SBJ/November 24 - 30, 2003/Facilities

Colleges, minors drive bulk of $1.5B arena tab

The opening of new and renovated sports arenas continued at a busy pace in 2003, with total construction costs for major league, minor league and collegiate indoor facilities topping the $1 billion threshold for a second consecutive year.

SportsBusiness Journal research shows $1.456 billion worth of arena construction was completed this year, an increase of $337 million over the 2002 total. The combined collegiate and minor league markets continue to experience the most growth, setting a record at $958.9 million.

Overall, 17 new arenas and four refurbished ones are opening in 2003, compared with 16 and three in 2002.

The major league segment is still somewhat stagnant as the Big Four team sports slowly gravitate toward a fully mature market.

The value of major league arena construction did increase more than 150 percent over 2002, but that jump owes to the lack of openings last year. Only SBC Center in San Antonio made its debut.

Two NBA/NHL buildings are opening this year — Toyota Center in Houston and the Glendale (Ariz.) Arena — and America West Arena completed a $50 million renovation. The year 1999 remains the benchmark, when six new major league arenas opened worth $1.3 billion in construction, propelling the total value of arena construction to more than $1.8 billion. (see "10-year look at new arena openings" chart here.)

Officials with Kansas City-based firms HOK Sport and Ellerbe Becket, two leading designers of sports facilities, reported their companies experienced relatively lean years overall in 2003. For HOK, that is somewhat notable considering the firm was the architect of record for Toyota Center and Glendale Arena.

"It was a flat year in terms of our revenues and the amount of facilities we had opening," said Earl Santee, HOK senior principal. "I'm not sure we know how to define the term mature. There are still a great deal of potential properties out there. Does that mean we're over the hill? I don't think so. In 2004-05, there are at least a dozen major projects that could start."

As the major leagues stay slow, minor league projects become more prominent. "That's still a very strong growth area for us," Santee said. "Three years ago, we didn't even talk about midsize arenas. That market has real high growth potential. It used to take three to four of those facilities to match our fee or the construction cost. But now they may be getting as complex in design as the major league buildings."

Ellerbe Becket was down about 30 percent from its original 2003 business forecast, based on the number of projects available and the contracts awarded to the firm, said Mike Clay, principal, project manager and operations director.

"It's been a hard year for Ellerbe Becket," Clay said. "A lot of things stopped and didn't start again. It's the economy. Everybody's cautious."

Things have begun to pick up for the firm as the year ends, Ellerbe Becket spokesman Stuart Smith said, though not necessarily on the arena front. "We've landed three to four jobs in the last three weeks, a major collegiate one and three NFL projects," he said, but would not reveal the projects.

"One could possibly be new construction, the others are renovations to existing buildings. Bottom line, we've been waiting for stuff like this to happen the last year and a half. This last quarter, we're starting to see things pop."

HNTB, also based in Kansas City, had a better than average year, noted Mike Wright, director of operations for sports architecture. "For us, it was a little above flat," Wright said. "There wasn't huge growth, but we were able to gain a little ground compared to our competitors. There was no reduction in the volume of contracts and revenue. We had a little increase."

Dale Koger, president of Turner Sports Group in Arlington, Va., said that, on the construction side, big league business all but came to a halt in 2003 in terms of new contracts distributed. "To my knowledge, there have been no major league projects awarded in 2003," he said. "There have some minor ones, like the 200 new seats in the Fenway Park outfield wall, but that's about it."

Three new collegiate arenas opened in 2003 with three under construction heading into 2004. The renovation wave that's sweeping college football stadiums across the country hasn't had nearly as big an effect on campus arenas because of the limitations with renovating indoor venues.

Koger said, "It's very difficult to expand an arena because it's enclosed by walls and a roof. It requires a significant structural change. The existing roof makes it tough. You would almost have to start over. College campuses also historically have site constraints."

John McCutcheon II, director of business development for Hunt Construction, the general contractor for Toyota Center, agreed. "It's getting cheaper each year to replace an older facility than it is to get the present one up to standard. A lot of colleges have aging arenas."

Wright estimated that 30 percent of HNTB business comes from the collegiate market.

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