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Strategic Alliance

Elisha Chauhan finds out what impact HOK’s acquisition of 360 Architecture will have on the sports venue design sector.

At the turn of 2009, a small group of employees broke away from architectural giant HOK and created their own sports-focused architecture firm, named Populous.

Crucially, before each party went its separate way, a five-year non-compete clause was signed to prohibit HOK from working in the sports sector. Since then, Populous has become one of the most successful sports architects in the world (see Popular Demand).

The breakaway marked the end of 26 years in the sports architecture space for HOK. But after the non-compete agreement expired early last year, the firm looked to return to the sports sector with discussions to acquire 360 Architecture. A merger was announced in August, before being finalised in December and completed in January this year.

Founded in 2004 through a merger of CDFM2 Architecture and Heinlein Schrock Stearns, Kansas City-based 360’s sports projects include the New Atlanta Stadium – home of the National Football League’s Atlanta Falcons (pictured) and Major League Soccer’s yet-to-be-named expansion franchise – Major League Baseball’s Oakland Athletics’ Cisco Field, and developments for the National Hockey League’s Detroit Red Wings and Edmonton Oilers. At the time of the merger, 360 had 200 employees.

Growing organically would take a lot of time and effort

The speed of which the deal was concluded was the result of an aligned working culture and philosophy, according to 360 founding principal Brad Schrock – who was previously employed by HOK – and HOK president Bill Hellmuth.

“We knew when we separated [from Populous] that sports architecture is an industry that makes an awful lot of sense for us to be a part of – it was just a matter of time and how,” Hellmuth told SportBusiness International.

“When the non-compete expired, we started growing organically by taking on people in our London office. However, growing organically would take a lot of time and effort. When we realised that 360 would be interested in a merger, we got on like a house on fire.

“We actually weren’t looking at merging with another firm – we were open to all sorts of things and, frankly, were in the early stages of what our next moves were in addition to our organic growth. The opportunity to acquire 360 came along very quickly – it was very fortuitous – and we didn’t get around to looking at any other similar firms.”

“We know the Populous guys well and we’ve competed against them, and although we were certainly aware of its split from HOK, we weren’t aware of HOK’s intentions to start a sports practice again,” says Schrock.

“However, it didn’t take long for a light bulb to go off, and realise that it made perfect sense to merge.”

International Expansion

HOK’s acquisition fulfils 360’s expansion ambitions, especially overseas, which was limited due to its relatively small amount of staff, all of whom were based in the United States, with two other offices in Columbus and San Francisco. HOK, which was founded in 1955, has long had an international footprint, having opened offices in Hong Kong and London in 1984 and 1987, respectively.

“Although we were very thankful for that growth, we found ourselves limited,” says Schrock, who is now a director for the newly-formed HOK Sports + Recreation + Entertainment, which boasts 1,800 staff members – more than double that of Populous – in 25 offices around the world.

“When you’re a firm of that size, there are a certain amount of resources you have to spread around. We had started to do some international work, which is a major commitment for a firm of our size.

“We immediately knew that HOK’s resources and, most importantly, its relationships around the world would give us the opportunity to look at all types of new projects that we hadn’t been able to touch before.

“The reaction from our clients has been absolutely tremendous across the board. They immediately saw the value of what this larger platform means to them individually, in terms of the resources and knowledge in things like environmental and city planning that are absolutely critical for sports architecture.

“Our clients are very excited about benefitting from those resources – it’s been nothing but positive.”

Hellmuth says that a selection of HOK offices around the world will, with 360’s help, develop expertise in sports architecture so that the firm has a strong and strategic presence in key markets, particularly Asia and the Middle East.

“We’re not just going to wholesale shift a load of HOK staff into sports architecture. It’s going to be much more gradual as people train and learn,” he says. “The immediate cross-utilisation [between HOK and 360], though, will be in urban planning as well as large-scale projects in the Middle East.”

Competitive Market

With Populous and AECOM – the latter operating in over 150 regions and having recently acquired construction company URS Corporation and Hunt Construction Group – both vying for major sports contracts, it’s a competitive market that HOK is entering.

However, London-based HOK director John Rhodes says HOK’s new-found ability to combine expertise in master planning, sports and entertainment will be its calling card versus the competition.

“HOK is now on a scale where we can really start to deliver major sports projects,” he told SportBusiness International. “We’re working on several projects in the Middle East at the moment, most notably Dubai’s hosting of the World Expo in 2020, where we’re creating an experiential environment that cuts across sport and entertainment – that’s a market we want to continue to be in.”

“Believing in the philosophy that a facility goes way beyond sports use and having the expertise to bear on all of our projects is a clear differentiator for us,” adds Schrock.

“It allowed 360 to be successful as a small firm competing against the big guys. We have always committed all of our resources on one project from start to end, which is a unique thing to do in our industry, and we’ll continue to do that with HOK.”

Popular demand

Populous is a global architectural firm specialising in the design of sports facilities and convention centres. It formerly operated as HOK Sport Venue Event, which was part of the HOK Group, however, in January 2009 Populous broke away through a management buyout to set up as an independently owned and operated company.

Populous is headquartered in Kansas City, and has 13 offices in total across the world. In 2013, Building Design & Construction magazine ranked it as the United States’ top sports architecture firm, with annual revenues exceeding $95 million.

Venues in Populous’ portfolio include the Yankee Stadium in New York, Wembley Stadium, Wimbledon Centre Court, Arsenal’s Emirates Stadium, the Philippine Arena in Manila, the renovation of Chicago’s Wrigley Field, London’s 2012 Olympic Stadium, Sochi’s Fisht Olympic Stadium and the Millennium Stadium in Cardiff.

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