Public-private partnerships
THE SPORTS INDUSTRY is getting better at successfully navigating mixed-use projects. That starts with putting more resources and effort into understanding the community’s needs, implementing an overall vision and addressing key concerns, instead of down the road reacting to public relations headaches or building something people don’t want.
“It’s just a much more sophisticated way of trying to head off one of the major obstacles to these transactions in advance,” said Peter Breckheimer, a partner at O’Melveny & Myers. “It works to everyone’s benefit to do that. That’s been a lesson learned over time.”
That’s an even better idea given the heightened scrutiny over publicly funding sports venue projects.
“That’s really become the first question over the last 10 years,“said O’Melveny partner Liz Dubeck.
“People really want to say they don’t need to use public funds.”
In Cobb County, the Braves found a densely developed area with hundreds of thousands of people living and working, but without a town square-type setting. They also found local governments willing to partner, a critical aspect of any mixed-use deal. Public money paid for nearly half of the $672 million Truist Park, enabling the team to cover all costs associated with The Battery. That was easier for the Braves with the support of their corporate owners,
Liberty Media, which floated a $165 million loan during construction that the team has since repaid.
Municipalities are seeing mixed-use developments work and their interest in them is growing, said Malaika Rivers, a partner at Lexicon Strategies, who worked on behalf of Cumberland, Ga., to attract the Braves and The Battery.
“It spurs economic development, it helps with the tax base, quality of life, it puts them on the map in many cases,” said Rivers, who is now working
with the Atlanta Hawks on a mixed-use project next to State Farm Arena.
In many cases, public support is a must. Sports owners would probably like to self-fund more of these projects — again, control — but the sheer amount of money and risk required means that’s still unrealistic for many, even more so in the uncertain economic climate.
“You need to be prepared to put up $250, $300, $400 million,” said Braves Development Company President and CEO Mike Plant, who oversees The Battery.
At FC Cincinnati, whose owner Carl Lindner has a real estate background, the hoped-for financial impact from an eight-acre, $300 million mixed-use project that broke ground in April is both indirect and direct, said the Major League Soccer club’s co-CEO, Jeff Berding. The indirect impact is creating a place that people want to be, which naturally boosts traditional sports revenue streams, like ticket sales. The direct impact, Berding said, is, “a financial infusion into the club that will be material, because in MLS, respectfully, every million dollars means something. Could literally be the difference between being profitable or not.”