North Carolina FC owner says proposed downtown stadium is not contingent on an MLS franchise

North Carolina Football Club and N.C. Courage owner Steve Malik says the potential development of 40-plus acres of land in Southeast Raleigh for a sports stadium is not contingent on the club landing a Major League Soccer franchise.

And if public money isn’t allocated for the potential “billion-and-a-half-dollar” project, Malik said he would develop the land in another fashion, along with Raleigh developer John Kane and an undisclosed group of investors.

A stadium “is not a contingency in our plan” to buy the land, Malik said in an interview with The News & Observer.

“We’re going to build a development,” he said. “But what we would like to do — in a (public-private) partnership — is make it an entertainment-zone focus, and the stadium is a perfect catalyst to do what’s best for the region.”

Malik, who bought North Carolina FC in 2015, and Kane, the head of Kane Realty, are currently pitching the idea of building a stadium to Wake County and are hoping to receive funds from the Interlocal Agreement, a pool of money that comes from the Wake County room occupancy and prepared food and beverage taxes, to finance the project. (That tax generated around $55 million in the 2018 fiscal year. Money generated by the tax can only be used on tourism-related projects that are likely to bring more visitors to the county.)

The group is one of several applying for the money, including the Centennial Authority, which wants to renovate PNC Arena. Malik and Kane are asking for more than $300 million to help fund the stadium, which would be paid out in $11 million chunks per year for 30 years beginning in 2022.

The Southeast Raleigh site is the second that the group has identified as a landing spot for a new downtown stadium — and the one it prefers now. Originally the group had identified state-owned land on the corner of Salisbury and Peace streets.

The group envisions building a North Hills-like mixed-use project around a stadium that would attract myriad events beyond soccer games.

While the group isn’t identifying what land it has under contract — it is still attempting to cobble together more parcels — Kane said last week that it is within the Beltline, an indication that it is likely near the edge of downtown somewhere along the South Saunders Street corridor.

The new site would also be in an “opportunity zone” — a new feature in the country’s tax code that allows developers to earn savings on capital gains by investing in economically disadvantaged areas — that stretches from Red Hat Amphitheater to south of I-440. Those potential tax savings opened up a whole new realm of possibilities, Malik said, noting that feature didn’t even exist when the club first announced its intentions to build a stadium.

There aren’t too many large parcels of land that are currently undeveloped in that section of downtown, though developers in recent years have talked about the potential of the old Cargill property and a section of open land on Penmarc Drive. Malik said that it “ought to be a stop” on any future bus rapid transit route.

Malik’s comments came in a one-on-one interview at the team’s offices in suburban Cary. The following has been edited for length and clarity:

Why has the club moved on from the old state-owned site?

“We thought that location was fabulous in part because it didn’t have a lot of neighborhoods around it. It is one place you can go to where you can put significant acreage together (right in downtown) as well as the opportunity to light up and marry what was happening in Glenwood South.

“At the same time, a lot has happened since then. Frankly, one of the challenges with that location was moving people. That is what took us so long to work through it. (We would have to tear) down some buildings, so where do you put (those workers) and with it being government, where do people park? How many (parking) places? Is that different for each department? It was a lot of work.”

Why are you interested in Southeast Raleigh?

“We were out talking to members of the City Council, county commissioners and they were saying, ‘Hey, what can we do for Southeast Raleigh? We want economic equity, we want to do something and help lift up that part of town.’ ... And as we looked at what (opportunity zones) really meant, it translated into a lot of financial interest and investments (for places like Southeast Raleigh) because of the tax advantages, which is exactly what the legislation is supposed to do.

“And, so we started to pursue what alternative locations might fit ... and (Southeast Raleigh) was checking more than one box. It’s still urban, still getting a significant enough acreage and, frankly, the best part about it was that it had more acres. We were really challenged on 13 acres, with a 10-acre stadium. ... We will have a lot more space to be able to do place creation, like (Kane) has done such a great job of with the North Hills-Midtown area. And so that became very exciting when you combine it with ... very significant financial investment.”

A map of opportunity zones around downtown Raleigh. Opportunity zones, which allow investors to lower their taxes on capital gains, are highlighted in green. Courtesy of the N.C. Commerce Department

What will you do for Southeast Raleigh beyond building a stadium?

“That’s an area of our community that we can do more to bring the benefits of our game to. You’ve got to have fields near middle schools, where kids that age don’t have transportation challenges and can get out and play.

“For the first time, this spring, our youth club is bringing the game to (Southeast Raleigh). We have fields in that part of town now, and we are offering the sport and bringing along the infrastructure that is gonna allow them to have all the benefits of learning teamwork and fitness. And, oh, by the way, it will not have some of the other health challenges that come with, and I am going to say it, American football and the concussions and what we’ve learned about that. There’s a long term benefit for our community to have everybody playing soccer.”

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An artist’s rendering of what a Major League Soccer stadium in downtown Raleigh might look like if North Carolina Football Club plans for a public-private partnership to build the facility come to be. Courtesy of North Carolina Football Club

Why do you need money from the Interlocal fund?

“Well, you know, the headline of this is it’s going to be an economic impact. We know what to expect: literally thousands of jobs. And clearly the public officials and the public are going to see that we’re talking about a tremendous amount of (new) property tax. ... In fact, what we’re working from is no new taxes, (these are) taxes that have already been collected that are specifically earmarked for entertainment. ... But in return, we’re going to be bringing in more than $20 million a year in property taxes.”

“We are one of the largest contributors to (hotel occupancy) tax. ... Our tournament series grabs 31,000 quantifiable hotel rooms each year. We’re bringing in kids from all over the country for our college showcase and other tournaments. Of those 31,000 hotel rooms, 21,000 are in Wake County ... and they are paying taxes. So from that perspective, we certainly should be part of the equation.

Will PNC Arena asking for money hurt your cause?

“Well, certainly there are limited funds, and I think you can put the Convention Center and the other nine projects that are all asking for support from that. I think that I’m all for PNC getting updated, I do think that they’ve got some things to sort out. We’re coming to the table with a long-term lease for the anchor tenants. (The Hurricanes’ lease at PNC expires in 2024.) We’re doing it in a way that we’re bringing in additional $1.5 billion of investment.

“You know, PNC has been there 20 years, and we’ve seen what it has done, both positive and what has developed around it. And it’s important, I think, that we put the money into a place that the community gets the highest return on investment. And I believe that’s our project, so I don’t think they’re mutually exclusive — I just think we have the best project.”

Steve Malik, owner of the soccer team North Carolina FC, stands for a portrait after an interview discussing his new proposal, with developer John Kane, for a new soccer stadium in Southeast Raleigh, that aims to eventually land a franchise in Major League Soccer, on Tuesday, Mar. 19, 2019, in Cary, NC. Casey Toth

Will this stadium help land an MLS franchise?

“Well, obviously one of the keys is having a stadium plan and an urban stadium plan, so it would be huge for us. You know, I believe we should build this regardless, that it’s not just about MLS. We have two great soccer teams that will be the anchor tenants for the facility — but it’s also about lacrosse and rugby and college football, frankly, for some of the smaller colleges in this area that can afford to rent out Carter-Finley and many other smaller events that need an outdoor facility. ... I think all those things are positive for us for MLS, and at the same time, it’s not a requirement.”

What does our competition for an MLS franchise look like?

“I think that there are many communities that have been working on this for a long time. I mean take Sacramento, who has a shovel-ready project. It was missing a billionaire (investor) and now they have a billionaire, so that is a very compelling market certainly and there are others. (Malik has said Raleigh should have a chance to land an MLS team if the league expands past 28 teams. It is currently at 24, with three future spots already locked down.)

“Frankly, we look at D.C., the closest MLS franchise to us, and it took them 20 years to get a stadium, and we’re going to do it a lot faster than that. And I think that puts us right in the game, when you look at our growth and some of the things that are happening in this region. I feel good about that. ... We’re going to be the best that we can be. Hopefully, that’s MLS one day.”

On potential competition with Charlotte for a team?

“I think we’re two separate markets. We’ve got 3.9 million people within a 90-minute drive. ... But frankly, I do think that and I have said this publicly as well, I’m supportive of Charlotte getting a (National Women’s Soccer League) team, I think it would be a great rivalry and we welcome them. I think we can (as a state support more than one team). As the 10th largest state, going to be the ninth largest state, there are certainly other states that have more than one team in them.”

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.