Two years ago, the San Francisco 49ers announced plans to build a new football stadium on land used for the current stadium's parking lot. The cost of building the stadium would be underwritten by revenues from a 1.5 million sq. ft. shopping and entertainment mall to be developed by The Mills Corp. and DeBartolo Entertainment Corp., a company formed by 49ers owner Eddie DeBartolo, son of shopping center magnate Edward DeBartolo.
In turn, the stadium would generate customers for the mall, both directly through pre- and post-game visits by football fans and indirectly through frequent mention of the shopping center and site in television broadcasts and news articles.
The project, however, has become mired in controversy. Projected costs some $200 million higher than originally estimated, hostility toward use of the city's limited bonding capacity and lingering charges of election irregularities in a vote on the project leave its development in doubt. Despite official claims to the contrary, it seems unlikely to move forward.
But whether it goes forward or not, the concept of using a sports facility to anchor a shopping center (and vice versa) appears to be taking hold in communities all across the nation.
Hot dog, beer, ballgame ... and shopping? Shopping and entertainment centers are slated for development in conjunction with professional sports facilities in cities as diverse as Salt Lake City, Houston, Dallas, San Diego, and Hartford, Conn. Back in San Francisco, a separate retail project is under development across the street from a new downtown baseball park being built for the San Francisco Giants. And in the Los Angeles area, two of the three groups making competing bids for a new National Football League franchise have proposed retail centers as part of their development plans.
Despite the spate of activity, uncertainty about the viability of this pairing remains. Does the presence of a stadium or arena next to a shopping center actually boost retail sales? For the moment, there is no reliable answer to this question. To begin with, few projects have been completed. Most have not even reached the construction stage, and some may never get built.
In addition, in all but one of the above cases, both the retail and sports projects are components of large-scale developments tying together multiple elements. These developments typically encompass residential, office, hotel, cultural and recreational uses as well as shopping and ballgames. Furthermore, virtually all are being built in a location that already has some of these elements in place. Only the 49ers/DeBartolo/Mills development combines just sports and shopping on a site fairly isolated from any other uses.
Consequently, the impact of sports facilities on nearby retailing is, and will remain, difficult to gauge. Nonetheless, as Bruce Miller, a vice president in the San Francisco office of New York-based E&Y Kenneth Leventhal, remarks, "There are a lot of these projects being discussed right now, so somebody clearly believes the synergy is right."
And why not? he asks. "If you just look at what's happened at the airports - you have all these human beings who are there, so it seems logical you can capture a fair number of people to shop as well," Miller observes. The bigger question, he says, concerns whether a stadium or arena is the optimal choice to serve as a "shadow" anchor for a shopping center.
Certainly, the fact that only the 49ers project involves a stadium and mall on their own suggests that developers lack confidence that the combination will work without additional components.
"My own bias," says Miller, "is that sports fans tend to buy their food and barbecue it at home, have a tailgate party, go to the game and leave. I don't see them changing that and adding on a few hours of shopping." Especially football fans, he says, who typically come from outside the immediate area of the stadium. "I can't imagine them hanging around after the game, unless maybe it's to have a beer or something. They just want to get home."
Transforming an area Comments from developers of proposed stadium-related retail centers indicate they do not plan to rely primarily on people attending sporting events. Rather, they regard the athletic facility as an opportunity for a level of exposure no standard marketing approach could provide.
"It identifies the site, gives it recognition," says Dan Arian in regard to the new Giants ballpark in San Francisco. Arian is vice president of retail entertainment for the Urban Development Group of Catellus Development Corp., a San Francisco-based spinoff of the former Southern Pacific Railway Co.
Catellus plans to build a 300,000 sq. ft. retail center directly across the street from Pacific Bell Park, as the baseball stadium is officially known.
Arian calls the ballpark's role "psychographic," in that it will be both a social and geographic marker in the city, a place locals and visitors alike will automatically conjure up when they think of San Francisco. Few people, he notes, develop a high level of personal identification with shopping centers, but when you place one in juxtaposition to a stadium used by a popular sports team, the cachet of the latter is likely to carry over to the former.
"Sports are such a huge thing in people's mentality," he says. "They relate it to entertainment and enjoyment. It's one of the ways people create a sense of community, identifying with the team."
In the case of San Francisco, Arian continues, Pacific Bell Park serves the additional function of establishing the surrounding area as a legitimate address for business. The warehouse and light-industrial district declined substantially after the city lost most of its commercial shipping business to Oakland and other West Coast ports.
However, since announcement of plans for the ballpark, the district has begun a major resurgence, with virtually every piece of property to the north of it changing hands in the past two years, according to the California Real Estate Journal.
New restaurants are open or planned, a residential high-rise is in development and several projects have been proposed along the waterfront. To the north, Catellus has initiated construction of Mission Bay, which entails development of 5 million sq. ft. of commercial space, 6,000 residential units, a 2.65 million sq. ft. research campus for the University of California at San Francisco and a full-service hotel.
"The ballpark was critical in the sense of spearheading development in the whole area," Arian emphasizes. "I think it's similar to Denver or Cleveland, where the ballpark becomes the first domino (to fall) in terms of dollars flowing into otherwise-ignored parts of the city."
Barry Elbasani, a principal with ELS/Elbasani & Logan Architects in Berkeley, Calif., concurs that construction of Coors Ballpark in Denver served as a catalyst for a transformation of the city's Lower Downtown area.
From a collection of decrepit warehouses, flophouses and vacant lots, the district, now called LoDo, has become a vibrant neighborhood with a complete range of activities. ELS recently celebrated the opening of Denver Pavilions, a retail/entertainment project the firm designed for a site near the ballpark. Elbasani says the project would likely not have been built had the ballpark not gone up first.
"You can't quantify it, but it's clear the park increased the number of people coming to downtown Denver," he says. "It's not necessarily a direct relationship with the sports fans creating the retail customer base, but by coming to the games people make LoDo a legitimate place to go."
Steve Caine, special projects director for Boyer Co. in Salt Lake City, calls the Delta Center, a 20,000-seat arena for the Utah Jazz basketball team, a "huge activity generator" for the surrounding area. The nearby area includes 26 acres of abandoned railyards Boyer is redeveloping into a mixed-use project called The Gateway. A prime element is a retail center with about 700,000 sq. ft. of entertainment, restaurant and lifestyle retail uses. The retail center occupies the site directly across the street from the main entrance to the arena.
Caine emphasizes that the arena is only one element affecting development, but he acknowledges it is a significant one. "We're not completely reliant on the arena, but just under 2 million people visit (Delta Center) every year, so it's definitely a major factor in what we're doing," he says.
Other developers make similar statements: The retail project does not depend entirely on the sports facility for its existence, but the presence of sports and concert patrons gives greater assurance of success.
In San Diego, a 250,000 sq. ft. downtown retail complex is planned adjacent to a 2.5-acre public park and a new baseball stadium for the San Diego Padres.
"Without the stadium, it would be premature to build the project, but the Padres will generate enough business to make it succeed before other things are in place," says John Kratzer, vice president of San Diego-based JMI Realty Inc. JMI is developing the retail center in conjunction with another San Diego company, Burnham Development Group.
Residential, office and hotel buildings are being developed on a multi-block site by JMI and additional nearby residential and commercial projects by other developers.
The way the stadium and retail complex have been designed to feed into one another shows the level of importance the JMI/Burnham partnership places on the juxtaposition. Rather than being fully enclosed as most stadiums are, the Padres' facility will have a split opening in the bleachers behind center field that looks directly across the public park to the retail complex.
The complex, in turn, will have shops and restaurants with entries on the park. People will be able to walk freely between the two facilities. On non-game days, the stadium will be used as an extension of the public park.
"We probably have the most unique project from the standpoint of integrating the ballpark with the retail component," Kratzer ventures. "A fan who's interested in the Gap store that he sees past the outfield can leave his seat, go on over, then come back."
Kratzer expects food tenants in particular to benefit from the arrangement. Fans can buy the hot dogs and tacos sold by concessions in the ballpark proper, or they can select from a wider variety of foods offered in the retail center.
Arian reports that Catellus wants to ensure that a portion of its project is oriented toward the entry plaza of the Giants' ballpark. Though not yet designed, he says, the project will likely have entertainment and food tenants facing the ballpark, with soft- and hard-goods retailers in the parts facing the planned residential units.
Does the stadium help the mall? Not unnoticed by developers is the fact that ballparks and arenas draw people to areas of town they would not ordinarily go to. Cities have had increasing success drawing people back downtown, but they have had less success drawing a full range of the population.
Teenagers and younger adults have been the easiest to reach, largely because they tend to be the most active segment of the populace and have less fear of urban crime. Attracting older adults and families is a tougher proposition. But more and more, cities are recognizing that a major sports facility seems to give a place a family seal of approval.
"We see the stadium as creating a family-oriented destination," says Kratzer. "So it's natural these two venues would be linked. The retail plaza stands the best chance of success if it appeals to the whole family, not just a single age group."
But if a sports facility helps a retail project get developed, how much help is it in the long run? Does a stadium or arena continue to give greater value to the shopping center? The general consensus, at least among retail developers, is that over time the mall will help the stadium more than the stadium will help the mall.
For one thing, fans are more likely to come out to see their home team, especially a losing team, if they have additional reasons to visit the site. Also, family members who like sports can see a game while those who don't can shop or catch a movie. Yet they can all get together beforehand or afterward for a meal, so they can still share a part of the day.
In addition, a shopping center plays a much larger role than a stadium in attracting residential and commercial development. The San Francisco Redevelopment Agency estimates that at least 10,000 households and 100,000 employees will be added to the area surrounding Pacific Bell Park in the next 10 to 15 years. Neither individuals nor businesses would move there if retail and restaurant resources were not available.
But once the ballpark's role as a catalyst for development is finished, its practical importance diminishes. Few residents, shoppers or business owners will base their decisions to be in the area on its presence.
For some planned stadium projects, the retail element is of greater help right from the start. In the case of the 49ers, the truth of this view is fairly obvious. San Francisco officials made it clear they would not back the stadium financially without the promise of revenues from the mall.
The two Los Angeles proposals - one in Carson by Hollywood dealmaker Michael Ovitz and celebrity supporters such as Kevin Costner, Magic Johnson and Shaquille O'Neal, the other just outside downtown Los Angeles by locally based Roski Co. - are also structured for a retail center to cover at least part of stadium costs.
The former would include a large retail complex with the latest in entertainment technology. The other, which would entail a substantial rebuilding of the Los Angeles Coliseum, would have a new, 1.5 million sq. ft. entertainment-oriented mall.
With growing taxpayer resistance to subsidizing professional sports facilities, using ancillary components to generate income helps keep public contributions to a minimum, though in the opinion of most analysts, it probably cannot eliminate them entirely.
For example, while the San Francisco Giants are self-funding Pacific Bell Park through sale of seat licenses, gate receipts, stadium naming rights and inclusion of about 20,000 sq. ft. of restaurant, cafe, arcade and sports-related retail space, the city is underwriting several million dollars of improvements to the surrounding infrastructure. It will also build a ferry terminal outside the park and provide expanded water and land-based transit service on game days.
With cities increasingly concerned about ensuring the financial viability of publicly subsidized endeavors, they are getting involved very early in the game, says Steve Barth, vice president of special projects for Houston-based Enron Energy Services. He cites two reasons for such involvement: One, the city wants to have a strong voice in overall planning to make sure it's not getting the short end of the stick; and two, by getting in early it can amass the land before speculators have a chance to drive up prices.
Enron, which builds and manages energy infrastructures and handles facilities management, has a 10-year contract to provide energy and various management services for Pacific Bell Park and will provide financial backing for a new stadium for the Houston Astros.
Barth says his company is negotiating for naming rights for the latter. It has also been negotiating with Catellus for a major role in development and managementof Mission Bay.
According to Barth, development of the Astros stadium will follow the San Diego model of having the city, the team and a master developer work together to create a fully integrated multi-component project. He says Dallas has also adopted this model in helping create a basketball and hockey arena for the Mavericks and the Stars. The Hillwood Group, Dallas, will serve as master developer of that effort.
Eddie Wang, president of The Jerde Partnership, considers this type of integrated planning essential in meeting the needs of both sports fans and the community at large.
The Santa Monica, Calif.-based architectural firm is designing the retail components of both the Salt Lake City and San Diego projects. The company is also designing the retail portion of a mixed-use development in Hartford, Conn., that centers on a new football stadium for the New England Patriots.
"In any urban area, you can't afford to look at development one project at a time," says Wang. "Now that cities have decided sports should be part of urban life, they need to find ways to merge it into the cityscape. We think retail provides the best type of linkage."