About a year ago notable entrepreneur and former owner of the Dallas Mavericks Mark Cuban sold his majority stake in the team to the Adelson family.
Initially, no one knew why.
Several months ago, Cuban explained.
The first reason was estate planning.
Cuban said he wanted to take pressure off his three children to make ownership a family business.
However, the main reason was the changing landscape of NBA team ownership.
Cuban quoted, “When I first bought [the Mavericks] in 2000 I was the tech guy in the NBA. I was the media guy. I had every edge and every angle. Now fast-forward 24 years later, to sustain growth to be able to compete with the new collective bargaining agreement, you have to have other sources of revenue. And so you see other teams in all sports for that matter talking about casinos, talking about doing real estate development. That’s just not me. I wasn’t going to put up $2 billion to get an education on building. If we’re able to build a Venetian-type casino in Dallas with an American Airlines Center in the middle of it, the valuation is $20 billion. But I own 27% of that.”
New real estate and stadium redevelopment are becoming prevalent throughout every sport, not just the NBA, and there are specific reasons why.
3 Reasons Why Stadiums Are The Next Great Frontier For The Future Of Sports
Technological testing ground
Sports arenas provide a place where owners and operators can implement and integrate new technological innovations.
A prime example is the new Intuit Dome, built and backed by Clippers owner Steve Ballmer.
As one of the most forward-thinking arenas in all of sports, it features:
- Heated seats that have USB ports & massage settings
- 360-degree, double-sided scoreboard
- 1,160+ toilets which 2x a normal arena
Organizations are looking at arenas to bring a one-of-a-kind experience to fans but also as a testing ground for improving that experience using state-of-the-art technology.
Multi-use mega complexes
Sports arenas aren’t just for sports.
A few weeks ago, Northwestern University revealed plans for the new $850M Ryan Field funded by Ryan Sports Development.
Aside from hosting Northwestern football games, it will also be a premier destination for:
- National events
- Youth sports championships
- Community events
- Holiday festivals
- Student activities
- Concerts
Owners and developers are looking at venues as more than just places where teams play and practice.
Even outside of the actual arena, there are opportunities to build retail shopping experiences, hotels, office space, and more.
A huge driver for revenue and valuations
For years, media rights have been the primary revenue stream for US-based sports organizations.
While this will likely be the case going forward, the surrounding real estate and assets that a team controls or owns could be a huge factor in terms of how much the overall asset is valued.
The Battery, a mixed-use entertainment venue in Atlanta owned by Liberty Media is a great example.
It cost $400 million to build and could be worth up to $1.5 billion by some estimates.
That’s a 275% increase in the 8 years since it’s been open.
It also spins off approximately $50 million in revenue for the corporation which owns the Atlanta Braves, Moto Gp, and F1.
The only things that matter
As with any investment – there are obviously risks to be considered.
Although owners are willing to put hundreds of millions and even billions into building these revolutionary arenas, the name of the game is putting butts in seats.
Sports as an asset class is in its infancy and we’ve yet to see how these bets will pay off.
But at the end of the day, the most important factors are attracting great talent, caring about the culture and fans, and winning.
