Building a new stadium or athletic facility is always exciting. Whether you’re a prospective team owner looking to launch a franchise or a municipal leader hoping to create a community asset that drives economic development, it’s easy to focus on the glitzy parts like the announcement, the groundbreaking, the ribbon cutting, and the opening match.

But long before the first shovel goes into the ground, the most successful projects begin with something far less glamorous: a financial model.

It may not be as exciting as architectural renderings or 3-D animations, but a comprehensive financial model is one of the most valuable tools a prospective owner can develop. It helps transform an ambitious vision into a realistic plan, uncovers potential risks before they become expensive problems, and gives every stakeholder confidence that the project can succeed.

Just as importantly, or perhaps more so, a strong financial model can help determine whether a project is actually investable. Investors, lenders, and development partners aren’t investing in a concept. They’re investing in a combination of real estate, cash flow, market demand, operating performance, and risk. A well-developed model connects those pieces and gives potential capital partners a clearer understanding of where their money goes, how the project creates value, how risk can be managed, and, ultimately, ROI.

For McCullers Group Development Analyst Ali Fawaz, the model is the foundation. For him, every facility begins with a thorough understanding of the numbers before any major decision is made. Because a well-built model doesn’t simply forecast cash flow, it tells the complete story of the project from beginning to end. Here’s his advice when it comes to developing yours and what it can mean for your project’s investability:

Start with Questions, Not Answers

One of the biggest mistakes new team owners and municipalities make is jumping directly into stadium design. Fawaz suggests starting instead with inputs and assumptions.

Every successful financial model begins by gathering the information available today and identifying the assumptions that will shape tomorrow. Where will the facility be located? How many events can it host each year? How many fans are expected to attend? How much will the average visitor spend on tickets, concessions, merchandise, and parking? What sponsorship opportunities exist? Will the venue host non-sporting events that may require additional infrastructure?

Each assumption may seem small on its own, but together they determine whether a project becomes financially sustainable. Thoughtful planning and precise modeling reduces that uncertainty.

This is also where a project begins to become more attractive to outside capital. Investors want to understand not only what the project would or could become, but why the underlying assumptions are credible. A well-supported model forces the development team to distinguish between facts, assumptions, and aspirations. That distinction matters.

For a municipality, this exercise can also clarify what it needs to contribute to make the project viable. Rather than approaching potential investors with a general request for participation, the municipality can demonstrate where public investment, infrastructure improvements, land contributions, tax incentives, and/or other tools may close a specific financial gap and unlock more private capital.

In other words, the financial model can help answer one of the most important questions a capital partner will ask: “What has to be true for this project to work?”

Think Beyond Game Day

Many first-time owners naturally focus on the team. Successful facilities, however, are designed around the venue, not just the tenant. If a stadium only generates revenue during home games, it spends most of the year sitting idle. That’s why successful projects look for opportunities to activate the facility throughout the calendar.

Concerts; festivals; community events; college, high school, and youth sports championships; graduations; and corporate gatherings can all create additional revenue while strengthening the venue’s connection to the community.

This perspective is especially important in smaller markets, where modeling for and maximizing every revenue opportunity can make a significant difference to long-term financial performance. The question shouldn’t be simply, “How many games will we host?” he suggests. It’s, “How do we make the building sweat? How else can it create value?”

From an investment perspective, diversification is about more than maximizing revenue. It can reduce dependence on a single tenant, event type, or revenue stream. That can make the project more resilient – and potentially more attractive to lenders and investors.

A capital partner may be much more comfortable with a project that demonstrates multiple sources of operating revenue, particularly when those sources are supported by realistic market demand. A stadium that can generate supplemental income has a different risk profile than a facility dependent almost entirely on sales from a single team.

This is where the financial model becomes particularly valuable. It can show not only how much each revenue stream contributes, but also what happens when one of those streams underperforms. That gives investors a clearer picture of the project’s downside protection as well as its upside potential.

Every Design Decision Has a Financial Impact

It’s easy to think about stadium features strictly from a fan experience perspective. In reality, every design decision has financial consequences.

Premium seating increases average ticket revenue. Luxury suites appeal to corporate sponsors. Standing-room sections lower ticket prices while increasing capacity. Covered seating may cost more, but it can dramatically expand year-round programming opportunities.

Even seemingly small decisions matter. Should there be two concession areas or four or eight? How large do locker rooms need to be? Would a multipurpose event space generate more value than a dedicated media room? Could artificial turf reduce annual maintenance costs compared to natural grass?

These aren’t simply architectural decisions, they’re investment decisions. The best project teams continually ask, “Can this feature generate enough value to justify its cost?”

That question is fundamental to investment readiness. Capital providers don’t necessarily expect every project to minimize costs. They want to understand whether the project is allocating capital intelligently. Spending more on a feature can make sense if it creates measurable additional revenue, reduces operating costs, improves the venue’s competitiveness, or increases the value of the surrounding development.

The financial model gives owners and municipalities a way to quantify those tradeoffs. Instead of saying that a premium club area “should” generate additional revenue, the team can model the incremental construction cost against expected ticket, food and beverage, sponsorship, and hospitality revenue. The same approach can be applied to parking, technology, roofing, turf, hospitality areas, and other major design decisions.

For investors, this demonstrates something important: disciplined capital allocation. The question isn’t simply whether the project can be built; it’s whether each dollar of capital is being deployed in a way that supports the project’s long-term financial performance.

Your Budget Should Be a Decision-Making Tool

Construction budgets are often viewed as fixed numbers. Fawaz, who holds a master’s in real estate development, sees them differently. A detailed rough order of magnitude (ROM) estimate functions more like a menu than a price tag. It’s a guide for assessing and prioritizing engineering, capital, operational, and guest experience decisions. It allows owners and municipalities to understand what each feature costs and evaluate whether it’s must-have, good to have, or just nice to have.

Imagine a project budget that comes in $20 million higher than expected. Without a detailed breakdown, decision-makers are left making broad cuts. With a well-developed cost model, however, they can evaluate specific tradeoffs.

Should a stadium reconsider a roof? Reduce premium spaces? Simplify the locker rooms? Delay certain amenities until a future phase?

Instead of making emotional decisions, stakeholders can make informed ones. That flexibility often becomes invaluable as projects evolve.

It also becomes important when the project is presented to outside capital. Investors and lenders want to know that the development team understands not only the headline costs, but also the sources and uses of capital, contingencies, soft costs, financing costs, operating reserves, and potential escalations. A detailed budget demonstrates that the project has been analyzed well beyond the rendering.

This can also help municipalities make a stronger case for public participation. A city is in a better position to evaluate a proposed incentive or infrastructure contribution when it can see exactly how that contribution affects the overall capital stack and what amount of private investment it helps unlock.

The goal shouldn’t be to minimize the project’s cost at all costs. It should be to establish the right cost structure for the project’s market, operating model, and investment strategy. Sometimes spending more creates value. Sometimes spending less protects returns. The financial model helps determine the difference.

Remember That Every Stakeholder Defines Success Differently

Stadium projects rarely involve just one decision-maker. Or one goal.

Owners care about return on investment. Cities focus on economic impact and public value. Banks evaluate lending risk. Investors want confidence that projected returns justify their capital.

Each stakeholder views the project through a different lens. A strong financial model addresses all of those perspectives simultaneously. It demonstrates how financing will work, how debt will be repaid, how public incentives influence the project, and whether projected cash flow supports the investment over the long term.

Perhaps just as importantly, it presents that information in a way non-financial audiences can understand. That’s critical because many municipalities and first-time owners only undertake a project of this scale once. Financial sophistication shouldn’t be a prerequisite for making informed decisions.

Bringing those perspectives together early can also make a project substantially more investable. Capital providers are looking for alignment. They want to know that the team owner, municipality, developer, lender, and other stakeholders understand the project’s economics and have a shared understanding of their respective roles.

The financial model can serve as the common language. It can show an investor the expected return profile, a lender the debt-service capacity, a municipality the public investment and economic-development benefits, and an owner the long-term value of the asset. When those pieces are connected, it becomes easier to build a financing structure in which each participant understands both its contribution and its potential return.

This is particularly important when a project requires a combination of private equity, debt, public participation, incentives, and potentially other sources of capital. The stronger the underlying financial story, the easier it becomes to explain why each layer of capital belongs in the project and what role it serves.

Plan for the Unexpected

No stadium project unfolds exactly as planned. Unexpected site conditions emerge. Construction costs fluctuate. Interest rates change. Attendance projections shift. Operating expenses increase. That’s why shrewd developers, in Fawaz’ experience, don’t rely on a single forecast.

Instead, they model multiple scenarios: Best case, base case, and worst case.

By stress-testing assumptions before construction begins, project teams can determine whether the facility remains financially viable even when conditions change. They also build contingencies into both budgets and schedules because experience shows that unexpected challenges are inevitable.

That’s not pessimism. It’s smart risk management.

It’s also a critical part of the investment conversation. Sophisticated investors don’t expect every projection to be perfect. They expect the development team to understand what could go wrong and have a plan for dealing with it.

Sensitivity analysis can reveal which assumptions matter most. What happens if attendance is 15% below projections? What if construction costs increase by 10%? What if interest rates remain elevated? What if the opening is delayed by six months? What happens to investor returns if sponsorship revenue takes longer to develop?

These exercises can identify the project’s true risk drivers and help the team develop mitigation strategies before capital is committed. They can also help investors distinguish between a project with manageable risk and one whose financial success depends on a narrow set of optimistic assumptions.

The objective isn’t to eliminate risk (an unrealistic goal in any development project). It’s to understand, price, and manage risk well enough that capital providers can make an informed decision.

Build the Capital Stack Into the Model

A project can have strong operating projections and still struggle to attract investment if the capital structure doesn’t work. That’s why the financial model should go beyond revenue and expenses to show how the entire project will be capitalized.

The capital stack may include owner equity, outside investor equity, construction financing, permanent debt, public funds, land contributions, tax incentives, infrastructure investments, or other sources. Each source comes with different expectations, costs, and requirements. The model should show how those pieces fit together and how changes in one layer affect the others.

For municipalities, this can be particularly valuable. Instead of asking, “How much public money does this project need?” Fawaz suggests the better question may be, “What amount and type of public participation is required to unlock the desired amount of private investment while protecting the public interest?”

That distinction can materially change the conversation with elected officials, investors, and community stakeholders. A public contribution that helps unlock several times its value in private capital may have a very different economic-development rationale than a contribution that simply fills an operating shortfall.

Make the Investment Story Easy to Understand

A financial model is an analytical tool, but it’s also the foundation for the project’s investment story. The numbers should ultimately help answer a handful of questions that every potential capital partner is likely to ask, including: How much capital is required? Where will it be spent? What generates revenue? What are the major risks? What happens if assumptions change? How does the investor get a return? And what creates value over time?

The more clearly those questions can be answered, the easier it becomes to move from an interesting concept to a credible investment opportunity.

This is especially important for municipalities, which may be accustomed to presenting projects in terms of community benefits rather than investor returns. Both stories matter. A successful project needs to demonstrate public value while also presenting a credible economic proposition for the private capital required to make it possible.

The Bottom Line

Building a stadium is one of the most complex development projects a team owner or community can undertake. It combines real estate, finance, construction, operations, public-private partnerships, and community interest into a single investment.

The projects that succeed aren’t necessarily the ones with the biggest budgets or the flashiest amenities. They’re the ones that begin with disciplined planning.

A thoughtful financial model helps project teams ask better questions, understand tradeoffs, evaluate risk, and make confident decisions before significant dollars are committed. It creates alignment among owners, municipalities, lenders, and investors while providing a roadmap that can adapt as conditions change.

Most importantly, it helps turn a project from a concept into an investment proposition. It provides the evidence needed to demonstrate market demand, establish realistic revenue expectations, understand the capital requirement, evaluate potential returns, and identify the risks that could affect performance.

For municipalities and owners seeking outside investment, that distinction is critical. Investors don’t invest because a stadium is exciting. They invest when the opportunity is supported by a credible market, a thoughtful development plan, a realistic financial structure, and a clear path to value creation.

In other words, the best way to reduce project risk isn’t to build faster; it’s to plan smarter.

And planning smarter means thinking about the financial model from the very beginning – not as a spreadsheet created to validate a decision that’s already been made, but as a decision-making and capital-attraction tool that helps determine what should be built, how it should be financed, who should participate, and why the project deserves investment in the first place.

Because when the modeling is sound, the venue has a much better chance of becoming not just a successful one, but a lasting community asset that serves teams, communities, and fans for decades to come.

 

To learn more about financial modeling and project planning, contact McCullers Group Development Analyst Ali Fawaz at ali@mccullersgroup.com.