districts, allowing the public draw of the sporting event to bring consumers to adjacent bars, restaurants, stores, and so on. Examples of entertainment districts can be found in Philadelphia, Kansas City, and St. Louis, and will soon pop up in places like Atlanta and San Francisco.
- Sports promotes commerce–the larger the event, the greater the economic impact–as any Super Bowl or World Series game demonstrates. This is particularly true when it comes to hotel occupancy and rate hikes, local restaurant business, and demand for more property inventory in these important sectors.
- National profile: a competitive sports team can put a market on the nation’s map, and helps to promote things like tourism within the market, which naturally trickles into long-term real estate and hospitality demand.
- Developers love sports projects–if they’re fortunate and well-connected enough to land one of these rare opportunities–because they’re among the most high-profile real estate endeavors in any city (case in point: Bruce Ratner and Forest City Ratner’s Barclay’s Center, part of the Pacific Park mega-development in Brooklyn).
For a present-day example of the interplay of sports and local real estate, look no further than the tragically NFL-deprived city of Los Angeles. LA, the second-biggest population in the country and one of the most active of the nation’s CRE markets, has been trying for years to land a professional football team (which it hasn’t hosted in about 20 years). The natural prerequisite for any pro sports team is, of course, a venue. And that is where the complications arise. The big questions that come with this proposition are, Where? Who will build it? Who will finance it?
All of which are contentious issues, as this recent Fox Sports article explains. Right now, the NFL is floating the idea of locating two teams in one stadium, which would help defray the player-side cost of the new stadium (although, how hard will Oakland and San Diego fight to keep their respective teams from moving to LA?).
Either way, it seems there is little likelihood of public-private financing for LA’s hypothetical stadium, which seems like a good thing: keeping the capital on the private side helps eliminate the largest controversy surrounding major sports developments (other than NIMBY things). Public financing, in my view, rarely helps anyone but the team owners and private developers, and does not offer significant long-term returns for the local economy or taxpayers themselves. Also, if a city is willing to foot the bill for part of a development, as many have, this desperate move is a pretty clear sign that this city has some skewed priorities–and probably isn’t ready for a new stadium, to be honest.
Check out the Ron Jaworski interview below for his thoughts on the subject…
Author: Raymond T. Cirz
A Conversation with Ron Jaworski – sports icon, ESPN analyst, and entrepreneur (Part II):
