Building a Bennigan’s restaurant in Gary, Ind., would seem to have nothing to do with high-caliber investing. But this is not how the entrepreneurs of Victory Sports Group see it. The leaders of Victory Sports, the sports management and development company behind the Gary project, see this venture as anything but a kitschy franchise diner—home of the O’Cajun salmon—set in a rundown, rust-belt city. This particular Bennigan’s is attached to a thriving downtown baseball stadium, and together the two properties serve as an exemplar of the trends and opportunities found in the nation’s ongoing construction boom in sports stadiums and arenas.

VICTORY SPORTS' new baseball stadium is home to the Gary (Ind.) SouthShore RailCats. Along with adjacent properties, the project cost the city more than $45 million—a high price tag for a minor league venue—but it is expected to revitalize the downtown.

“Many communities are no longer willing to build expensive stadiums just for a team,” says Michael Tatoian, CEO of Victory Sports. “There’s got to be something value-added that’s bigger than just sports.” Over the past decade, Tatoian has launched seven successful professional baseball and hockey teams, and has won numerous awards as a sports executive. Victory Group’s chairman, George Huber, runs one of the nation’s largest private retail real estate investment trusts, Equity Investment Group.

The city of Gary invested $45 million in the 6,000-seat minor league ballpark with a handsome brick facade, forest-green seats, wrought-iron details and 18 luxury skybox suites. The price tag for the park, completed in 2002, is high by minor league standards, particularly for a nonmajor league-affiliated team such as the Gary SouthShore RailCats, who play in the independent Northern League. But the city, in tandem with Victory Sports, believes the stadium project will lay a foundation for much-needed economic growth.

Victory Sports agreed to purchase a baseball team and move it to Gary for the 2003 season. It signed a long-term lease with the city and agreed to operate the team. Potentially far more lucrative than the baseball operation, however, is Victory’s vision for real estate investment. The firm secured development rights to a tantalizingly valuable chunk of Gary—the roughly 20-acre footprint surrounding the downtown ballpark.

To date, the firm’s partners have each added more than several million dollars to the Gary project’s initial outlay, including $2 million for the Bennigan’s restaurant that sits along the ballpark’s first-base line. The 14,000-square-foot restaurant is open year-round and includes a 7,000-square-foot banquet facility. It is one of the few outside investments made in downtown Gary in roughly three decades. Victory Sports is working with city officials to develop other projects on the stadium site.

TOP VIEW Since the early 1990s, nearly 60 new Major League Baseball parks, NFL stadiums and NBA or NHL arenas have been built in the United States, along with dozens of minor league venues. For sports-minded investors, these facilities represent opportunities that combine the thrill of competition with intricate property deals. For real estate speculators, stadiums and the land surrounding them offer potentially lucrative opportunities for hotels, retail and residential development.

City officials and the Victory Sports partners are betting that this multipurpose venue, located off Interstate 90, will give residents of the northwest Indiana metropolitan area a reason to visit Gary, which will spark further economic development. “Let’s be clear: Gary is a challenged site,” says Timothy Haffner, a Victory Sports principal and attorney in Fort Wayne, Ind., where he is also president of the chamber of commerce. He and his partners believe the Gary site is an investment worth gambling on because of the city’s economic commitment to the project.

Victory Sports aims to develop more sports venue-related real estate projects, but the partners admit that finding the right situation has been difficult. They have examined, and walked away from, other minor league-level opportunities because the cities have been disorganized and ineffective in their approach. “Not to sound mean, but a city has to have its act together,” Haffner says. “It’s very difficult to make professional sports deals work unless the city endorses your ideas and is supportive and committed to the project.”