The Structural Difference Most Sports Real Estate Investors Miss
Here's what separates institutional capital from strategic capital: The difference between being an LP in a single sports-anchored development and owning a stake in the GP executing multiple stadium districts isn't incremental—it's structural.
When you partner with the developer (GP-staking) instead of just the project, you're buying into a platform with multiple shots on goal. You capture economics that traditional LP positions never see.
The GP-staking model has proven itself across private markets, generating returns that compound to higher multiples than traditional LP investments. In sports-anchored development—where complexity, entitlement expertise, and municipal relationships create barriers—the fee streams and platform value can be transformational.
Case Study: Why GP Economics Beat LP Returns
The LP Problem
Traditional LP positions in sports-anchored developments mean:
Single project exposure — Capital locked into one stadium district
No platform economics — Development fees of 3-5% of project costs, asset management fees, acquisition fees, and promote typically go to the GP
Exit-dependent returns — The LP only makes money at stabilization/sale
No cross-market leverage — Knowledge from Atlanta doesn't benefit your Nashville investment
What GP-Staking Can Unlock in Sports Real Estate
Development Fees: Sports-anchored districts ($300M-$1B+ developments) can generate $10-$50M in fees ( 3 - 5%) during construction—before a single tenant opens.
Asset Management Fees: Managing stabilized sports districts can generate $5-10M-- annually across a portfolio of four $400M districts structured as either a 1%-2% fee on the total equity invested in the project or as a ~3% fee on project-level gross revenues. Total equity invested in a project is often 20%-40% of the total development cost depending on public incentive availability, debt covenants, project-level risk profiles, etc.
Construction Management: GPs capture a 1-2% fee of construction hard costs. Hard costs are typically ~70% of the overall development cost.
Land Acquisition Fees: In ground-up construction, GPs often get a fee equal to ~1% of the cost of the land contributed to the project. Land costs are normally ~10%-25% of the overall development cost depending on urban vs. suburban and the nuances of each market.
Municipal Advisory Fees: Structuring TIF districts and public-private partnerships generates additional revenue that transfers across markets. GPs typically receive a fee equal to 1% of the total financing arranged with the municipality.
Promote Participation: GPs get access to a share of the 20%+ sponsor-level promote on each project’s profits (often only accessible after LP investors get all of their money back + an 8% per year preferred return).
Historical Performance Comparison
Typical LP in Single Sports District:
Historical target: 10-16% IRR, 2.0-2.5x multiple over 5-7 years
Returns concentrated at exit
Single franchise/market exposure
GP-Staking in Sports Platforms:
Historical range: 16-22% IRR, 2.5-3.5x multiple over 5-7 years
Cash flow from year one via fees
Diversified across 3-5 markets and franchises
Platform sale optionality
Research suggests GP-staking has historically generated 500-800 basis points of annual outperformance through fee capture and platform appreciation.
Why Sports-Anchored Development Works
The Barrier-to-Entry Advantage
Sports districts require specialized expertise:
Franchise Relationships: Understanding team economics, ownership dynamics, and coordinating development around 100+ event days annually.
Municipal Partnerships: TIF structuring, public-private partnership architecture, and revenue sharing agreements.
Complex Entitlements: Mixed-use zoning across 40-60 acre parcels, environmental review, and community benefit agreements.
A GP that successfully delivers 2-3 sports-anchored districts has built institutional knowledge that creates significant barriers to entry. Traditional LP investors capture none of that platform value.
Real-World Proof Points
The Battery Atlanta: Property values increased from $5M (2014) to $736M (2022)—a 147x increase. Generated $38M in tax revenue in 2022.
AT&T Stadium (Arlington): Hotel tax revenue up 72%, sales tax revenue up 36% from 2008-2018. Stadium debt paid off 10 years early.
Understanding the Model
This article is for educational and informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Hypothetical Illustration: Platform vs. Single District
The following is hypothetical based on industry data and does not represent any actual investment.
$48M GP-level Equity Investment in a Sports Development Platform:
6 districts across 6 different geographies tied to 6 separate teams ($8M GP-level equity investment per platform)
$1.6B total development costs
$48M GP-level equity investment out of $96M total GP-level equity = Hypothetical 50% GP ownership stake
Sponsor/GP equity on average is ~10%-30% of the total project-level equity.
Capital Stack Split: 30% Equity (20% GP / 80% LP), 20% Municipal Funding, 50% Debt
Years 1- 4 (Pre-Development Work / Construction):
Development Fees: ($1.6B Development Cost 3% Developer Fee 50% GP Ownership) = $24M
Construction Management Fees: ($1.6B Development Cost 70% Hard Costs 1% Construction Management Fee * 50% GP Ownership) = $5.6M
Municipal Advisory Fees: ($1.6B Development Cost 20% Municipal Funding 1% Municipal Advisory Fee * 50% GP Ownership) = $1.6M
Land acquisition Fees: ($1.6B Development Cost 15% Land Costs 1% Land Acquisition Fee * 50% GP Ownership) = $1.2M
Total: $32.4M. (67.5% of capital recovered from development fees)
Years 5-7 (Stabilization):
Asset Management Fees (3 years): ($1.6B Development Cost 30% Equity Capital 80% LP Equity 1% Asset Management Fee 3 Years * 50% GP Ownership) = $5.7M
Promote Income (assuming 2x project-level return on $480M Total Equity; 20% GP / 80% LP Equity Split): ($480M Equity Profits 80% LP Equity 20% Carry * 50% GP Ownership) = $38.4M
2x Return on $48M GP Equity Investment: ($48M GP Equity Investment * 2x Project Level Return) = $96M
Total: $140.1M (291% of capital recovered from management fees, promote, and equity-level returns)
Combined: $172.5M on $48M invested = 3.59x MOIC, ~20% IRR
Compare to LP in Single District:
Same $48M investment
No fee income, no platform value. Actually have to pay carry & management fees.
Total Return on $48M Investment: $96M; 2x Gross MOIC, 11% Gross IRR
The GP-staking model potentially delivers ~80% higher returns (~900 basis points per year higher IRR) with earlier cash flow and lower volatility.
Past performance does not guarantee future results.
Why Now
Several trends are converging:
Franchise Demand: Teams seeking Battery-style districts after proven success. Battery property values up 147x, Cowboys demonstrating venue control economics.
Housing Shortage: 3.8-5.5M unit shortage nationally. Sports districts solve housing + placemaking simultaneously.
Municipal Appetite: Cities learned from Battery's $38M in tax revenue and Arlington's tax growth. Competition for franchises creates favorable TIF terms.
Financing Gap: Construction lending at 11-year lows, though CRE originations rebounded 16% to $498B. GPs with franchise relationships struggle to scale due to equity constraints.
Fee Expansion: Development fees rising to 4-5% on complex projects. Sports coordination commands premium asset management fees (1.5-2.5%).
Platform Valuations: Private equity buying platforms at 10-15x EBITDA. Strategic acquirers value franchise relationships.
The Momentous Sports Perspective
Most sports capital flows into either franchise stakes with no real estate exposure, or LP positions in individual districts with no platform economics. Few strategies combine franchise expertise with platform-level real estate evaluation.
The Battery proved the model works. The Cowboys demonstrated venue control transforms economics. The question becomes: Which GPs possess the franchise relationships, municipal expertise, and execution discipline to scale—and which investors have the domain knowledge to evaluate them before institutional scale?
For investors operating at the intersection of sports franchises and real estate development, this framework represents a differentiated approach worth understanding.
Learn More
Interested in learning more about how Momentous Sports evaluates opportunities at the intersection of professional sports franchises and institutional real estate?
Sources
Sports Case Studies:
Development Fees & GP-Staking:
Market Data:
This newsletter is for informational and educational purposes only and does not constitute investment advice, an offer to sell, or a solicitation of an offer to buy any securities. All financial data presented represents historical performance of specific venues and should not be construed as indicative of future results. Past performance does not guarantee future results. Investment in sports venues and related assets involves significant risk, including potential loss of principal. The behavioral economics concepts discussed are based on academic research and historical case studies that may not apply to all situations or guarantee similar outcomes. No representation is made that any investment approach discussed herein will or is likely to achieve results similar to those shown. Any investment decision should be made only after careful consideration of all relevant factors and consultation with qualified financial, tax, and legal advisors. Momentous Sports and Magnolia Hill Partners make no representations or warranties regarding the accuracy or completeness of this information and disclaim any liability arising from your use of this information. This material has not been prepared in accordance with requirements designed to ensure unbiased reporting, and there are no restrictions on trading in the securities discussed herein prior to publication. For qualified accredited investors interested in learning more about our educational materials and investment approach, please contact us directly for a confidential discussion.