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Secondary, Tertiary Markets Investing Billions in Stadium Construction Projects

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Secondary, Tertiary Markets Investing Billions in Stadium Construction Projects


~$2 billion has been spent renovating or building new minor-league stadiums over the last half decade. Industry insiders estimate that at least 85% of that total was public funding.

Secondary cities including, but not limited to, Omaha (Nebraska), Richmond (Virginia), Worcester (Massachusetts), Columbus (Georgia), Chattanooga (Tennessee), and Knoxville (Tennessee) have all ponied up to retain the affordable, family-friendly, live entertainment option.

“City leaders realize the importance of high-quality sports entertainment to their constituencies. Teams, like Union Omaha and the Richmond Flying Squirrels in the Alliance Sports portfolio, create economic growth, drive civic pride, and [spur] broad community outreach, [all of] which help make [the cities they play in] attractive places to live.”

They also understood the alternative was likely losing the club to a market willing to invest to attract one, like Wilson (North Carolina) or Spartanburg (South Carolina).


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The battle for public funding is highly competitive and the tendency historically has been for municipalities to allocate those dollars to ‘more visible’ stadia (think: NFL, NBA/NHL, MLB). Tier two and three properties, and minor league organizations, particularly those in secondary and tertiary markets, have gotten overlooked.

But that mentality is starting to change. Broad demand for live entertainment nationwide, and an influx of smart money into these teams, including that of Diamond Baseball Holdings (DBH), has brought on a newfound willingness amongst elected officials to allocate public dollars towards MiLB, USL, and AHL stadium projects. 

DBH is acquiring clubs across MiLB. The holding company, backed by Silver Lake, is among those investing heavily in ‘minor league’ markets.

The pressure to fund venue construction/renovation has picked up too. Back in 2020, MLB implemented facilities standards with an ultimate deadline of Opening Day of 2025. Clubs that fail to adhere to Professional Development League guidelines could face considerable fines or even lose their affiliation.

While some team owners are funding the improvements themselves, others have looked to the local municipality for help. And with several vacant markets eager to land their own team, the latter had leverage. 

DBH is moving one club from Kinston (North Carolina) to Spartanburg (South Carolina) as part of a $250 million public-private partnership. The Milwaukee Brewers are moving another, the Carolina Mudcats, from Zebulon (North Carolina) to Wilson (North Carolina) and into a new $69 million ballpark.

It’s safe to assume more relocation is on the way. Moving a minor league club from an old ballpark to a state-of-the-art facility is one of the biggest levers an ownership group can pull to create value. 

The Salt Lake Bees are going from a downtrodden part of downtown SLC to a new build stadium in a vibrant submarket with a huge mixed use project attached. It will become one of the most valuable clubs in MiLB in the process.

And ballpark projects in Waldorf (Maryland), Frederick (Maryland), and Trenton (New Jersey) have or are rumored to be receiving public funding meant to help attract affiliated baseball.

Major league cities with multiple pro and/or college teams aren’t caving to ownership pressure. They simply don’t value tier two/three and minor league sports as much.

But smaller locales without a plethora of live entertainment options see funding these venues as an opportunity. Stadium construction projects can activate an otherwise dormant tax base (see: Spartanburg), and the future tourism and tax benefits should dwarf building costs.

Plus, they view it as a civic investment that uplifts local spirits.

That’s not to say every secondary or tertiary market is throwing money at these teams. There’s a vocal contingent that opposes giving public purpose dollars to privately owned businesses. 

And in some cities, like Memphis, any and all available capital goes to properties higher up the value chain. 

But those in favor note that many of these markets have long sought to bring sophisticated private business owners capable of investing into the broader market to town (think: mixed-use development projects), and building a modern stadium for them to play in is among the ways to attract one. 

They see The Battery and its success, and realize that unlike in Atlanta, local residents in these cities often lack anything comparable. 

Savvy investors are taking note of the opportunity. They see robust demographics, healthy, growing discretionary incomes, and the need for a product that satiates the residents’ ears and eyes.

“Stadium adjacent mixed-use development, when properly planned and executed, can be a win-win,” David Carlock (principal, Machete Group) said. “Extending the game day length of stay increases fan affinity and creates new revenue streams for the team. Cities benefit from concentrated development investment that creates vibrant new urban places, and often has a catalytic effect on the submarket.”

In addition to the project referenced in Sacramento, conversations about mixed use real-estate development tied to a ballpark are underway in Wilson, Richmond, Omaha, Colorado Springs and Spartanburg (and likely several other cities).

Of course, building adjacent to the venue is not feasible in every market. Local demographic and population trends, discretionary and average household income, occupancy rates, and rent growth over time all need to be considered. 

There are also real-estate related constraints with some ballparks (think: Fenway Park). 

But even in those cities, sophisticated PE-backed investors, like DBH, may be able to bring outsized value. They can often do a better job activating the venue year-round than a mom-and-pop ownership group could (think: regular slate of concerts, winter festival, youth sports tournaments, college games, soccer friendlies). 

And if successful, the venue should, in theory, become a more valuable community asset. Remember, the city is going to collect tax dollars on every event it holds.

Minor League Sports organizations make money. Well, at least some do. 

Varying management styles can lead to a wide range of profitability outcomes. Some teams are highly profitable (think: 30% EBITDA margins), and others struggle to reach breakeven.

The stadium situation (think: facilities, fan experience), and number of events at the venue, play a key role in that spread. Attendance and revenue are directly correlated.

Smart money knows this and will continue to look to the local municipality for help in building a state-of-the-art venue. Those that won’t invest run the risk of losing their team to one that will.

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