But lawsuits from neighbors and businesses challenging the terms of leases and the way the project was approved have stymied efforts to raise the financing needed for construction. Meanwhile, Topgolf’s broader expansion plans have been scaled back by sluggish sales, and on Tuesday the company announced its separation from parent company Topgolf Callaway Brands Inc.
A three-story paddock with 102 driving bays, a bar and a 175-foot-tall net will soon be built on Tchupitoulas Street, but little construction is visible. A 10-acre field that has long been used as a cruise ship parking lot is surrounded by a fence emblazoned with the Topgolf logo.
Work on the project has been slower than that of a rival facility under construction less than three miles away, Five-O-Four Golf, whose owners said last year they hoped to open the facility by next month but now say they plan to open by the end of the year.
An important first project
Convention center leaders see Topgolf as the first major project to attract other investors to the River District, the site of entertainment venues, office buildings, residential towers, hotels and retail stores slated to be built on more than 50 acres of private and public land at the upstream end of the convention center.
During a meeting of the New Orleans Exhibit Hall Management Board last month, convention center attorney David Phelps said the River District Development Consortium, or River District Neighborhood Investors, or RDNI, would need to guarantee a $6.8 million loan to a state-run entity to fulfill its obligations to secure initial construction funding for Topgolf.
Phelps said the Topgolf project remains on hold because Red River Bank won’t make loans without a state government guarantee.
“RDNI indicated that if we were not willing to sign this agreement, we would not be able to obtain financing and Topgolf would not be able to move forward,” he said.
The convention center’s board of directors unanimously approved the loan guarantee, which requires the convention center to assume the loan if the lease is invalidated in a lawsuit brought by David Baird, owner of Le Citron Bistro on Religious Street. Baird sued the convention center in December, alleging that the Topgolf lease was a “sweet deal” that violates the Louisiana Constitution because it was a “free donation by a state entity.”
Lawyers for the convention center called the lawsuit “frivolous,” and an Orleans Parish Civil District Court judge dismissed the suit earlier this year, saying it was filed too late. On Tuesday, the 4th U.S. Circuit Court of Appeals upheld that decision.
Baird said after the appeals court’s decision that he plans to petition the Louisiana Supreme Court for review of the case.
There are other lawsuits still pending related to the project, including two filed by Daniel Matthew Ryan, president of the Lower Garden Neighborhood Association, which challenge whether Topgolf’s contract with the city to relocate part of Melpomene Street and the process for granting building permits were legal. The first lawsuit is scheduled to be heard on September 13 in Orleans Parish Civil District Court.
Five O Four and the River District Development Consortium have their own legal battles going through state court over unfair trade practices.
Phelps, Convention Center CEO Michael Sawaya and outside real estate adviser Mike Siegel of Corporate Realty told the 13 board members at their monthly meeting that the loan guarantee was a good business move that would not put the convention center at risk.
The centre said the guarantee would only be triggered if the original lease was invalid, in which case the centre would become the direct landlord and receive the full rent rather than sharing it with the River District Consortium.
It’s unclear whether the convention center’s loan could be affected if Topgolf pulls out at a later date, or how other litigation could affect the agreement.
Topgolf did not respond to a request for comment.
Philippe Franco, an attorney with Adams & Rees LLP representing Five-O-Four’s owners, questioned the board’s decision to approve the agreement, arguing it “appears to be an attempt to enter into a contract without a public bidding process.”
“I would be surprised if it wasn’t challenged,” he said.
Rough
Topgolf Callaway shares have fallen more than 70% since Topgolf was acquired by California-based Callaway Golf Co. in the spring of 2021, with company executives attributing much of the trouble to slowing sales at Topgolf venues and the heavy debt burden that came with its rapid expansion.
In its latest quarterly report at the end of June, the company reported that profits had halved.
This week, Topgolf and Callaway announced that they plan to separate the two companies three years after the merger, and Topgolf will reduce the number of new facilities it plans to open, though it did not say which ones.