Recalculating the Cost

Doug Kirchhofer

Recalculating the Cost

With projections smashed by high materials prices, the actual budget for the planned multi-use stadium won’t be known until this fall.

by scott barker • July 27, 2022
Doug Kirchhofer
Boyd Sports CEO Doug Kirchhofer leads a virtual tour of the planned stadium.

Construction of the stadium planned for the warehouse district east of the Old City could begin around the first of the year, though the project’s budget remains in flux.

Site prep is set to begin within two weeks but construction won't start until around the first of the year.

Doug Kirchhofer, CEO of Boyd Sports, which is leading the development for the Sports Authority, gave members of the city-county Sports Authority a rough project timeline on Tuesday before guiding them on a virtual tour of the stadium as it’s currently designed.

“The timeline will indicate the site work will begin in August and will wrap up by the end of this year,” he told Sports Authority members.

The site work, final design plans and the $65 million bond issue that would provide the bulk of the funding would have to come together before Denark Construction, the project’s lead contractor, could start construction, he said.

Kirchhofer did not offer a new cost estimate for the stadium. Construction materials prices have soared during the past year, rendering the previous $80.1 million estimate obsolete. 

Sources have said Boyd Sports owner Randy Boyd is prepared to provide a loan to fill the apparently substantial funding gap, though no official confirmation of the arrangement was forthcoming at the meeting. Neither Stephanie Welch, the city’s chief economic and community development officer, nor Knox County Chief Financial Officer Chris Caldwell would comment on the loan proposal, which is part of negotiations with Boyd Sports.

Boyd has said he would cover any cost overruns the project incurs. The stadium development agreement approved — but not signed — by the Sports Authority requires that Boyd pay any costs that exceed the maximum amount of the final budget.

Kirchhofer, who declined to comment on Boyd’s plans to provide a loan to cover the shortfall, drew a distinction between the cost estimates based on the stadium concept and the prices locked into a project budget. “These price increases are different from cost overruns,” he said.

Kirchhofer said the original cost estimates were based on the stadium’s conceptual plans developed before the COVID-19 pandemic and subsequent economic upheavals. The design team has scaled back portions of the plans, he said, and the project budget will ultimately be based on the prices for goods and services at the time bids go out.

According to the Associated General Contractors of America, the nation’s largest construction industry organization, non-residential construction costs increased 19.8 percent from June 2021 to June 2022. Structural steel prices are up 31.5 percent. Diesel fuel, needed to power the trucks transporting the materials to Knoxville, has more than doubled in price.

Sports Authority bond counsel Mark Mamantov, who has been involved in the financing of just about every publicly funded stadium and arena in Tennessee during the past three decades, said the increases are unprecedented in his career.

“We haven’t had inflation like this since the early ’80s,” he said. “The spikes in prices have been unusual.”

Sports Authority member Tim Hill, a developer, said he’s working on a project with similar challenges. “We are starting to see some decline in those costs,” he said, and he’s optimistic prices will continue to fall.

Barry Brooke, executive vice president of Lawler Wood, which is acting as the Sports Authority’s construction representative, said his firm has two projects on hold right now. He said the stadium is on the right track.

”This is a very complex project,” Brooke said. “We’re hopeful it modulates and comes down a little bit.”

Kirchhofer pointed out some of the cost-saving design changes, including a reduction of square footage to be built, that are going into the stadium as he led Sports Authority members on a virtual tour of the facility. He noted that the design team halved the two buildings with ground-floor retail space along Jackson Avenue outside the stadium by eliminating the second floors. 

Offices for the Tennessee Smokies, originally planned for the second floor of one of the buildings, now are earmarked for space in the adjacent private development. The commissary planned for the second floor of the other building has been relocated on the property. 

“We think that’s a good solution,” Kirchhofer said.

The open space on top of the seating bowl will be smaller. Out of sight for most fans, the service level beneath the seats has been redesigned, which impacts team clubhouses and operations space. Batting cages have been moved, replacing areas originally planned for retail space. The field maintenance building is tucked behind the center field wall.

One casualty, at least at the beginning, is the water tower that once stood over the site and has been preserved. The virtual tour showed it in the right field corner, where there will be space for parties and special events, but Kirchhofer said its installation won’t be included in the initial budget.

“It’s a great character piece for the stadium and a nod to the past,” he said.

Kirchhofer said one stroke of good fortune was the decision by the Knoxville Utilities Board to remove a 48-inch sewer line near First Creek, which is beyond the stadium’s outfield. As a result, a 400-foot stretch of the stream won’t have to be covered to accommodate the stadium.

The design team is working to finalize the architectural drawings and construction documents that should allow bidding to commence, which Kirchhofer said would be the basis for the final budget with a guaranteed maximum price. The construction documents should be in their final form in the fall, he said.

Rough grading and site preparation are scheduled to begin within the next couple of weeks. Until the bond issue, Boyd’s team is paying for the preliminary work. Kirchhofer said he’s confident that the stadium will be ready for the Smokies’ first home game of the 2025 season.