$80 million Hoover sports complex to lose money first five years

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The $80 million sports complex being built next to Hoover Metropolitan Stadium is expected to lose money each of the first five years of operation, according to projections shared with the Hoover City Council tonight.

However, the complex is expected to have a direct economic impact of $14 million in its first year and $33 million by year five of operation, said Steve Goris, a vice president with Sports Facilities Management, the Florida company hired by Hoover to manage the facility.

That’s much greater than the operating losses projected for the facility itself.

The sports complex will include a 155,000-square-foot indoor event center, five NCAA regulation-size soccer/football/lacrosse fields, five NCAA regulation-size baseball (or softball) fields,16 tennis courts with a pro shop, a 2-mile walking track, playground, splash pad and large event lawn.

The indoor event center is scheduled to open by May 2017, and the athletic fields are slated to open by February 2018.

Numbers shared tonight by John McDonald, a regional director for SFM, project it will cost the city $1.2 million to get the complex up and running.

Then, the facility is expected to lose roughly $746,000 in its first year of operation, $600,000 in the second year, $417,000 in the third year, $264,000 in the fourth year and $169,000 in year five.

However, with lots of out-of-town guests expected for sports tournaments and other events, the complex is expected to have a direct economic impact of $14 million its first year, $24.4 million its second year, $27.7 million the third year, $31.8 million the fourth year and $33.4 million the fifth year.

The economic impact numbers only include direct spending on things such as hotel stays and restaurants and do not include indirect spending, such as additional economic activity generated as a result of tourism, like increased sales in linen supplies due to greater use of hotel rooms.

Hoover Councilman John Greene asked how accurate the revenue projections are, and Goris said SFM has met or exceeded its revenue projections for every facility it manages.

Greene said he would have liked to have seen higher revenue projections, but he guesses the revenues are probably as good as could be expected, given the large scale of the complex.

Councilman Gene Smith said the projected losses are a little higher than he anticipated, and he did not expect them to extend out five years. He expected the complex to be making money sometime within the five years, he said.

However, he and Councilman John Lyda both noted that the city will pick up sales and lodging tax money because of the facility as well. Lyda estimates the additional sales and lodging tax money will more than cover the losses by the second year of operation.

“Show me another business that can have that level of profit in two years,” Lyda said. “It’s pretty remarkable.”

The operating budget and revenue projections shared tonight show that the council made the right decision to hire SFM to manage the sports complex, Lyda said. “These guys know their business,” he said.

They know the marketing strategies that are needed to make the sports complex successful, he said.

Smith said that, in the long term, the city is going to be glad the sports complex was built.

“I think it’s a good match to the (Hoover) Met,” he said. “The Met — right, wrong, or indifferent, has been greatly underutilized since the (Birmingham) Barons left. I think this is going to bring more activity to the city for years and years to come — decades and decades.”

Smith also said he wants to see SFM’s projections for the operation of Hoover Metropolitan Stadium as well since that company will be charged with managing the stadium, too.

The Hoover City Council on Monday is scheduled to vote on the budget for managing and operating the sports complex at its 6 p.m. meeting at the Hoover Municipal Center.

See the complete five-year forecast and economic impact projection prepared by SFM Management.