Cities Turn to Sports Stadiums to Snap Out of Downtown Doom Loop

Washington, D.C.’s $3.8 billion agreement is just one of dozens of stadium-based real-estate deals in the works across the U.S.

By Rebecca Picciotto

A growing number of U.S. cities are embracing an alternative approach to revitalizing sleepy downtowns: Strike a deal with a local sports team to usher in a giant real-estate project. 

The creation of whole neighborhoods anchored by new sports stadiums or entertainment arenas is emerging as a real-estate asset class all its own. Stadiums serve as the foundation, surrounded by hotels, shopping centers, office towers, residential buildings and entertainment venues. 

Washington, D.C., is the latest to turn to this playbook. The Washington Commanders said last week they reached a $3.8 billion agreement for a new 65,000-seat football stadium project, one of the most expensive of these proposals in the U.S. 

Team owner and private-equity executive Josh Harris pledged to contribute $2.7 billion, which the mayor said would be the single-largest private investment in district history. The city would kick in $1.1 billion.

The stadium would be part of a 180-acre development proposal that includes new housing, hotels, restaurants, retail and parks, though the financing for those pieces hasn’t yet been figured out. 

These stadium-based neighborhoods reflect an evolving sports business model, too. It is no longer enough to sell tickets and book television deals. Teams also want expansive real-estate portfolios that generate revenue. Increasingly, sports teams see their arenas as power centers for the micro-economies that surround them.

“This stadium proposal is better than just a sports venue,” said Andrew VanHorn, who joined the Commanders in January to lead the team’s new real-estate division. “We can lease apartments, partner with hoteliers. We can rent out restaurants and retail.”

Many more of these megaprojects are in the works. Plans to renovate or newly build at least 39 major sports venues are currently under way across North America, from New York to Las Vegas, according to sports agency Klutch Sports Group. 

In Nashville, Tenn., the Titans are building a $2.2 billion football stadium as a centerpiece for new housing, hotels and office space. The A’s baseball team is relocating to a new $1.7 billion stadium in Vegas, which plans to anchor a surrounding casino-resort with more than 3,000 hotel rooms. These price tags will be even higher as mixed-use developments sprout up around the arenas.  

Over the next 15 years, there could be more than $100 billion of investment opportunity for sports-anchored mixed-use districts, Klutch Sports Group estimated. 

And it isn’t just an American phenomenon. Sports and Entertainment Real Estate Global Holdings, a firm known as Seregh that develops and invests in sports and entertainment venues, estimates that the sports real-estate sector could be a trillion-dollar market globally.

The company has a pipeline of projects in the U.S., U.K., Middle East and Asia, said Seregh founder and CEO Jonathan Fascitelli. 

Stadiums, he said, are unique drivers in an era where in-person, live entertainment can command ever-rising premiums. 

“What’s going to drive people off the couch or out of their home?” Fascitelli said. “It’s all about shared live experiences.”

Stadium developments don’t always live up to their economic promises, especially if taxpayers have to fund a portion of it. Rather than generate new economic activity, critics say, new stadium districts can just reallocate consumer spending from local businesses to the sports team or entertainment company running the arena. 

“The economic benefits of a Taylor Swift concert mostly went to Taylor Swift,” said Kennesaw State University professor J.C. Bradbury who studies the economics of sports arenas. “It doesn’t justify spending a billion dollars on a stadium.”

The Chicago Bears are dealing with this pushback firsthand. After more than a year of negotiations, they still haven’t settled on a site for their proposed $4.7 billion stadium district in Chicago, partly because of public opposition to the team’s request for at least $1 billion in state government subsidies for the project. 

Still, proponents of the new supersize stadium-district model—where sports teams pledge to attach community benefits to their project proposals—say these projects boost local economies more than just stand-alone arenas. 

The Washington economy, for one, is under pressure after mass federal layoffs and looming local budget cuts of more than $1 billion. Government officials are framing the Commanders deal as a much-needed economic solution for the nation’s capital.

“The Commanders stadium is not a luxury but a fundamental necessity to grow our city again,” District of Columbia City Administrator Kevin Donahue said. 

The district’s $1.1 billion contribution is one of the largest public subsidies for this kind of sports-anchored development in the U.S. and doesn’t include additional tax exemptions for the Commanders and their one-dollar annual rent payment. 

The D.C. Council has yet to set a vote on the stadium proposal and several council members have voiced opposition given the city’s existing budget strains. 

“How do I go to people and say I’m going to have to cut them from healthcare, housing assistance, food assistance and yet we’re going to put $1.1 billion into an NFL stadium,” said Council member Charles Allen. 

But if the project moves forward, it will be one of the most high-profile test cases for sports-centered real estate. 

The Commanders stadium proposal includes up to 6,000 units of housing, roughly a third of which would be designated as affordable housing. 

Politicians tend to support sports-centric real-estate development because their voters often already have an emotional affinity for the team. Washington Mayor Muriel Bowser touted the Commanders deal for bringing the team back to its hometown campus after its relocation to Maryland in 1997. That announcement scores easy political points with her constituents.

“I definitely give the mayor a thumbs-up for getting it done,” said Samu Qureshi, a lifelong Washington football fan who owns a multimillion-dollar collection of his team’s football memorabilia.