The massive grandstand at the closed Arlington International Racecourse casts an eerie shadow as the sun sets on a weekday evening. It rests on a piece of land that could be radically remodeled.
With the galloping horses long gone, the Chicago Bears see great opportunity in 326 acres. The Buffalo Bills are also making plans for a new home. The same goes for the Tennessee Titans and the Kansas City Royals in baseball. Major League Soccer’s Inter Miami is working on its new pitch, and it’s going on and on.
In building for sport, today’s economic uncertainty is nothing compared to tomorrow’s lucrative promises. Interest rates, inflation and supply chain issues all play a part in the plans, according to construction and financing experts, but they haven’t stood in the way.
“The best time to build is now, not two years from now,” said Dan Wacker, director of front construction for Mortenson’s sports and entertainment division, which owns the U.S. Bank Stadium in Minneapolis and Allegiant Stadium in Las Vegas are among her most recent major projects. “If you can do it.”
The key to any development is understanding what the market can handle in terms of spending, which already accounts for inflation — “a manageable risk factor,” according to Scott Zolke, an attorney with an extensive sports background who represents the Bills on stadium talks.
“One of the things we exhausted in our analysis of Buffalo was ‘What if?'” he said.
“What about inflation? What if we hit a recession? What if… the supply chain was turned completely upside down?” Zolke adds. “You look at the best, worst, and middle scenarios, do your comparisons… and then you say, is it worth it?”
Teams continue to say yes during what appears to be an imposing time for massive construction projects. Even amid a tentative fall in inflation in October, the US Federal Reserve is likely to hike rates further to cool the economy.
While teams take into account the current economic climate, this was not a deal breaker.
“I haven’t seen any decisions that have changed because of the cost of doing a project or not,” said Bill Mulvihill, managing director and head of the sports finance group at the U.S. Bank that helped fund the Los Angeles Rams. SoFi Stadium. “It’s just changing more how we’re going to fund that, how much is it going to cost, instead of changing whether we’re going to do that or not?”
The Bears want to transform the Arlington Heights location, once a gem of thoroughbred racing, into another gem, anchored by a gated stadium and bursting with year-round activity – assuming a deal goes with Churchill Downs Inc. to buy the land brought about by.
They envision restaurants, retail and more on the property about 30 miles northwest of their longtime home in Soldier Field — all for about $5 billion, with some taxpayer help.
You’re not the only team eyeing new digs. The Bills are finalizing a deal with state and county governments to build a $1.4 billion stadium, and the Titans recently closed the final round of financing for an estimated $2.1 billion dome home brought the way.
In Buffalo, it took years of urging, fears of moving, numerous studies, a change of ownership, and delays caused by the COVID-19 pandemic to finally conclude that the Bills needed a new facility to replace the stadium they’ve since owned call their home in 1973.
Most of the time, when it comes to new stadiums and ballparks, owners are playing the long game and know they’re getting the best of it, even if prices are a bit haywire at the moment.
According to the National Association of Homebuilders, material costs have increased by 35.7% since January 2020. Concrete rose from a 30-year low in 2009 for its biggest jump and highest price this year since 1989.
Supply chain issues have led to juggling in material selection. For example, when steel was scarce, there was a rush for concrete. That, in turn, has created supply and demand problems there, said Logan Gerken, vice president and general manager of Mortenson’s sports and entertainment division.
When teams limit design, they do so in ways that fans probably wouldn’t notice — like fewer TVs in suites, Mulvihill said. But when it comes to big-ticket items? They don’t sacrifice a retractable roof for a fixed roof or no roof at all just to save money.
“If a year ago you thought you needed a retractable roof, I guess you’ll build with a retractable roof and just take the cost increases and figure out how to fund them,” Mulvihill said.
Though the scope of the Bills’ deal includes a record NFL price of $850 million for the taxpayer in March (and likely to be surpassed by the Titans proposal), securing government funding can be difficult.
Take what happened in Oakland, where baseball’s track and field could leave without a new stadium. The city, which had received $321.5 million in grants for a $12 billion stadium and waterfront project, scrambled for more to cover potential infrastructure cost overruns and keep the team in the city .
The Bears plan to pay for their stadium but want taxpayer money to cover infrastructure costs like roads and sewers to develop the site.
There are differences that need to be considered when developing in large markets versus smaller ones. While development around Los Angeles’ SoFi Stadium and what the Bears envisions at Arlington Heights will bring in additional revenue, Buffalo’s small population base and appeal to visitors played important roles in the Bills’ projections of greater reliance on public funds.
“It’s not apples for apples. It’s a completely different metric,” said Zolke, who also worked with Rams owner Stan Kroenke on SoFi development after the team moved from St. Louis.
“It didn’t make sense for (Kroenke) to privately fund a project in St. Louis,” he said. “It made 100% sense to say, ‘I’m going to fund this thing [in L.A.], just give me some infrastructure.'”
In Nashville, public funding commitments may be greater because the region can expect to recoup the money by creating another attraction to draw even more visitors to Music City, including the potential to host a Super Bowl.
That’s not the case in Buffalo, despite the appeal of nearby Niagara Falls and the home of chicken wing.
The top priority with any development project, Zolke said, is that teams are happy with the long-term return, which to some extent mitigates the impact of inflation.
“This is a long-term investment. In five years you won’t collect anything,” said Zolke. “You don’t flip a house.”
Wavrov reported this story from Buffalo, New York.
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