During my recent trip to Chicago, I shepherded a panel at the Kellogg Real Estate Conference and Venture Competition focused on sports-adjacent real estate.
The discussion, featuring Joe Myhra (COO, United Center), Eric Nordness (managing principal, Marquee Development), and Ari Glass (head of real estate, Mansueto/Chicago Fire FC), was the first in the conference’s 12-year history focused on a sports topic. Here are some interesting (and edited) comments from the three panelists:
Nordness, on the development and design approach to Wrigleyville: “From Day 1, it was all about being hyper-local. Wrigleyville was one of the original entertainment districts because it organically happened. The challenge for me as I came in was, one, I didn’t want to be in witness protection because we screwed up Wrigley Field and everything around it. Thinking very thoughtfully about placemaking; how do you look at the architecture? Don’t land a spaceship from outer space. Look at what the cadence is in your neighborhood, the architectural styles, the size and everything. We capped the size of our development purposely because we didn’t want to go too vertical. We wanted to fit in with the neighborhood.
“So, when we’re doing that for other teams, the big thing we talk about is connecting with the community. The franchise asset is always going to be more important than any real estate you do outside. My chairman, Tom [Ricketts], we said this [recently] in a meeting to another owner, you can give up 50, 100, 200 basis points on a deal. It doesn’t change the lives of these owners. What would change is if you do the wrong thing outside and you do something that doesn’t connect with the community, or you’re flipping it too quickly to another owner and now you’re at odds with your ecosystem.”
Myhra, regarding the 1901 Project’s investment in public green space: “Play allows for that curiosity, that exploration that we want to introduce into the development.”
Glass, regarding the Fire stadium’s riverfront site: “We wanted to find a spot that was going to be the easiest to get to from the most different modes of transportation. The river allows us to have river taxis and be able to shuttle people literally from heavy rail, so you can come into Union Station or Ogilvie and get on a water taxi and be dropped right off at the 78 and go to a match.”
Nordness: “That control of your environment, that ecosystem, marrying that with the capital is really the complexity of this [sports] environment now. How do we think about being really smart developers that are delivering the opportunistic rate of return for the markets right now or a low-20s project [internal rate of return] or something like that, in a seven-to-10-year horizon? If we were next to Ari or Joe, we’d think about how are we going to create control for you after we’re gone? Because we’re your partner now, but we may not always be there because our money isn’t always forever.”
Myhra: “The community center going into our music hall is dedicated to the community for their use. We’ve done a lot of stakeholder engagement interviews with our community to figure out what exactly they are looking to do. A good example is our alderman wants to host a bingo night, so I’m tasked with trying to figure out where we’re going to host a bingo night. Well, how many people are there? Two thousand people. [Laughs.] It’s incredible, right? I just want to be the one to call the numbers. That was my request.”
Glass, regarding the Fire and Related Companies’ relationship: “We’ll have streets shut down during our games. We’ll have traffic flows get significantly interrupted. There’s a lot riding on an ongoing relationship between us and Related to really enable them to have a successful development around us.”
Nordness, regarding what team owners struggle with most in this realm: “Most sports orgs that we work with, and we work with a ton of them now, they’re very thoughtful and deliberative. They have long strategic plans. They think about these assets as multi-generational. They’re thinking about media rights, disruption. They’re thinking about their digital ticketing, how do we go cashless in our venues, they do all those things and they’re very deliberate. Then they get into real estate. And it’s hard to get them lined up to say like once you make these decisions and once that train’s going, you can’t reanalyze, you can’t rethink it. Because we all know those are change orders, and those are things that their development can’t interrupt. The pace of development, once it gets going, is really hard for sports owners to get their arms around.”