AECOM, Hunt deal forms facility behemoth

AECOM’s acquisition of Hunt Construction Group has formed a blockbuster operation in sports facility development that can now pitch an integrated design-build model that seeks to minimize financial risk for potential clients.

Last week’s announcement of the acquisition surprised some in the industry, but it was no surprise to those who knew the Hunt family had been seeking a buyer during the past decade. AECOM is the world’s largest provider of architectural services and already owns firms tied to research, consulting, construction and design. Buying Indianapolis-based Hunt and pairing it with AECOM’s Kansas City-based sports architecture practice brings together two of the top names in sports facility development.

While the purchase price was not disclosed, AECOM said the deal expands its annual revenue to $20 billion and its workforce to 95,000 employees across 150 countries.

Prior to the acquisition, AECOM and Hunt Construction Group had worked together on multiple sports facility projects, including Barclays Center in Brooklyn. Photo by: PATRICK E. MCCARTHY

Hunt Construction, a 70-year-old family-owned firm with 700 workers, generated $1.2 billion in revenue last year. Over the past 45 years, Hunt has built multiple big league arenas and stadiums (see chart).

But while AECOM and Hunt officials tout their combined efficiencies, competitors floated concerns over potential conflicts of interest and wondered whether the merger could result in architects straying from Hunt as a construction resource now that the company is a partner with a chief competitor.

The merger will result in the largest combined operation in the sports facility space. Five years ago, AECOM bought Ellerbe Becket and its Kansas City sports design group. Hunt has been the top sports builder 10 of the past 16 years, according to data compiled by Engineering News-Record.

“It looks like whales swallowing whales,” said Allen Johnson, executive director of Orlando Venues, the city of Orlando’s group currently working with Hunt to build a $175 million renovation of Citrus Bowl Stadium.

The genesis for the merger started a year ago when Dan McQuade, AECOM’s chief executive of construction services, reached out to Hunt’s CEO, Robert G. Hunt, about a potential acquisition. Hunt is the grandson of the company’s founder, Paul Hunt.

It was no secret that Hunt was looking for a succession plan, industry sources said. About nine years ago, after Hunt’s father, Robert C. Hunt, died, Hunt shopped the company to competitors, sources said. A deal was never consummated, though, for reasons unclear. But when talks with AECOM started, Hunt was poised to sell the business. Sources from inside the company said Hunt’s family was not interested in remaining in the construction industry.

The deal is set to close in October, but the Hunt name, unlike the Ellerbe Becket moniker, will remain, as will its key executives, McQuade said. Moving forward, AECOM’s vision is to jointly pursue sports projects with Hunt, including an even bigger focus overseas in Europe, the Middle East and China, he said. To date, Hunt has not done much business internationally, but that will change with new ownership, said Ken Johnson, Hunt’s executive vice president and division manager in Indianapolis.

AECOM and Hunt will aggressively market the design-build model, a business strategy where the architect and the general contractor are formed as a single entity with the builder taking the lead role for development. It is a different method for delivering a project, and some say more cost-effective, compared with the architect designing a project separately before handing those plans to a contractor for construction. Most design-builds, though, involve separate companies forming a joint venture, sources said.

Bill Hanway, AECOM’s executive vice president and leader for global architecture and global sports, said more big league teams and colleges are considering design-builds to keep costs under control, and now that Hunt is in the fold, AECOM can push the model with a higher degree of confidence. “We can talk to owners about a consolidated offer … a package that relieves risks at the ownership level and allows us to deliver what we think would be a great facility for a price everyone agrees to early on in the process,” Hanway said.

It doesn’t mean AECOM will pitch design-build for every sports project it pursues. There will still be situations where a client has a strong relationship with another architect and prefers to have Hunt build a facility without using AECOM’s designers, Hanway said. And vice versa.

“Hunt is completely free and allowed to go ahead and deal with [certain projects] independently,” he said. “Equally, we’ll be in a situation where a team will come to us and want to use a local builder. We won’t change the nature of those relationships, although our preference is to work together.”

How it all shakes out for competing interests in sports development remains to be seen.

The AECOM-Hunt merger could lead to hesitation for building designers seeking preliminary cost estimates from Hunt officials for projects that have not been made public, said Dale Koger, Legends Global Planning’s senior vice president and managing director for project development. The thinking is Hunt could then share information on a confidential project with AECOM, which in turn could come knocking on the client’s door looking to do business with them, Koger said.

Tom Tingle, senior vice president for Skanska, a sports builder and Hunt competitor, also noted a potential challenge of the pairing. “Typically, the architect is selected first, and this could preclude AECOM/Hunt from being considered for a project,” he said. “It’s a dilemma that has to sort itself out.”

Earl Santee, senior principal at Populous, a top sports architect, has concerns about the deal potentially taking Hunt “out of the market” as a construction resource. Populous and Hunt are working together to build a $350 million arena in Las Vegas that is expected to open in 2017. Hunt officials, according to Santee, have assured Populous it’s business as usual and that Hunt is not required to work with AECOM on every project. 

Hunt has teamed with Populous alone on more than 50 projects over the years, and Hunt’s Ken Johnson, who has worked with Santee to develop MLB parks in St. Louis, Kansas City and Miami, said he would never compromise the strong relationships his firm has with all sports architects. In fact, Hunt keeps confidential projects under wraps internally by using code names to prevent details from leaking outside the office. “We will certainly keep that dynamic in place,” Johnson said.

Said Santee, “Right now, that’s the case, but in a year or two if it turns out to be different, we would rethink how we move forward with construction managers. If it goes south, we will make an adjustment.”