Quantifying the Risks of Delays

Liquidated damages are often among the most heavily negotiated provisions in construction contracts for stadiums, arenas, and other sports venues—and for good reason. Unlike many commercial developments, a delayed sports project can trigger losses that extend far beyond increased construction costs. As such, when establishing liquidated damages for a stadium or arena project, owners should resist the temptation to simply adopt the daily rate used on a prior project or rely on “industry custom.” Instead, the analysis should begin with the owner’s actual business risks:

  • What would a delayed opening truly cost?
  • Would a missed completion date require a sporting event or concert to be canceled, relocated, or rescheduled?
  • What revenue could be lost from ticket sales, premium seating, concessions, parking, merchandise, sponsorships, naming rights, advertising, or broadcast commitments?
  • Would the owner incur additional financing costs, extended project management expenses, increased operating costs, or liability under team leases, event agreements, or other third-party contracts?

Answering these questions requires more than legal analysis. Finance, venue operations, project management, leasing, sponsorship, event management, and legal teams should all have a seat at the table to ensure the liquidated damages provision reflects the project’s actual operational and financial risks.

Prioritizing the Risks of Delays

Equally important is how liquidated damages are structured. Stadiums and arenas rarely have a single completion milestone that determines project success, yet many construction contracts impose a single daily rate tied only to Substantial Completion. Owners should instead identify the project milestones that are truly mission-critical and consider whether separate liquidated damages should apply to each. Concession facilities may need to be operational well before opening day to allow hiring, training, and operational testing. Premium suites and club spaces may have contractual delivery obligations to sponsors or suite holders that warrant independent completion milestones. Retail or restaurant tenant spaces may be subject to lease delivery dates, while the playing surface, locker rooms, broadcast facilities, or league-required inspections may need to be completed by specific dates to satisfy team or league requirements. Likewise, overall venue readiness—including security systems, ticketing integration, audiovisual systems, crowd management, and life safety testing—may be far more important than Final Completion, particularly when punch list work can continue after the venue safely opens. A thoughtful, milestone-based liquidated damages framework better aligns the contractor’s incentives with the owner’s business objectives and recognizes that, on a sports venue project, not every delay carries the same consequence.

Addressing Delays as They Arise

Even the most thoughtfully drafted liquidated damages provision should not become an owner’s primary strategy for addressing project delays. On a high-profile stadium or arena project, owners should remain focused on preventing delays—not simply recovering damages after they occur. That begins with negotiating contractual scheduling requirements that provide meaningful visibility into the contractor’s progress and identify schedule concerns before they become critical. Once warning signs emerge, owners should evaluate the full range of contractual remedies available, including requiring recovery schedules, supplementing the contractor’s workforce where permitted, engaging replacement subcontractors, or exercising other contractual rights designed to mitigate delay. Although these measures may increase short-term costs, timely intervention can significantly reduce the financial, operational, and reputational consequences of missing a critical project milestone or opening day.

Conclusion

In the end, the most effective liquidated damages provisions are not drafted at the final buzzer—they are carefully developed long before tip-off. By aligning liquidated damages with the owner’s actual business risks, prioritizing mission-critical milestones, and actively managing schedule performance throughout construction, owners can better position their projects for a successful opening day.

Contacts


Ashley Cummings   I   214.745.5390   I  acummings@winstead.com

Ashley Cummings represents owners and developers on a variety of commercial developments, with an emphasis on complex sports, hospitality, and entertainment developments. Her experience spans industrial developments, hotels, high-end health and wellness facilities and clubs, multi-family and mixed-use developments, residential condominiums, sports and entertainment facilities, office buildings, and more. Whether advising on cutting-edge sports venues, luxury hospitality projects, or mixed-use developments, Ashley brings national experience and a solutions-oriented approach to resolving the sophisticated issues that accompany large, multifaceted developments.


Dakota Brewer   I   214.745.5396   I   dbrewer@winstead.com

Dakota Brewer represents owners and developers in the planning, development, and construction of sophisticated commercial projects across a broad range of industries, including sports venues, hospitality, entertainment, mixed-use, multifamily, warehouse and manufacturing facilities, land development projects, and special purpose districts. His practice emphasizes proactive risk management through the strategic negotiation of design and construction contracts and the efficient resolution of construction disputes.

 

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