In the Spotlight / Riverhounds put down roots

The seeds of Highmark Stadium were planted by a player who wanted to stay put


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Highmark Stadium is pretty hard to miss.

Whether you are driving across the Fort Pitt Bridge or looking across the Monongahela River from Downtown, the new 3,102-seat stadium at Station Square almost immediately catches the eye.

The new home for the Pittsburgh Riverhounds was scheduled to open nine months after ground was broken in July 2012, but Highmark Stadium was a project more than six years in the making.

"If you had said five years ago, six years ago, that we'd be building a stadium in Station Square at that location, I would've said you were crazy," said Riverhounds midfielder and CEO Jason Kutney.

The Riverhounds' April 13 home opener, their first game in Highmark Stadium, was sold out. But to trace the journey of how the $10.2-million project came together, you have to go back to late 2006.

At that point, the Riverhounds had been around for seven seasons but had struggled to find a foothold in the Pittsburgh region. Playing in soccer's minor leagues, the team had gone through ownership changes and used local high school stadiums as home venues before settling for two years at Consol Energy Park (then known as Falconi Field) in Washington, Pa.

At the end of the 2006 season, the group that owned the Riverhounds notified players that they would not be continuing operations the following year.

That's where Mr. Kutney comes in. The 2004 Duquesne University graduate had joined the team as a player that year, and wasn't anxious to move again. He had settled in Pittsburgh and gotten involved on the business side of the Greentree SportsPlex fitness facility.

"I had a couple of good opportunities in [Major League Soccer] at the time, but I was really looking for something that I could sink my roots in and live in one consistent place, make a living and feel some level of consistency in my life," Mr. Kutney said.

He got together a group of investors to buy the Riverhounds and almost immediately began discussions for a new stadium.

In fact, in early 2007 the Riverhounds had the framework of a deal in place for a public/private venture with Allegheny County for a stadium on Neville Island.

"Lease agreements were drawn up and they were sitting on my desk and we were kind of [wondering], 'Is this thing really going to happen?' " Mr. Kutney said. "And then, just for any number of different reasons, it didn't move forward."

That now looks like a blessing in disguise. Highmark Stadium, with its view of Downtown, trumps any suburban venture the Riverhounds could have come up with.

The Neville Island failure also refocused the ownership group on exactly what it would take to turn a stadium into reality. Strangely enough, the answer was de-emphasizing their professional team.

The Riverhounds took a hiatus from professional soccer play in 2007 and instead focused on establishing and developing the organization's youth program, which includes The Riverhounds Academy. They even signed a deal with English Premier League soccer club Everton to develop a training system.

The professional team returned in 2008, playing its home games at Chartiers Valley High School, but the success of the youth program, which now has over 650 participants, provided the Riverhounds with a steady, dependable revenue stream as they progressed toward a stadium.

"Getting investors to write checks when most of the people in this country are hoarding cash was very, very difficult and it really came down to the youth component that we built here," Mr. Kutney said.

The next step was finding the right land for the new stadium. Mr. Kutney said the group assessed three locations and was favoring a spot near Robinson Town Centre when he got a call from a developer about the possible availability of property at Station Square just west of the Gateway Clipper Fleet. While he knew there would be hurdles, it was clear that this was the place the Riverhounds needed to be.

"The whole group knew that the only way to make the pro team a real pro team was to be Downtown, on a river," said David Wilke, one of the team's owners who served as a consultant on the Highmark Stadium project.

As the project started coming together in late 2011, the ownership group began courting investors and sponsors. Unlike the Penguins, Pirates and Steelers, the Riverhounds received no state money for their new stadium.

"Fortunately or unfortunately, the state was not in a place where they were investing money in stadiums, or any other projects for that matter," Mr. Wilke said.

"It made it a lot harder, absolutely, to get the transaction completed because the expectations of an investor are very high."

The stability of the youth program helped secure investors, and the potential for prime advertising space along the river helped lure sponsors, including Highmark and #1 Cochran.

"That catapulted us into a new level because we then had revenues upon which we could leverage debt," Mr. Kutney said. "We could go to the banks and say, 'Here's a revenue model that works, here's why we're sustainable for five-plus years.' "

The group completed financing for the stadium in April when it secured a $500,000 loan from the city's Urban Redevelopment Authority. That loan -- combined with $5.1 million in private equity, $2.2 million in New Markets tax credits and $2 million in bank lending -- meant the project was ready to go.

The stadium hosted its first event in December when the Penguins set up an outdoor ice skating rink for a month. During that time, over 35,000 people came through Highmark Stadium, according to Mr. Wilke.

Moving forward, the stadium will host several other events beyond soccer. The Pittsburgh Passion women's football team will play its home games there, and Mr. Kutney said his group was in talks with several local high schools and colleges for football, lacrosse and rugby games. Concerts and even boxing matches are potentially on the horizon.

All of these events provide ancillary revenue opportunities for the Riverhounds. That, along with booming ticket sales, seems to show that the investment in Highmark Stadium is paying off so far. In addition to the first game sellout, ticket sales have been strong for the rest of the 14-game slate as well.

The Riverhounds are one of just three teams in their league (United Soccer Leagues Pro, the third tier of American soccer) to have their own soccer-specific stadium, and that has already paid dividends. Mr. Kutney said the Riverhounds targeted six players to sign before this season, and landed all six.

Mr. Kutney dreams big. His ultimate goal is to seek MLS membership within 10 years. While there are countless other hurdles to clear, he described the stadium project as "the right foot forward."

The average capacity for current MLS stadiums is 21,200. The smallest is San Jose's Buck Shaw Stadium, which holds 10,525. The Earthquakes are planning to move into a new 18,000-seat stadium in 2014, though. Mr. Kutney said Highmark Stadium has room to expand if MLS ever comes calling.

Mr. Wilke described Highmark Stadium as "Jason's dream," which it is certainly is. But Riverhounds coach Justin Evans saw it also as a culmination of an organizational vision.

"At this level, you have a lot of teams that sort of come and go," Mr. Evans said. "They're sort of wishy-washy and they don't have a clear direction of where they want to go as an organization. If they do, how are they going to get there, do they know what they need to do?

"We certainly do. We've put a lot of time into this, and everybody pulls in the same direction for the same cause. That's a pretty powerful thing in this organization."

-- Sam Werner: swerner@post-gazette.com or on Twitter @SWernerPG

intheleadstories


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