BAD DEALS: Two proposed condominium ventures tied to Virginia Tech’s Lane Stadium, shown here during the 2024 season, fell through over the past 15 years, resulting in legal action. (Getty Images)
Right time for schools to tap donors, their best asset
The Nations Group, an owner’s representative in the college space, last week announced a new project called Club Residences, tied to the development of condominiums for high-end donors to use during football weekends.
The concept is to build condos next to college football stadiums to serve as secondary residences for donors, primarily targeted for hospitality and tailgating purposes.
Under the company’s business model, universities would sign agreements with third-party developers to build and sell the condos. Nations Group would serve as the school’s middleman, providing the donor database to developers.
Revenue generated over and above the project cost would go to the athletic department in return for providing the list of potential buyers to developers.
In some cases, Nations Group could fill the role of developer and bring equity to the table, said Chris Nations, president of the company that bears his name. In return, Nations Group would get a small share of the profit.
Nations Group would work in tandem with schools to structure the agreements with developers, he said.
Chris Nations told VenuesNow he planned to discuss the initiative with 15 to 20 schools in Las Vegas during last week’s annual National Football Foundation event and a college sports conference.
The scale of the condo projects models would vary depending on the business model.
Developments could run from a low of 60 units as part of a four-acre property that would amount to $50 million to a full residential tower covering 140 units at a cost of $150 million, where the return would be maximized with a seven-figure sum. Schools would sign a long-term land lease with the developer, with the value of the property paid back through condo sales.
The question is whether developers taking the financial risk would be willing to share in the upside?
Nations says the answer is yes, due in part to schools providing access to their top 2,000 donors and the best locations on campus for new construction. He’s visited with developers across the country who told him it would be a “slam dunk” by getting access to the wealthiest people connected to a university to buy a condo next to the stadium, he said.
“Given where college athletics is at and the ability to take advantage of the money that can be made from their assets, this is do-able now from the university side,” Nations said. “Two years ago, even a year ago, this concept would not have worked because there’s too many constituencies on the school side that have power and kill good ideas.”
That’s all changed after Name, Image and Likeness and revenue-sharing between schools and athletes is at the forefront of college sports, especially football, which drives the engine at Big Ten, SEC, Big 12 and ACC institutions.
Every school and board of trustees has connections with developers, whether they sit on the board or know people in the business, Nations said.
“It’s a money-making venture for athletics because the value of a condo next to a stadium vs. a few blocks away, that’s connected with a university, is worth a tremendous amount of money, which is what we’ve learned in the market,” he said.
Nations Group’s proposal isn’t new in college sports. Others have tried to build similar developments but failed to complete the projects.
In Blacksburg, Virginia, there were two unsuccessful attempts over the past 15 years to build the Legends of Blacksburg, a sports condo-hotel complex next to Virginia Tech’s Lane Stadium. The first effort resulted in former college football coach Rich Rodriquez being sued in federal court for defaulting millions on a loan to buy condos at Virginia Tech, while he was still coaching at West Virginia. The second try landed developer Mark Kinser in federal prison.
Most recently, Sports Illustrated last year announced a joint venture with vacation ownership firm Travel & Leisure to build SI-branded resorts in college towns starting with the University of Alabama in Tuscaloosa. In October of this year, the proposal did not move forward after local residents voiced opposition over the scope of the project, to include a nine-story hotel and five other buildings with condos and time-share units along the Black River in Tuscaloosa.
Developers said they would go back to the drawing board to make adjustments, but there’s no timetable for the revisions, according to local reports.
TALL ORDER: A rendering shown of a proposed condominium tower next to a college football stadium. (Courtesy Nations Group)
On a smaller scale, Mississippi State’s Dudy Noble Field has residential “lofts” in left field available for rent during the college baseballs season. Auburn’s Neville Arena has suites that double as tailgating spaces with outdoor patios.
Eddy Street Commons, situated next to the southern edge of Notre Dame University, opened in 2009 and its inventory of condos, town homes, apartments and row houses are sold out, according to the Eddy Street website. Pricing for the 66 condominiums started at $250,000, with town homes starting at $705,000.
The difference is those developers aren’t associated with Notre Dame, Nations said.
Veteran sports marketer Rob Yowell pointed out that the Vrbo and AirBnB market thrives in college towns for big game weekends, bowl games and College Football Playoff matchups.
For condos, “donors will only pay so much and most are going away as soon as their kids don’t have the same passion to a school,” Yowell said, resulting in corporate and private equity money required to cover the investment. “But it’s a different era now and it will be interesting to see how schools will find new revenue streams.”
In some college markets, plans have progressed for mixed-use developments connected to sports venues, some of which include residential units, such as Tennessee’s proposed entertainment district next to Neyland Stadium with 60 condos and 240 hotel rooms.
In addition, Wake Forest, Iowa State and Kansas, where Nations Group serves as owner’s rep for the Big 12 school’s $450 million stadium renovation, are all pursuing mixed-use projects tied to football facilities.
“They’re trying to do these larger developments, but many times, there’s $30 million to $40 million worth of equity that has to be put in by the school for infrastructure to make it viable,” Nations said. “This stands by itself, being the anchor of a future development that can be done without that equity investment by the university.”
In general, though, times are changing in college sports and the Club Residences is one way to resolve athletic departments’ funding issues, Nations said.
“This is the way to do it, because it’s going to make athletics a lot of money based off of assets they aren’t taking advantage of other than to sell suites and tickets,” he said.”Why not take the next step in real estate and make millions of dollars even year?”
Editor’s Note: This story has been updated.
