Beyond the stadium: the hidden complexity of valuing real estate in sport

The valuation of sports real estate assets is likely to become increasingly important and scrutinised in the coming years.  Sporting regulation frameworks are evolving rapidly, which materially alters the economic incentives underpinning how assets are structured and held. For example, the Premier League’s shift away from its previous Profitability and Sustainability Rules (PSR) towards a new framework incorporating Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR) places greater emphasis on the relationship between football-related revenues and costs.

At the same time, the increasing prevalence of investment by private equity firms into sports clubs may lead sporting bodies to introduce regulations beyond wage caps, in a similar way to the Premier League, where financial rules impose constraints on cost levels relative to revenues and require independent assessment of certain transactions to ensure compliance with fair market value standards.

For valuers, this will mean greater reliance on professional judgement, enhanced transparency requirements, and closer engagement with legal and regulatory frameworks. For legal practitioners, acting for clubs, regulators and investors, the subjective nature of valuation is becoming increasingly important in disputes, compliance and financial structuring in sport.

Against this backdrop, this article aims to provide legal professionals with insight into:

• The underlying complexity that arises when valuing sports real estate assets in line with RICS Valuation – Global Standards^[1] (the Red Book) and why these assets present distinctive issues when compared with more conventional real estate.
  
  
• The interaction of these valuation issues with legal considerations, such as in the context of business rates, other tax assessments and related-party transactions.

Article overview

• The role of real estate in sport
• Assets, ownership and transactions
• Valuation complexities
  • The market approach and the absence of an open market
  • The income approach and “value in use”
  • The cost approach and specialised properties
  • Alternative uses and “highest and best use”
  • Balance sheet value vs Red Book market value
• Legal context and disputes