Real Estate: the New Frontier in Sports Franchise Ownership

Featuring commentary by Eric Belsky

By Jason McAlees and Carly Jane Zapernick, M.Des Real Estate and Built Environment ‘14

Professional sports stadiums are as intrinsic to the history and tradition of the franchises they house as are the players, games, coaches, and fans. Stadiums also represent some of the most famous, expensive, and controversial real estate megaprojects in the United States. Built with an inherently inward-looking perspective, the relationship between the stadium and its surrounding environment has evolved over the past 20 years. Starting in the 1990s, the stadium emerged as a kind of civic symbol, one that could also potentially catalyze economic and physical development. The integration of stadiums into broader urban redevelopment schemes aimed at revitalizing declining or underutilized neighborhoods followed. These initiatives often featured a partnership between the sports franchise, the local governing body, and private real estate developers. Second, following that blueprint, the trend of stadium-anchored real estate development more recently reached its next logical point — projects conceived of and executed by the franchise owners themselves. The development of Patriot Place, a 1.3 million square foot entertainment and retail complex attached to Gillette Stadium in Foxboro, Massachusetts spearheaded by the Kraft Group, exemplifies an owner attempting to enhance the income generated by and value of the franchise through real estate development.

The Evolution of the Stadium Model

Figure 1: Dodgers Stadium, Los Angeles, California

Driven by rising land costs in urban cores, sports franchises flocked to the suburbs. Patrons of sporting events typically arrived in an automobile, parked in a vast sea of asphalt lots surrounding the stadium, spent most of their money inside the venue, and left soon after the game concluded.

Beginning with the redevelopment of Camden Yards in Baltimore, Maryland in 1992, however, the perception of the role of the stadium within the larger urban context shifted. Instead of constructing stadiums in a suburban greenfield, teams and local officials alike made efforts to integrate the stadium into the existing built environment. No longer viewed as a solitary monolith devoted exclusively to infrequent sporting events, stadiums would instead anchor larger retail and entertainment-based districts designed to capitalize on game day attendance and catalyze sustainable economic activity.

In theory, large facilities bring about redevelopment by drawing visitors — particularly from outside the immediate neighborhood — to events, providing the critical mass necessary to support investments in related entertainment facilities such as restaurants, bars, and retail. The retail and entertainment developments draw corporations, leading to an expansion in office space. In turn, new offices spur residential development as high-income families move to the newly thriving, amenity-filled neighborhood. Combining commercial development with a large facility also makes practical sense, as they often have the parking, roads, and infrastructure to handle large crowds. Stadiums — and the sports franchises they house — represent the kind of highly visible, wildly popular, and widely understood institutions that cause broad economic stimulus, and (re) development in particular.

Camden Yards became the first sports facility to test the theory of stadium-anchored urban redevelopment. In the prior decade, Baltimore had revitalized its Inner Harbor area through the construction of a convention center, a cluster of museums, and entertainment retail. The plan for the new Camden Yards, which would sit directly adjacent to the Inner Harbor, included not only the stadium, but also surrounding office, restaurant, and retail space that connected to the existing neighborhood. The redevelopment of Camden Yards received positive reviews, including raves for its architectural and urban design quality, and built upon the development of the Inner Harbor.

Ironically, in contrast to the trend of franchise owners eagerly developing the land around their stadiums, the ownership of the Baltimore Orioles — the sole occupant of Camden Yards — opposed the development of surrounding parcels. They feared the cannibalization of retail sales within the stadium and claimed that the loss of parking would adversely impact attendance and thereby hamper entertainment-oriented development opportunities.

Gillette Stadium

As urban development proponents studied the Camden Yards model, similar development schemes were proposed and executed in the mid- and late-1990s in other cities across the country, with and without the support of the owners. During that same time, the New England Patriots joined the growing list of franchises pursuing a new stadium. The Patriots played in Foxboro Stadium, an outdated relic completed in less than one year in 1970 for a paltry cost of $4 million. Located in Foxboro — approximately halfway between Boston and Providence, Rhode Island — the stadium lacked both the capacity and then-ubiquitous amenities like luxury boxes needed to compete with other franchises.

Robert Kraft, the Founder, Chairman, and CEO of the Kraft Group, the owner of the Patriots, led the search for a new stadium. Kraft actually owed his ownership of the Patriots to Foxboro Stadium. In 1988, he outbid several competitors to acquire the stadium out of bankruptcy from then-owner and team founder William Sullivan. Kraft’s stadium purchase included the lease between the Patriots and Foxboro Stadium. When a subsequent owner made an offer to buy out the lease in an assumed effort to move the Patriots to St. Louis, Missouri, Kraft countered with an offer to purchase the franchise outright for $172 million.

The Patriots explored a number of alternative stadium sites in places like Boston, Providence, and Connecticut. At one point, Kraft even reached an agreement with the then-Governor of Connecticut to relocate the team to a new state-of-the-art stadium in Hartford, a stadium that, naturally, would have anchored a major redevelopment of its downtown. However, after obtaining $70 million from the Massachusetts Legislature for infrastructure improvements, the Patriots elected to remain in Foxboro. The new Gillette Stadium would be completed in the shadow of its predecessor in 2002 at a cost of $325 million.

With the benefit of hindsight, the election to keep the team in Foxboro came as little surprise. Beginning with the purchase of an option on a parcel of land adjacent to Foxboro Stadium and culminating with the acquisition of the stadium itself, by 1994 Kraft found himself in possession not only of a sports franchise and a stadium, but also roughly 700 acres of developable land.

The Kraft Group

After graduating from Harvard Business School, Kraft established International Forest Products LLC in 1972 and subsequently entered the paper manufacturing and forest products distribution industries. Kraft maintains that presence today — his son Daniel is the current President and CEO of International Forest Products. The acquisition of the Patriots in 1994 marked the beginning of an expansionary period for Kraft and his company into sports; he would later help found Major League Soccer’s New England Revolution. Today, the Kraft Group, created in 1998, also operates in the energy, private equity, and philanthropy sectors.

Whether intentionally or not, the company’s land holdings offered Kraft yet another expansion opportunity — he could become a real estate developer. During negotiations with the Massachusetts Legislature for approval to construct what would become Gillette Stadium, Kraft also quietly and successfully sought to rezone the surrounding acreage to accommodate a future mixed-use development. Although Kraft lacked experience, he undoubtedly recognized the potential value of his land holdings, especially set against the proliferation of stadium-anchored developments across the country. “The Patriots would join a growing number of NFL teams trying to use stadiums as catalysts for commercial development” (Preer 2006). However, unlike the projects undertaken by the owners of those numerous other franchises, Kraft planned to develop the project himself. Moreover, “Kraft…plan(s) to own the development long-term and keep control of the day-to-day operations of the complex, which analysts say is rare for such a large undertaking” (Abelson 2007). If it succeeded, Kraft’s plan would constitute another significant evolution in the stadium development model.

Patriot Place

After opening Gillette Stadium in 2002 — at a significant cost to his company — Kraft began to seriously contemplate a use for the remaining land, not to mention the vast roadway and parking infrastructure needed for just a few dozen events annually. Numerous big box retailers expressed interest in building on the land across Route 1, but Kraft, after surveying real estate brokers in the region, gravitated toward an open-air lifestyle center. The lifestyle center concept originated in the Midwest in the 1990s before spreading to the Southeast and Southwest and is hallmarked by its large scale and mixture of uses, with emphasis on entertainment and retail. Kraft thought a lifestyle center would capitalize on the Patriots brand, complement Gillette Stadium, and attract up to 40,000 visitors daily. Moreover, “on game days, [Kraft] hopes to get people to come earlier, stay longer, and to lure into its stores the thousands who show up without game tickets and tailgate in the parking lot all day” (Abelson 2007).

Figure 2: Renderings of Patriots Place

The planning process resulted in Patriot Place, a 1.3 million square foot complex designed by Arrowstreet, an architecture, urban planning, and design firm based in Cambridge, Massachusetts. Opened in Fall 2007 at a cost of $350 million, the initial phases include a power center anchored by Bass Pro Shops — a Missouri-based retailer that specializes in fishing and hunting gear, drawing customers from an average 300-mile radius — and a lifestyle center that includes specialty shops, restaurants, a multiplex theater, a 120-room hotel, broadcast studios, a health club, medical offices, and a museum dedicated to the Patriots. Kraft, in consultation with local retail brokers, carefully selected the unique mixture of tenants to complement the in-stadium retail offerings. The Kraft Group also calls Patriot Place home.

Though Patriot Place has at times struggled to generate consistent crowds during the off-season, the development has succeeded, particularly in light of the general real estate environment at the time of its opening. In place of a parking lot, Kraft has created a productive entertainment district that draws visitors from throughout the region. By Kraft’s estimate, the project has also benefitted the town of Foxboro enormously, generating $1 to $2 million of tax revenue annually — net of municipal service provision — compared to previous total annual revenue of $4.3 million. The clearest sign of the project’s success from Kraft’s perspective, however, is his ongoing desire to expand. In the past two years, Kraft has sought allowances from the town to build another hotel, more restaurants, more retail, and more flexible commercial uses. The medical facility plans to grow. In the long term, Kraft hopes to attract a corporate headquarters and to construct housing. That a development of this nature succeeded in a suburban location like Foxboro is likely to embolden other franchise owners with land holdings, especially those with holdings in urban and other strategic infill locations.


Much like the Camden Yards model of the 1990s, the Patriot Place model has been duplicated in other places, including in Dallas, Texas by Cowboys owner Jerry Jones, and is the basis for proposed new stadiums in Minneapolis, Minnesota and Atlanta, Georgia. Owners not only derive municipal and political support as well as — more often than not — public subsidies with such schemes, but also potentially reap enormous financial rewards. The ability of owners to envision, create, and capitalize upon ancillary streams of income from activities like real estate development has accelerated the exponential growth in the value of their franchises.

In 2012, the Los Angeles Dodgers sold for an astronomical $2.15 billion, eclipsing the then-records for the highest price paid for a baseball franchise — $845 million for the Chicago Cubs in 2009 — and for the highest price paid for any sports franchise in history– $1.47 billion for Manchester United in 2005. Among the many valuable elements of the Dodgers franchise is the ownership of 300 empty acres surrounding Dodgers Stadium, a prime and wildly underdeveloped part of Los Angeles. The price paid by the new owners almost certainly incorporates expected revenues realized from future real estate development. In fact, in a potential sign of things to come, multiple bidders for the Dodgers franchise were real estate entrepreneurs.

Commentary by Eric Belsky

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Eric Belsky is Managing Director of the Joint Center and a Lecturer in Urban Planning and Design at the Harvard Graduate School of Design. Prior to his Harvard appointments, Dr. Belsky led the Housing Finance and Credit Analysis Group at Price Waterhouse LLP. He has also held the positions of Director of Housing Finance Research at Fannie Mae, Senior Economist at the National Association of Home Builders, and Assistant Professor at the University of Massachusetts at Amherst.

Dr. Belsky currently serves on the editorial boards of the Journal of Housing Research and Housing Policy Debate, the board of the Opportunity Finance Network, the Affordable Housing Advisory Council of Fannie Mae, and the National Advisory Council of CredAbility. In 2001 and 2002, Dr. Belsky also served as Research Director for the bipartisan Millennial Housing Commission established by the Congress of the United States. Dr. Belsky has extensive experience conducting research on housing markets, housing finance, and housing policy. He has published numerous articles in trade publications and academic journals.

This paper tells the story of the evolving relationships of stadiums to the areas that surround them. It focuses on two models in particular: stadiums as anchors for urban revitalization and stadiums as anchors for private real estate development around stadiums by franchise owners. The prime example of the former is the development of Camden Yards in Baltimore and of the latter is Patriot Place adjacent to Gillette Stadium in suburban Foxboro, Massachusetts. Indeed, these are two interesting, pioneering, and iconic examples of these two modes of relating stadiums to their surroundings. They move beyond the sea of parking and nothing else that surround so many other stadiums.

The cases raise important questions and issues. The first has to do with the role that the public sector plays in enabling private capital in developing new stadiums as well as real estate development around them in instances when private capital opts to undertake such developments. Some of the public supports that were provided in each of the cases are mentioned — from funding infrastructure to providing regulatory approvals of specific forms of associated real estate development. More attention to these and how fair a shake the community and the state got in return for them would have been welcome in illuminating the appeal of using stadiums to anchor development or redevelopment, and what might be done to improve the public return.

The paper also passes over the interesting parallel between Camden Yards and Gillette Stadium. Part of Camden Yard’s success is that it is adjacent to another large mixed-use redevelopment that involved concentrates public as well as private investment — the Baltimore Waterfront. Camden Yard was in some respects an extension of this earlier redevelopment to a nearby area (to, at the time, a team ownership resistant to further retail development for fear of competition with in-stadium concessions). Situated in an urban environment, it helped further catalyze redevelopment of a broader part of the downtown area. Still, Baltimore is struggling to attract investment to redevelop its distressed communities. In the case of Gillette Stadium, the private development benefiting from large public investment is occurring second, in a suburban greenfield, and with the ownership in the same hands as the stadium and franchise. It looks like the hefty investment and risk the owner took in this case will pay off.

The paper concludes with the observation that the Los Angeles Dodgers appear headed towards real estate development of the valuable land around their stadium. It is apparent that the record price paid anticipated returns on real estate development — so the value of the franchise extended beyond the team and stadium to its 300 acres. The authors conclude that this a sign that this will repeat, but of course this depends in other places on the value of surrounding land and if it is owned by the franchise. In urban areas this is often not the case.

In addition to considering what the public gets back for its investments and its approvals when granting development rights to stadiums as anchors of urban redevelopment or greenfield development, it would have been interesting to consider how state and local governments can plan in advance for uses around the stadium. This would help produce better publicly vetted and value-added outcomes regardless of who controls the nearby properties.

Harvard Real Estate Review

A student-run publication investigating the intersection of real estate, technology, and design. We foster collaborative conversations between students and industry professionals to explore solutions to contemporary urban issues.

Harvard Real Estate Review

Written by

Editorial team at the Harvard Real Estate Review

Harvard Real Estate Review

A student-run publication investigating the intersection of real estate, technology, and design. We foster collaborative conversations between students and industry professionals to explore solutions to contemporary urban issues.

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