Pro Sports Owners Act More Like Mixed-Use Developers
Anaheim, California, Weighs New Commercial Districts to Keep Teams in Town
Hong Kong-based LT Global Investment has received city approvals for a new mixed-use development near Angel Stadium in Anaheim. Image credit: LT Global Investment
The Southern California city of Anaheim is in talks to keep the National Hockey League’s Anaheim Ducks in town for 30 more years by letting the team develop land near its arena into a mixed-use entertainment complex, just the latest case of a U.S. professional sports team property coming under consideration for use as a hub for year-round economic activity.
In locations from California to Wisconsin to Georgia, civic leaders are finding that easing the pathway of team owners into privately financed, stadium-adjacent development has become key to keeping pro sports franchises in place -- without asking city residents to pay the bill. It can also boost business in the vicinity more than a stand-alone venue that sits empty for half the year.
“More and more, especially as people oppose public stadium subsidies, this is going to be the norm,” said Garrick Brown, vice president of retail intelligence for brokerage firm Cushman & Wakefield. “The team owners will need to monetize the real estate near their stadiums and come up with other funding sources.”
Anaheim is trying to jump-start development in an area of the city known as the Platinum Triangle, which contains the separate homes of the NHL’s Ducks and Major League Baseball’s Los Angeles Angels. The Triangle area has generally lagged behind other commercial neighborhoods when it comes to benefiting from the six-decade Anaheim presence of Disneyland, the world’s second-most popular theme park, with more than 18 million visitors in 2017.
City records indicate that the Triangle area, spanning 820 acres in eastern Anaheim –- across Interstate 5 from Disneyland -- was originally zoned in 2004 to house more than 17,000 residential units, 9.2 million square feet of offices and 4.8 million square feet of retail and other commercial development. To date, just over 3,300 residential units and 39,000 square feet of commercial space has been built.
With the goal of bolstering the Triangle’s prospects, Anaheim officials in 2016 approved Hong Kong-based LT Global Investment’s plans for a nearly $500 million mixed-use project , next door to baseball’s Angel Stadium. Project officials have said ground could be broken before the end of this year on the 14.8-acre LT Platinum Center, which is planned to include 400 residential units, 430,000 square feet of retail, 75,000 square feet of offices and a 200-room hotel.
Most recently, Anaheim officials approved an initial negotiating framework for plans that would keep the NHL’s Ducks in Anaheim through 2048 -- 25 years beyond the June 2023 expiration of the team’s current lease -- by allowing team owner H&S Ventures to convert underused city-owned property near the arena into an entertainment district. The team would buy city-owned land in four parking lots at appraised market value to be negotiated.
Teaming With Developers
In many cases, team owners are partnering with established developers of office, multifamily and retail to put those elements near their stadiums, though the owners themselves maintain large equity stakes and often bear the brunt of costs for those projects. In theory at least, cities gain benefits including enhanced tax collections from properties that otherwise would have sat unused or under-utilized, though they still need to weigh those benefits against the potential negative impacts on neighborhoods, such as traffic and noise.
Recently completed mixed-use projects already deemed successful, based on initial lease-ups and foot traffic, include The Battery , a commercial district adjacent to the stadium housing Major League Baseball’s Atlanta Braves; and Titletown , a district next-door to the home of the National Football League’s Green Bay Packers in Wisconsin.
Don Loudermilk, a senior vice president who handles sports-related properties for brokerage firm Jones Lang LaSalle, known as JLL, said team owners in several cities are now wishing they had snapped up more land adjacent to their stadiums at the time they were built, especially after seeing other commercial developers swoop in to take advantage of new energy generated by those venues.
One team with no regrets, he said, is the Atlanta Braves, a JLL client that brokers advised on the feasibility of apartments, offices, retail and other elements that are now filled to near capacity next to the team’s SunTrust Park. A Braves executive recently told Loudermilk that representatives of other MLB teams, during a recent meeting in Atlanta, were quizzing him on the logistics of such projects.
"He said, ‘Everyone's been asking me how we did it, and how they can do the same thing,’ " said Loudermilk, who is also JLL’s national sports practice director.
Brown noted that several similar team-financed arrangements are now in the works in locations nationwide, including projects next-door to the venues of baseball’s Boston Red Sox and New York Yankees, and football’s Tampa Bay Buccaneers in Florida. A similar project is also likely in Las Vegas, if the Oakland Raiders are able to complete a planned relocation to that city.
In California, Anaheim and other cities are seeking to emulate what’s now seen at LA Live, a mixed-use development in downtown Los Angeles that has long housed Staples Center, home to the National Basketball Association’s Lakers and Clippers, surrounded by several blocks of offices, hotels, apartments, restaurants and stores.
Baseball’s San Francisco Giants recently selected Tishman Speyer as its development partner for the 28-acre Mission Rock , scheduled to include 1,400 residential units, 250,000 square feet of retail and 1.4 million square feet of offices, on leased property just beyond the right field wall of AT&T park. Also in San Francisco, owners of the NBA champion Golden State Warriors are at work on Chase Center, slated to include mixed-use elements next-door to a new arena.
In Inglewood, owners of the NFL’s Los Angeles Rams have a $2.6 billion project with a stadium and entertainment district planned.
Keeping Teams Happy
The development of LT Platinum Center is deemed especially important to keeping in town the Los Angeles Angels. Angels and LT officials could not be reached, but published reports indicate that behind-the-scenes discussions include ways that the Angels can benefit from the mixed-use project, including sharing in the proceeds from development that might be placed in parking lots at Angel Stadium.
The MLB team has played at Angel Stadium since it opened in 1966, but it recently opted out of its stadium lease. The team in the past has scouted other Southern California locations but ultimately decided to stay in place at Angel Stadium, which has been renovated over the years but is now the fourth-oldest venue in Major League Baseball.
Anaheim city spokesman Mike Lyster said the lease opt-out is standard procedure and does not mean the team’s departure is imminent. “As fun as baseball is in Anaheim, this is a reminder that this is still a business,” Lyster said in a statement. “And we understand that the Angels need to preserve all options available. We welcome talking with the team about the future of baseball in Anaheim.”
“As we look to the future, we need the ability to continue to deliver a high-quality fan experience beyond what the original lease allows,” said Angels President John Carpino in a recent statement. “It is important that we look at all our options and how we can best serve our fans now and in the future.”
Cushman & Wakefield’s Brown said a mixed-use entertainment district of some kind could prove to be a good way to connect Honda Center with Angel Stadium, improving overall development prospects for the under-performing Platinum Triangle area.
Initial indicators point to other cities making progress in creating family-friendly venues that could help neighborhoods move beyond the seasonal benefits of sports facilities to create more year-round effects while building team brands beyond the traditional sales of caps and T-shirts.
“These sports teams are starting to hit into an untapped source that probably should have been tapped a long time ago,” Brown said. “They’re realizing more these days that a stadium doesn’t have to be a place where people go for three hours. It can be a destination.”