A League Of Its Own: Sport Stadium As Significant Asset Class For Private Capital Investors

Deloitte predicts that, in 2025, over 300 global sports stadiums will have begun renovations or new builds, with almost 50% of these new stadium infrastructure projects expected to take place across North America and Europe, and stadium investment likely to increase across multiple global regions. Associated training facilities and esports venues will further add to these numbers.

Many of these stadium projects will be built out as whole entertainment districts with different offerings – including non-game events, VIP experiences, hospitality, music, culture, as well as social spaces for different types of fans – all aimed to increase fans' participation and to drive and diversify revenues beyond traditional matchday ticketing and hospitality inflows.

As a result of the growing complexity and technology involved, the cost of building these modern stadium projects has skyrocketed over the last decade into the billion-pound range. And with transaction valuations getting bigger and deals more complicated, forming the required capital requires new and innovative financing structures that incorporate a variety of sources of financing.

This article discusses (1) the drivers of investing in sports infrastructure for different types of debt financiers, (2) the types of financing product utilised and (3) key structural and documentary features specific to this sector.

Drivers of Investor Interest

Having funded around 65% of major US stadium financing developments, JPMorgan Chase's stadium finance group has now firmly landed across the pond and is funding stadium projects for two storied Premier League clubs, Everton and Fulham. As Europe catches up on the US model of competitive stadium re-building or upgrades, JPMorgan is one of the leading US banks keen to expand their expertise and balance sheet to projects in Europe, bringing over the technology of stadium financing that they've deployed in the US. Other traditional bank lenders – such as Goldman Sachs – with expertise and knowledge in this complex sector which involves disciplines including media and infrastructure, are following suit.

Secondly, the retrenchment of traditional banks since the Great Financial Crisis has opened up space for private credit lenders to fill funding gaps and identify new outlets to deploy their abundant capital at a premium return. Recognising sports as a growing asset class, they have stepped up their push into the sector, with Apollo announcing plans in September 2025 to launch a $5bn sports investment vehicle to buy stakes and lend to clubs and leagues, having already participated in the financing for Co-Op Live, the largest indoor arena in the UK, as well as providing a working capital loan to its first English Premier League club in July 2025.

Lastly, institutional investors – asset managers, insurance companies and pension funds – have for some time seen stadium financing as an attractive investment avenue. It provides long-term, contractual cashflows that can be structured to match with institutional liability needs such as annuity payments and retirement liabilities. Compared to public bonds, privately structured, less liquid debt also offers these investors a yield pick-up and individually negotiated terms which mitigate against downside risk. Additionally, as investment grade rating can be achieved for these issuances, they serve as an important capital mitigation measure for insurers in particular. MetLife Investment Management, the investment arm of New York-based insurance giant MetLife Inc., is an example of a leading investor in the institutional market for stadium and arena related debt with a rapidly growing European presence. The interest from UK institutional investors is likely to continue to grow at pace as well, as private initiatives such the Mansion House Accords, partnerships with asset managers and regulatory tailwinds encourage these regulated institutions to increase their allocations to private markets.

Types of Lending Products

From the clubs' perspective, the growing interest in the sports sector means that they can draw on a mix of products depending on whether they need flexibility during construction, long-term stability once the doors open, or a way to monetise particular revenue streams. The three most common approaches are bank debt, rated private placement debt, and securitised debt – each playing a distinct role in the lifecycle of a stadium project:

• Construction loan: A senior secured construction loan is usually the first piece of the puzzle. An initial credit facility from a single lender or a lender club gives the owner the speed and certainty it needs to press ahead with construction before longer-term capital markets solutions can be arranged. Stadium construction is complex, expensive, and can be unpredictable, and banks are well placed to provide short-term funding with flexible drawdowns and the ability to adjust to changing project needs. These loans tend to run for three to seven years, with floating interest rates. At this stage, lenders may still require some level of owner support or guarantees because stadium revenues have yet to materialise.
• Rated private placement debt: Once the stadium is operational and revenue streams are established, the financing picture shifts toward long-dated, rated senior secured notes debt. Here, asset managers, insurers and pension funds typically step in. Unlike loans, the maturity of private placements notes can extend 20 to 30 years, with fixed rates that give clubs certainty on servicing costs. The debt is structured to satisfy project finance rating criteria and to achieve an investment grade rating, which is usually a higher credit rating than the underlying team might warrant on a standalone basis.
• Securitisation: A third option is securitised debt, where a team monetises specific income streams by packaging them into a bond issuance. Investors in a securitisation are repaid from these dedicated cash flows, which can be divided into tranches with varying levels of risk and return. While several European clubs have taken this route with the income streams from media rights, the model has recently been applied in stadium financings for FC Valencia and FC Barcelona as well.

Key Sector Specific Overlays

Structuring in stadium financing shares some similarities with traditional project finance but also features important distinctions as a result of the sector's unique characteristics. Some of the key structural features and sector specific overlays are described below:

• Non-Recourse Financing: The debt issuing entity ("StadCo") will typically be a newly formed SPV, with its assets and cash flows ring-fenced from the operating risks of the team owning entity ("TeamCo"). The debt documents include separateness covenants and usually don't cross-default to TeamCo or its affiliates.
• Flow of Funds: StadCo will lease the stadium to TeamCo and collect revenues generated by TeamCo and the stadium which are used to secure the stadium financing. Cash inflows are deposited into controlled accounts and periodically distributed in accordance with a prescribed waterfall which adjusts in respect of both control and flow of funds upon occurrence of specified trigger events.
• Security Package: The security package will typically comprise the equity interests in StadCo and all assets of StadCo, including a mortgage on its interest in the stadium, an assignment of stadium-related revenues (ticket, concession, and other game/event-day revenues, premium seating revenues, stadium naming rights, and revenues from other stadium events, such as concert ticket sales), sponsorships, media rights payments and the staging fee.

As leagues enact financial fair play rules, the rules and regulations of the relevant league should always be scrutinised to ensure that any restrictions on granting and enforcement of security or on the assignment of revenues by TeamCo to StadCo are well understood and addressed in structuring.

• Covenant Package: Strong covenants govern the use of funds, maintenance of separateness, and restrictions on additional indebtedness of StadCo. The legal structure is designed to ensure that, even in the event of a franchise bankruptcy, the pledged revenues continue to flow to StadCo and its creditors. A minimum historic and forward-looking debt service coverage ratio (DSCR) is set to measure the financial leverage at StadCo. Any distributions from StadCo to TeamCo are subject to restrictions and financial testing.
• Debt Servicing and Other Reserves: A combination of debt service reserve accounts, cash reserves, and/or cash-trap mechanisms which are triggered by adverse events (e.g., team relegation, team insolvency, force majeure) will typically be included. These provide a buffer to ensure continued debt service during periods of stress if brief economic downturns or other unexpected events affect pledged revenues.
• Staging and Non-Relocation Agreement:TeamCo's ability to terminate and relocate to another facility are restricted pursuant to a staging and non-relocation agreement entered into between TeamCo and StadCo, which requires the team to play its games in the financed facility for the duration of the debt and/or to indemnify the lenders in full in the event of a team relocation. Lenders can variously have step-in rights or other third party rights in relation to the staging and non-relocation agreement.

Conclusion

While the funders of stadium projects invariably share the fans' unwavering enthusiasm for sports and entertainment, it is a combination of sector diversification, diversified revenue streams, long asset life, attractive spreads and the sophistication of financing structures that make these assets into attractive investment avenues sought out by an ever increasing range of funders.

Lenders and borrowers alike should seek experienced legal counsel with a strong grounding in both sports and finance in order to successfully guide transactions in this highly specialised – and exciting – space.

Originally published by The Hedge Fund Journal

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.