AEG is nearing a deal to develop a massive new $1.5 billion sports and entertainment complex in Moscow, a landmark project that will dramatically change the way arenas and stadiums are built in Europe’s largest market.
The sports venues are targeted to open in 2016, with the stadium a centerpiece of the 2018 FIFA World Cup competition. Meanwhile, the NBA has been in preliminary talks with the developers about a new concept, the NBA Club, a themed destination that could be part of the complex’s mixed-use development. The NBA Club, developers said, could include a restaurant, children’s play area, a small gymnasium and a retail store, serving as a way for the league to extend its grassroots development to Russia.
The venues are targeted to open in 2016.
VTB Bank, 85 percent owned by the Russian government, is the country’s largest financial institution and has about $150 billion in total assets, according to the bank’s website.
AEG has been assisting VTB Bank for design and construction of the stadium and arena in the early stages of development, said Bob Newman, chief operating officer for AEG Facilities. Now AEG and VTB Bank, which controls the property through a 49-year lease, are close to signing a deal for AEG to continue working on a more formal basis, confirmed Andrei Peregoudov, VTB Bank’s senior vice president and chairman of the board for the sports development.
The relationship could result in AEG Facilities signing a deal to operate both sports facilities, both officials said. In addition to the World Cup, the stadium will serve as the new home for the Dynamo Moscow soccer club, 75 percent of which is owned by VTB Bank. Two other teams, the Kontinental Hockey League’s Dynamo and CSKA Moscow basketball, will play home games in the arena. VTB Bank does not own those two teams.
The NBA has been consulting with VTB Bank on the arena portion. League officials said they are interested in expanding its role on the project but did not disclose any specific plans.
VTB Bank is close to completing financing for the project, Peregoudov said. Officials have been talking to other international banks about funding, about $1 billion of which is set aside for the 650,000 square feet of leasable commercial space. If nobody else is interested, VTB Bank could finance the project on its own, Peregoudov said. The Russian economy has survived the global recession better than other parts of Europe because of its vast oil reserves and surging oil prices, he said.
The Moscow mixed-use development, the first of its kind in the market, is expected to help transform the city of 14 million residents by providing new sports venues in a community sorely lacking those facilities. VTB Bank executives plan to adopt the Western model of marketing arenas and stadiums by selling naming rights, founding partners and premium seats, while outsourcing deals for facility services such as ticketing and concessions.
AEG views the VTB Bank Arena deal as an opportunity to potentially bring all of its business divisions into Moscow with “bench strength” from the arenas it operates elsewhere in Europe, said Newman. AEG Global Partnerships, AEG Live, AEG Sports and AEG Real Estate could play key roles in selling the project, he said.
No deals have been signed yet, but Peregoudov knows the AEG model and says it works well in other buildings.
“It is the largest city in Europe and they have no modern arena to serve the sports and entertainment community,” Newman said. “It is a vibrant marketplace with a dynamic capital market. You start adding up all of its attributes, you can’t help but feel some energy toward the potential success of this project.”
|VTB Bank Stadium
||VTB Bank Arena|
|Total seats: 33,000, expandable to 45,000 for FIFA World Cup
||Total seats: 12,000, expandable to 15,000|
|Club seats: 6,750||Club seats: 1,632|
|Stage-end restaurant, conference and meeting rooms on club level, 5,640-square-foot LED video board
||Stage-end restaurant; ice floor; four-screen, center-hung scoreboard, total display exceeds 900 square feet|
If those deals are completed, they would further extend AEG’s global footprint. The Moscow site is similar to AEG’s O2 London, an arena surrounded by retail shops and restaurants inside the old Millennium Dome. In Moscow, the old Dynamo Stadium, built in the 1920s, is being demolished except for the exterior wall, which will frame two levels of new commercial space. The plan is to build the new stadium and arena above the retail development.
“They feel it’s a great fit for AEG’s global strategy with Moscow being next in line,” Peregoudov said. “This one will be bigger than London, which has an arena but no stadium.”
Peregoudov last month met with NBA executives at the NBA All-Star Game in Los Angeles and toured the AEG-developed L.A. Live.
The conversation between the NBA and Peregoudov about the arena project began in earnest last October a month after the NBA opened a new office in Moscow. The league and VTB Bank have a relationship that started three years ago when VTB launched a pro basketball league and consulted with the NBA on that venture. This time, VTB Bank asked the league for advice on arena design.
The arena/stadium project will include a high-end commercial district and a five-star hotel.
The NBA Club’s mix of education and entertainment appeals to project officials and fits with their vision for the overall development.
“Not everybody here likes soccer,” Peregoudov said.
The NBA has staged a few preseason games in Russia, most recently in 2006. The New Jersey Nets, owned by Russian billionaire Mikhail Prokhorov, would be a natural fit to play exhibitions at the new arena. The Nets conducted a preseason basketball clinic last October in Moscow during a one-day visit to Russia, have marketing deals with Russia companies Aeroflot and Stolichnaya, and their games are broadcast on Russian television.
VTB Bank officials have met the Nets’ new ownership group, with early talks on how the two groups could work together to expand business at the Moscow arena and Barclays Center, the $800 million arena the Nets are building in Brooklyn, Peregoudov said.
The NHL is aware of the project but does not have any plans to play games there, said Deputy Commissioner Bill Daly.
David Manica, an independent architect in Kansas City who spent 13 1/2 years with Populous until leaving the firm in 2007, is designing the arena and the stadium. Manica helped AEG develop Mercedes-Benz Arena in Shanghai in accordance with NBA standards, one of the three arenas operated as part of AEG’s venture with NBA China. The other arenas are in Beijing and Guangzhou.