Stephen Ross, the real estate billionaire who owns the Miami Dolphins NFL franchise, is in the middle of spending $350 million of his own cash to renovate Sun Life Stadium, which he also owns. And, while many owners are reluctant to put their own money into a stadium project, here's why this one is especially lucrative for the city of Miami, as well as Stephen Ross himself.
Why Stephen Ross in investing his own money, and what his $350 million is buying
Originally, the plan was to get the city of Miami to pay for some of the renovations. However, when that failed, Stephen Ross decided that even though he would need to spend $350 million of his own money, it would be well worth it in the end.
The renovation project is going to be done in two phases, and will be completed by the summer of 2016. During the first phase, which is already under way, all existing seating will be torn out and replaced with a new configuration that emphasizes quality over quantity. In fact, the stadium's capacity will be reduced by 14%, but will have more seats on the lower level, and will begin 24 feet closer to the field.
Phase two is what most South Florida residents are most excited about, as this will bring a long-awaited canopy to shield spectators from the hot Florida sun, as well as four giant HD video boards.
Ross has said the main goal of the plan is to bring Super Bowls to Miami. He is already lobbying for the 2019 and 2020 Super Bowls, the locations of which will be announced by the NFL in May 2016 (right around the time the renovations are done), with an ultimate goal of three to five over the next 20 years. South Florida has been a longtime favorite location for Super Bowls – after all, there is no better weather at an NFL stadium at Super Bowl time -- but has not been a part of the rotation since 2010, thanks to the condition of the facility.
In addition, Ross envisions the renovated stadium hosting World Cup matches, major concerts, college championships, and other large-scale events.
Great for the surrounding area
The construction of the new stadium could help the surrounding area in several ways
- The project will create jobs – 3,400 of them according to Miami's mayor
- While being near a stadium is generally a negative factor on home prices, studies have found a positive effect of new stadiums on home values in the surrounding area
- Spending will increase at many surrounding businesses, such as hotels, restaurants, and shopping outlets, which will also create jobs and drive economic growth. This effect will be amplified if the stadium attracts major events, such as Super Bowls
- Increase in cultural participation by local residents
And, Stephen Ross could see his fortune grow
Of course, Ross' investment isn't a charitable contribution -- he expects to profit from the renovated stadium as well. As owner of the stadium, Ross will see revenue climb dramatically as more events -- concerts, soccer matches, etc. -- are attracted to the stadium.
More importantly, the new stadium could dramatically increase the value of the Miami Dolphins franchise. The team was recently valued at $1.3 billion, below the NFL average of $1.43 billion. However, economic studies have shown that building a new stadium can double the value of an NFL franchise.
For example, the Dallas Cowboys franchise is estimated to be worth $3.2 billion, and has been the most valuable franchise in the league for eight years in a row. One big reason for this is the state-of-the-art Cowboys Stadium, which was completed in 2009 and widely publicized for its features, such as the largest HD video screen in the world (at the time). In fact, since that time, the franchise's value has grown from $1.7 billion, which supports the claim that new stadiums could potentially double a team's value.
So, if the same thing occurs in the Dolphins' case, the value of Ross' franchise could rise to more than $2.5 billion as a result of his investment -- not a bad potential return on a $350 million investment.
Stephen Ross' vision of bringing a world-class NFL stadium to Miami is a great example of how it is possible to produce strong investment returns, while still doing plenty of good for the community (or country, world, etc.) in the process. Of course, the actual economic impact on Miami and the rest of South Florida remains to be seen, but I'm confident in saying that lots of people will be better off as a result of this project.