Moody Center will be the home of Longhorns basketball as well as a magnet for major concerts.University of Texas
Collaborations between public universities and private entities are delivering the year’s two biggest college arena projects, the new Moody Center in Austin, and a renovated Rupp Arena in Lexington, Ky.
In exchange for a prime patch of real estate, Oak View Group took on all the financial risk of developing the 15,000-seat, $385 million Moody Center for the University of Texas. OVG agreed to a long-term deal with the university to operate the venue but will turn over ownership to UT when the arena opens in late March. In Kentucky, a nearly half-century-old partnership between the University of Kentucky and Lexington Center Corp. resulted in a three-year renovation that’s bringing one of college basketball’s hallowed venues up to modern standards.
These kinds of collaborations are still uncommon in college sports, but the industry’s increasingly insatiable need for new facilities could make public universities more amenable to private entities funding major projects, and assuming the inherent risk.
“There isn’t one solution where they’re all structured the same,” said Winstead attorney and shareholder David Staas, who represented Texas in negotiations with OVG. “It really is a lot about what are the objectives that the public entity wants to get? What does the private party want to do? Is it a team, or is it OVG, which is an operator? There is a universe out there of different ways that these transactions get structured that we’ve seen over the years.”
Tenant: University of Texas basketball
Cost: $385 million
Operator: Oak View Group
General contractors: AECOM Hunt
Structural engineer: Martinez Moore (joint venture)
Mechanical engineer: Henderson Engineers
Owner’s rep: CAA Icon
OVG won an RFP to develop the new UT arena, replacing the aging Frank Erwin Center. OVG gets to sell sponsorships and program an arena — outside of UT’s claimed dates for basketball games and other events — that will be a mainstay on the major concert circuit and located in the bustling downtown of one of the country’s fastest growing cities. And UT gets one of the best college basketball arenas in the country at a substantially reduced cost.
“The way the deal has been structured between Texas and OVG has really gotten a lot of attention from other universities. There is a lot of discussion about other universities,” said CAA Icon’s Dan Vaillant, who is working on the Moody project as the owner’s representative. “It could be a new kind of market for the private operators.”
OVG benefited from UT’s experience navigating in-state political processes.
“What they did, which was instrumental, was they guided us through the process that they had already heavily vetted and contemplated in order for us to continue to maintain focus on the sheer initiative,” said Francesca Bodie, OVG president of business development.
UT gets all revenue from its events at Moody Center and has a revenue-share agreement with OVG for non-UT events, including concerts. Moody Center’s suite prices are higher than any of the state’s NBA teams, said Jeff Nickler, OVG senior vice president and Moody Center general manager. He predicts that the arena will be one of the top touring destinations in the country, potentially contending for top-10 placing in Pollstar’s annual global ranking of arena ticket sales.
A sleek new atrium entrance will make Rupp Arena stand out in downtown Lexington, Ky.Courtesy of Central Bank Center
More than once, Lexington Center Corp. CEO Bill Owen stood at the Hilton Hotel across the street from Rupp Arena, when a stranger approached him and asked where the venue was located.
“It was a big brown box, nondescript
architecturally,” said Owen. “I think a whole new exterior façade to make a declaration of what the facility is and its impact on the region was paramount in our organization and the design team’s plans.”
The $310 million renovation, a total that included substantial work on the adjacent convention center, was paid for through several sources of public money. The university owns media and naming rights for the venue, which were used to help LCC raise debt for the project.
A jutting prow was added to Rupp’s northeast corner, and the convention center and a retail area were withdrawn to expose the arena’s new atrium entrance. Expanded concourses and public spaces make it easier for fans to congregate around Rupp, while four new club areas were added indoors, including three that the LCC can use on non-game days.
Rupp Arena at Central Bank Center
of Kentucky basketball
City: Lexington, Ky.
Cost: $241 million
Operator: Oak View Group
General contractor: Messer
Structural engineer: Thornton Tomasetti
Mechanical engineer: ME Engineering
Owner’s rep: PLC Management - Louisville
The neighboring convention center was expanded from 66,000 square feet to 100,000, which, according to UK Deputy Athletic Director Marc Hill, will enable the school to bid for events like the NCAA volleyball championships because it can host the coaches convention that is annually held in conjunction with the volleyball final four.
“That was one of the goals of the project at the outset, to have a simultaneous convention and arena event, which they weren’t previously able to do,” said Robert Mankin, who oversees the sports practice for architecture firm NBBJ, which designed the renovated Rupp.
UK’s basketball arena may be off-campus, but many American universities have a key asset that could lead to future on-campus public-private development collaborations: real estate. Denis Braham, chairman of Winstead’s Sports Business & Media Industry Group, said that universities across the country are reexamining their vast real estate holdings as part of master plan updates. There may be opportunities for more deals like the OVG-Texas Moody Center tie-up.
“We would love to find more,” said Bodie. “There are a ton of markets that make sense, and we have a tremendous amount of interest in investing more capital in collegiate. The question will be is there a process in place that allows us to execute?”