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Deidre Woollard: Hello. I'm Deidre Woollard, an editor at Millionacres. Thank you so much for tuning into the Millionacres Podcast. Today, we're going to talk about sports real estate, which I think is just fascinating, and soccer in specific. It's fascinating to me too, because this growth of professional soccer has led to all of these opportunities for different sizes of cities all around the country. My guest today is Justin Papadakis. He joined the United States Soccer League in December of 2014 when he was named the president of commercial ventures. In 2016, he began his role as Chief Operating Officer and then he added Chief Real Estate Officer to his title. He is overseeing all of this massive growth and surge in soccer-specific and mixed-use stadiums all across the country. Welcome.
Justin Papadakis: Thanks for having me on. Big fan of the podcast and excited to talk about soccer and real estate today.
Deidre Woollard: Excellent. Soccer has grown tremendously in the country. What are you seeing in terms of the growth of the sport and the interest in seeing games that didn't used to exist maybe 20 or 30 years ago?
Justin Papadakis: Exactly right. If you go back 20 years, the trajectory in growth of soccer from a youth participation level has been significantly rising. Going back about 10 years ago, is when the professional side of the sport really started to take off within the United States. Of course, you have a chicken and egg type of scenario where you need a first-class fan experience, which means a stadium, and ownership, and broadcast, players. You need the whole ecosystem to have a first-class fan experience and you need a fan base to watch it. What we've done at the USL is, I think, we've been able to break that cycle along with the MLS and providing first-class fan experience for professional soccer and markets around the country. We have over 40 teams today. We're going to expanding to 80 in the next five years. That's just on the men's side. We're going to be adding in those same markets 40-80 women's professional teams over the next 10 years as well. Soccer is growing at an incredible rate. The USL, we have a unique opportunity. I believe I'm the only Chief Real Estate Officer from any of the professional leagues in United States because we have so much of a real estate centric approach. Where USL, at the league level, is going out and spearheading these stadium anchored entertainment district developments all across the country.
Deidre Woollard: Interesting. Because you've got so many teams, it's far different than other professional sports, and you're able to go to some of these cities that may not have a professional sports venue. I think that's really interesting because we're seeing this overall trend in real estate even before the pandemic. It's discovery of smaller cities and a lot of these smaller cities don't have an anchor. Are you seeing more interest from these types of cities about wanting to anchor that having a professional stadium brings?
Justin Papadakis: I think we can divide our markets up into two buckets. We have markets, MSAs, 30-100, where we are the only professional soccer team in the market, and I'll talk about those in a second. Then we have markets, your top 1-30 markets like at New York City where what we're seeing is, even within those markets, this real move for localization. Our team in Queens that's starting in 2023, they're not trying to be New York's team, they're trying to be Queens' team. Within Queens, you have 2.2 million people. We look at Long Island, and Brooklyn, and Fairfield, Connecticut, those adjacent markets that are part of the larger New York metro, we believe that the move now is for more tribalism. People are really excited to represent their local community, where they're from, more than the super large regional community where that community exists within. If we look at the markets 31 through 100, as you mentioned, I think, especially post-pandemic where individual young professionals and families can really choose where they live, with housing prices really escalating throughout the country, so many young people, and young people make up the significant portion of our demographic in soccer, especially compared to baseball for example, those young people, when they have a choice of where to live and what they're telling their employers, and what their employers are telling their cities is that we need professional soccer on professional sports to compete with other cities, to attract and retain talent. Soccer is the sport of choice among these young professionals and young families and so that is driving our cities, counties, states to really look at investing in professional soccer and these entertainment districts around them so that they have this integrated first-class entertainment district experience for these young professionals.
Deidre Woollard: Excellent. You mentioned baseball. I know one of the cities you are having a venue in is Pawtucket. Used to be the home of the Pawtucket Sox, the farm team for the Red Sox. That younger demographic thing is really interesting to me because I think it makes sense. People grew up playing soccer and so now they want to watch soccer. What's happening in Pawtucket?
Justin Papadakis: Our stay in Pawtucket is a great example of a couple of factors that we're seeing across the country. You had a situation where the baseball team was able to get very significant economic package to relocate. When we approach the City of Pawtucket and the State of Rhode Island at large. We said, what we want to do is not just a stadium, but we want to have a transformational development. There's land, close proximity to where the baseball stadium was, where it's a longer river front. But it's been vacant for decades because you needed substantial cleanup from national grid because the ground was contaminated. We had this amazing canvas of waterfronts on both sides, this amazing land. But the city couldn't find the anchor that would bring a large-scale development there, along with the private capital to make this transformational development. After working with the city and the state, we've now broken ground on a transformational development that will enable the community to really leverage as waterfront, they'll we have pedestrian bridge, there will be landscaping and this is going to be a place for the community to really enjoy week in and week out. It will be anchored by an 80 plus million dollar stadium that will serve for men's soccer, women's soccer, concerts, lacrosse, and so many other community events, that will be what we call the community living room. It's going to be so exciting to see this project come out of the ground. Again, as an example of what USL can bring to communities, and that's transformational development, and hundreds of millions of dollars of economic impact.
Deidre Woollard: Excellent. When you're trying to make a proposal to mayors, city council, things like that. It sounds like you need to show not just what having a team does and having a stadium does, but really that whole package. How much of that proposal involves things like green space or spaces that are open to the community?
Justin Papadakis: They're a huge part. One of the reasons why again, our fan base is younger. Soccer fans, generally speaking are very progressive in their political views, and so even more than the general population, which is very much valuing and demanding green initiatives. Our fan base is, this is a core part of their beliefs. Our teams need to reflect that, and our stadium districts need to reflect that. Part of when you're looking at the overall environmental impact is we have to look at the entire fan journey. There's a lot of elements to it, but compared to old-style stadiums that were out standalone with a bunch of parking lots around them. New stadiums and what USL is making a particular emphasis in is this integrated stadiums downtown. When you look at the environmental impact, one, we're trying to get very close to public transportation lines. It's not a single car use. We're trying to get close to make sure it's durable, that it's scooterable, you can take your bike there. Then once you're at the property, what we want to make sure is having these entertainment districts is that you go there before the game and eat and drink, and then you go to the game. You walk across streets the game, and then you go back out, you walk back out of the stadium and go right back outside. You aren't driving across town for each of those three separate experiences. Then within the stadium we have a number of green initiatives, and we're really pushing all of our teams to be part of the Green Sport Alliance. There's a lot in this space. Our teams are very invested in being green because our cities want that. Importantly also, again, it's something that's really part of our fan constitution.
Deidre Woollard: You mentioned something really important there, which is that shift from the ways that we used to think about stadiums, which is absolutely that like big traditional football stadiums surrounded by all of that parking. I think I grew up in Massachusetts and so I think of like Foxboro, it's like way out there, it's a drive. It's not integrated into a city. Really it seems like this is the way of the future. But the other thing I think is important is that a lot of these smaller, younger cities don't really have a fully developed urban core. One of the ones that I was thinking about is like Colorado Springs, relatively younger city, really exciting city in terms of what's happening there with employment. But doesn't necessarily have a downtown. Does these stadiums helped create that urban neighborhood?
Justin Papadakis: That's a fantastic point. Say from a macro perspective, most cities there's this void where you have high school football stadiums, which are generally not commercial venues. It's more just GA seating. Then you have college and NFL venues and you have this big gap in between. That's really the void that USL is trying to fill. If you look at markets around the country and Colorado Springs is a great example where there is a downtown it just didn't have enough critical mass to bring people down there. We just opened earlier this year new state-of-the-art stadium, not only is it bringing people down there and you see bars and restaurants coming alive because of it. But there is also going to be upwards of half a billion dollars in multi-family related to the just around it. There's always this problem in real estate of you need bars and restaurants to attract people and you need people to have the bars and restaurants. What's stadiums do is it breaks that chicken and egg problem by putting the anchor down there, which brings in hundreds of thousands of people. Then what we're seeing again, because we have a young and progressive fan base, is they really want that live work play environment. Colorado Springs, if you're a millennial listening and you want that experience, there's an apartment building being built right behind one of the goals in our stadium there that you can have dinner, go out on your balcony, and you'll be looking right into the stadium. You can walk down to the coffee shop, outside of the stadium and at night you can also go out for a beer in the new breweries. Interesting about Colorado Springs is again, with all of this development happening. Several hundred yards away is an old factory. Massive factory that has the most beautiful views overlooking the mountains. That sits in between the stadium in the mountains. That just got approved to be decommissioned, and that's going to be, by itself another billion-dollar development. What makes that area now attractive for real estate developers is that this part of downtown now has the critical mass to enable that multibillion-dollar development to happen. That is, again, what we're so excited about the USL is not only are we creating great soccer, but we're having true transformational development and economic impact within our cities.
Deidre Woollard: Interesting. When you're looking at a city that you want to be in, the demographics or right, how does the process of trying to find the land start? Are you looking for shovel-ready? Are you trying to find something that can be reused looking for infill? What does that look like?
Justin Papadakis: It's a great question and with us being active and working on 35 of these projects around the country right now, of course, every market is a little bit different. What we've really tried to focus on is how can we make this transformation on development happen across very different types of property? In Rhode Island, we had a site that we had to clean up and National Grid is stepping up to clean that up. In Des Moines, we have a super fun site that now going to be a $50,000,000 entertainment district, and then Colorado Springs is another example of land that just wasn't investable from a real estate perspective because you don't have the critical mass. We have, again 35 examples in between those and a lot of different variations. A big part of what we do is we really have to engage our city county, and state partners to identify land and see where can we make the most impact? Because we have the scale to transform and bring that critical mass. We can go to areas of town that haven't been able to get off the ground, haven't been able to convince private capital to come in, and we can transform those parts of town because we have that anchor to do that. There's not one size that fits all, and to your point, at the beginning of the broadcast, what we've shown and proven now across the country is that we can do this in queens and top 30 MSAs, and we can do this in smaller cities. This opportunity is more than just New York, LA, Chicago, this can happen in smaller cities around the country as well, because USL is so investable from an asset, and because the stadium now serves as the anchor, which can attract borrowers, restaurant, hotels, office, retail, that can make for very exciting standalone real estate projects.
Deidre Woollard: Interesting. On that, the super fund site, are there some tax incentives there? Are you finding that you're using private public partnerships to fund these?
Justin Papadakis: Yes. Again, we have a very wide spectrum of deals, but one thing I would say is tax incentives make a good site better. But they don't make a bad site into a good or great site. Again, we do have the advantage of going into a site that is not good, hasn't been able to pencil out for just a standalone apartment building, but when we bring the scale to a project, we can transform a site that was less desirable into a very desirable site. But to go to your point about PPPs, stadiums are all unique and that we do need private public partnerships to make them work. Tips and other mechanisms though, I think it's really important that, and I think we've done a good job communicating to our cities, is that for the most part, these incentives are the result of increment in taxes that would otherwise not be there. In Des Moines, that land has sat vacant for 30-50 years. So by putting a development on it, the team and the development is creating a significant amount of new taxable revenue from sales tax to property tax that can be bundled together in a financing package to support infrastructure and other elements to make the project happen. You look at those types of local incentives, and then you have some federal programs like the Opportunities Zone program, that lends itself very well to sports team ownership and especially the combination of sports team ownership and real estate development. So we utilize a lot of tools in the toolbox, and I think what we've shown most importantly, to the residents of our communities, is that these transformation developments have direct economic benefits for them. We're creating a community asset in a community living room that can be used for not only men's soccer, but also women's soccer and other events. The last point I'd make is, historically in public use of public dollars for stadiums across MLB, NHL, NFL, MLS, those and minor league baseball, one common denominator there is that only men play in those stadiums. What we're seeing and the conversations we're having with our municipal partners is that we need to make sure that when public dollars are coming in, that the little grows in our communities, they can go to the stadium and say, "If I work really hard and practice every night, I can play in the stadium just like my brother can. That is something that we think is really resonating with our city partners and with our launch of the Super League in 2023, and the rollout that we're anticipating across our men's teams, that they will have men's and women's not only does it make the stadium finances work better, of course because you're generating double the amount of tickets and sponsorship and concessions and parking and other revenue streams that generate sales tax and other things to support the bonds, but more importantly, it's the right thing to do. As part of our announcement, the Super League, we also said that our women's teams will have the same aggregate pay as the men's teams. Our city partners, they are just so excited about that. The residents, our communities support that, and I think that's going to be a differentiating factor for USL, and the stadiums that we're going to build over the next five years.
Deidre Woollard: Interesting, I love that and that makes me think also about demographics too, because I believe that there is a shift in watching women play professional sports that younger generations are more interested in it. I'm a hockey fan, I'm seeing it on the hockey side. It's been slow. It's been like the WNBA has been slow to develop, but now more and more younger generations are realizing, hey, it is absolutely as much fun to watch women play sports as it is to watch men play sports, and it's great to see that message is really getting out among the communities. Wondering too about that community feedback process. I'm sure it must vary city-to-city, but is there usually a public feedback time-frame for the individual projects?
Justin Papadakis: Definitely. Stadium projects are in so many ways very different from other real estate projects. I came from the retail power center developments with Walmart and Target, and large-scale real estate development by its nature, as your listeners well know, always involves a high degree of cooperation with our municipal partners, whether that's zoning changes or traffic studies or the multitude of other things that go into real estate development. Stadiums, I think are inherently put under more scrutiny than most other types of developments, because they involve noise and lights and traffic, and so many other different elements than a standalone office building or apartment building or shopping center. So that results in the requirement, which we think is really positive and a significant higher level of cooperation with our municipal partners. The league, and one of the functions that my team serves, is that we work on these projects from one year to five years, and so we create local relationships. We have to make sure that we really articulate the value proposition that these stadiums and developments will have and we get public feedback. Sports teams are also inherently unique among other businesses and that they are a community asset. We have lots of hotels within a market. We have lots of restaurants. Typically we have one professional soccer team and so we think that that's really part of the magic though. People have different political beliefs, different music tastes, different restaurants taste, but what they come together week in week out for is supporting their team because their team represents their city and that's in a world of a lot of divisions, sports is one thing that brings everyone together week in and week out and that's what we're so excited about being a part of around the country.
Deidre Woollard: That's one of the reasons I love sports too. Talking about the property values for individual investors, are you seeing that once one of these projects comes in, that property values go up around the area? Is there more investment you had mentioned in Colorado Springs that adapt of reused projects? Are you seeing other things like that across the board?
Justin Papadakis: Definitely. Again, one of the core value propositions that we talk about with our municipal partners is that we want to have economic benefit beyond the four walls of the stadium, and so when we look at these entertainment districts as I mentioned earlier on the ESG side, is soccer has some inherent benefits. So it's a two-hour fixed window compared to a baseball game, which it could be three hours, it could be six hours. We have a rectangular field and so we can do soccer, men's soccer, women's soccer, lacrosse, concerts, we can do a whole bunch of things within the venue easier than baseball stadiums, for example. Then we have this culture in soccer that's different than American football, for example, where there isn't a tailgating culture where you BYOB, and you go sit in the parking lot, you eat, and then you go to the game and you go home. In soccer, our fans go out to the bars and restaurants before, they all match together over to the stadium. They know the games starts at 7:00, it's going to be over at 9:00, and so again, because we have a very young demo, they are not going home at 9:00. Most people are going out, they're walking across the street and going out again. That is a key part of, again, when we look at the fan journey, is we need to bring all of that together, and we want, hopefully, a significant portion of the spending that occurs outside of the stadium. Because of that, and because as I mentioned we can really leverage the stadium for so many events beyond just soccer, and now we have women's soccer and lacrosse and concerts that we're bringing hundreds of thousands of people every single week down to the stadium. That the bars, restaurants, hotels, retail, they have this constant traffic flow so that they can have very successful businesses. The result of that is also people want to live down there. They want a differentiated experience, and so living where you can look into the stadium is very appealing to our demographic and so it really creates a synergistic project and community where our local bar or restaurant and retail owners and apartment owners are getting the benefit of this stadium.
Deidre Woollard: Excellent. Does the size of the stadium vary by city and are they all open or are they open or closed structures, how does that play out?
Justin Papadakis: It's a great question and again, part of what we've thought about is very important for us to be able to go into cities of different sizes, and so we have stadiums from 5-15,000 seats, and we look at not only the number of seats, if that's the metric you use for size, but also the footprint. Again, depending on how much land we have to work with, we can really shrink the footprint of the size of the stadium. For example, in Colorado Springs, the stadium itself, for an 8,000-seat stadium is like 4.7 acres. It's very small for a stadium of that size and so we want to shrink the footprint of the stadium as small as we can, so that we have more room for bars, restaurants, hotels, apartments around the venue. Another thing that we've looked at though is the traditional metric of stadium is the number of seats. But we've also really thought about and studied again because we have such a young population is we might have less number of seats, and we really look at capacity. Because young people today, they don't always want to go to a fixed seat, because if I'm sitting down, I can only talk to the person to my left, to my right. Whereas if where we have more open, flow bar areas, I can mingle with all of my friends together. Then lastly, we've really looked at how to construct stadiums so that we can increase the volume of events there. For example, by putting a permanent stage behind one of the goals, we can significantly reduce the fixed cost of a concert because the infrastructure is already there, as well as significantly reduce the turnaround time where we can have a soccer game on Friday night and a concert on Saturday night and so we look at all of these different elements so that we can approach each market and see what the constraints are, from land size to whether the city has what their concert venue situation is like, and adapt our stadium to that. We've also put a lot of work into cost engineering our stadiums down to fit different communities, different budget restraints, so we've done a lot of work into modular stadiums that come prefab, where we don't have any reduction in the fan experience, but we can build them for significantly cheaper than a brick-and-mortar type stadium. Then we have a whole hybrid modular. We've really again try to think about how can we make this work across different community sizes and budgets, and land restraints so that we can optimize it for each individual community. There's obviously a lot of different factors involved but again, for us, it's how do we customize for each city.
Deidre Woollard: I've really liked what you said there about the ways that the viewing experience is changing. I've read an article on that recently and you're absolutely right that people don't want to go and just sit in the seat anymore. I'm wondering also how you and the team are thinking about technology and how that plays into stadiums now. Different stadiums, I know, are experimenting with simple things like being able to order food from your phone, but also just to having good Wi-Fi, being able to watch the game while you're watching the game and trying to play with augmented reality and things like that. What are you and the team thinking about when it comes to technology?
Justin Papadakis: It's so critical. Again, with extremely young and tech savvy fan base, ensuring that we are on the cutting-edge of technology is something that we think about a lot. We think that we have actually a very structural advantage because compared to the NFL or NBA, they are very large organizations that have hundreds of committees because they're multibillion-dollar organizations with long-term media rights that are in place. The USL, we really pride ourselves and talk with technology partners that really look at USL as a way that they can experiment with new technologies. The game experience is going to dramatically change in the next five-years.
Deidre Woollard: Love that, that's fantastic. Well Justin, thank you so much for your time today. Reminder to everybody listening you can learn more at uslsoccer.com. Stay well and stay invested.
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