UPDATED: Adds new info on stadium cost, financing, timetable.
The city will buy 40 acres of land in Butchertown for $30 million to enable Louisville City FC to build a $50 million soccer stadium as part of a $200 million investment, Mayor Greg Fischer announced Friday.
The mayor, club leaders and other city officials made the announcement near the site, at the intersection of Adams and Cabel streets, in the afternoon.
Fischer said that the city expected to be paid back about $14.5 million of its investment from the club, including lease payments, with an additional $2 million possible if the stadium hits certain financial markers. Details on the payments were not available Friday, but a club official said it would be a “real lease payment,” meaning not a sweetheart deal such as $1 per year.
The mayor said leveraging $15.5 million for a $130 million in private investments that include the creation of jobs is “good use of taxpayer funds.”
The city is investing in near-downtown land that is generating few taxes and helping turn much of what is a brownfield into a vibrant development, he said, and it will pave the way for the city to compete for an eventual major league soccer franchise.
The city said that it will finance the $30 million with debt, of which $5 million will be used for brownfield remediation and public infrastructure, such as roads and sidewalks.
LouCity FC leaders have identified building their own stadium as the top priority to assure the club’s long-term viability. The third-year United Soccer League team plays its home games at Slugger Field, home of the Louisville Bats.
The second-division club has lost money, even though it has achieved success on and off the field in its first two years, reaching the conference finals and ranking among the top two or three teams in attendance. Club leaders have told Insider that generating a profit may be difficult without a stadium — though revenue streams continue to improve.
Brad Estes, the club’s executive vice president, told Insider Friday afternoon that the owners now expect the stadium to cost $50 million, $10 million more than previously estimated. The owners plan to raise $10 million to obtain a bank loan of $40 million, with the loan payments to be serviced by revenue generated by the stadium and a state tax increment financing district, which has yet to be approved. Taxes on new developments in such districts get split between the taxing body (in this case, the state) and developers of the land (the soccer club). Estes said the owners expect that a state TIF would allow for them to receive about 15 percent of the state taxes generated by the project.
The metro council will have to approve the mayor’s $30 million proposal. Council President David Yates attended the Friday announcement and signaled his support of the deal.
Estes said the council could approve the deal as early as Oct. 12. If the city and state approve the deals, the stadium will be built, he said, even if the owners have to raise more than $10 million.
“The project, from my perspective, is a go,” he said.
Estes said club officials hope to have financing wrapped up by the end of the year.
The club hopes to break ground on the stadium next July/August, with construction expected to take about 18 months. The owners initially expected to build a stadium with 10,000 seats, expandable to 20,000 for an eventual MLS bid, but Estes said those figures can still be changed through next summer. The club at Slugger on occasion already has hosted more than 10,000 fans.
Officials emphasize Yum! Center deal differences
The mayor and club officials emphasized that the soccer stadium deal is very much unlike the city’s involvement in the Yum! Center, the owners of which have had trouble generating enough money to cover the bond payments, requiring the city and University of Louisville to pay millions of dollars more than expected.
In the soccer stadium deal, the city will not own the stadium, Fischer said. The city also will have no obligation for an annual contribution, and if the project fizzles, the agreement includes “numerous backstops” and “exit opportunities” for the city to recoup its expenses.
Estes said the city is buying land, which is an asset that appreciates over time, and won’t be on the hook for the stadium. If the project fails, the club owners will have to deal with the stadium while the city will retain ownership of the land, which it can then sell or develop it as it sees fit.
“If a stadium fails,” Estes said, “it’s on us.”
And, Estes said, the full amount of local property, payroll and other taxes will go the appropriate local taxing bodies, including the city and the schools. Only state tax dollars will help defray cost of the stadium construction.
LouCity is in first place in the Eastern Conference, six points clear of second-place Charlotte. The Louisville club also still has one game in hand. A win in that match could extend the lead to nine points, with only five games remaining in the regular season. The club plays at Ottawa at 2 p.m. Sunday.