The Riverhounds are a Pittsburgh soccer team, who until
recently didn't have a stadium. Even
though the team was a fairly successful soccer team, their home games were
played in high school stadiums. The team
was barely able to keep afloat as they worked on stadium options. The repeated attempts to get a stadium were unsuccessful, and not until 2012 was there a real effort to make this stadium happen.
In 2012 the team was able to gain roughly $5 million in
private equity for the stadium. With
this money and tax benefits, the Riverhounds would have a fantastic and "state
of the art" stadium. The stadium was suppose
to cost roughly $10 million, but due to time delays the cost was more than originally
expected.
The new stadium has increased overall attendance by roughly
2,500 people. But the increased number
of patrons and ticket sales, has not increased funds enough to pay off its
debts. Additionally, the stadium has
been unable to get “other entertainment acts” due to another concert hall.
The Riverhounds owe 7.2 million in mortgage debt, 1.5
million in a secured loan to the bank, and hundreds of thousands more to
unsecured creditors. Due to these
overwhelming debts, the Riverhounds have filed for Chapter 11 bankruptcy.
We have talked extensively in class about the Chapter 11
plan and creditors voting. In this case,
I started to think if I was a creditor what would I do. Although this new stadium should bring in new
business and customers, it appears that it hasn't brought as much as people
anticipated. I think this is for a
number of reasons. First, soccer is
still not considered one of the main sports of the United States. It doesn't seem like it was a smart idea to
build a brand new stadium, for a sport that doesn't do the same ticket sales as
other American pass times. Additionally, the Riverhounds were barely able to keep afloat in previous years. Secondly,
the Pittsburgh area has another concert hall in the area, that was just recently
built in 2010. This concert hall is seeing all
the “other entertainment acts”. These
reasons may cause a creditor to not approve the plan.
But the problem is the going concern likely has a higher
value than the liquidation value. Cause... who
would buy the stadium? I wonder what the plan will look like, and if it will really help to bolster the team.
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