There was no end to big words and bold declarations when the city of Karlsruhe handed over BBBank Wildpark stadium, which had been under construction for five years, to the local club on December 15 this year. However, no one wanted to bring up the taboo topic of KSC's looming debt to the city.

Over-optimistic planning or a serious miscalculation?

As of mid-December, Wildpark Stadium has passed into the full control of Karlsruher SC, after the main construction work was completed. According to the agreement, the second Bundesliga club is renting the new facility until the debt that KSC contracted with the municipality to cover the construction costs is paid in full.

What amount is in question? This is where the first problem arises. According to data gathered in 2016, when the two parties signed the contract, the new administrators were supposed to repay €74 million to the city for building the stadium. Later, the public thought that this was an overoptimistic variant and that, in reality, the amount of the debt was supposed to be at least €92 million.

However, these calculations are not worth much today as reported by SWR Aktuell quoting the responsible city company. The club has to pay as much as €104 million to the magistrate. Why such a difference in calculation? No one can explain this with full responsibility. The main reason for the missed projections was the unwillingness of the city to disclose any financial statements until the stadium was handed over. At the time, Karlsruhe's authorities hid behind the contractual confidentiality.

© BBBank Wildpark

Utopian plan right from the start?

Journalists from the German local broadcaster noticed even more discrepancies between the original plan and reality. As it reads in a city council resolution from the summer of 2016, KSC would pay off the debt in instalments, paying a rent of €3.5 million per year, provided the first team played at the highest league level of football in Germany. Depending on the level of the competition, the club would pay €1.5 million when appearing in the 2. Bundesliga or 400,000 € for the third division, respectively.

At these rates, a debt repayment period of 33 years was assumed, of which 20 years would be for the lease itself. Furthermore, many successful scenarios were drawn in the event of Karlsruher SC's promotion to the elite. Such a picture is nowhere near the forecasts of the company "Fußballstadion im Wildpark". According to them, within seven years the projected rent has been reduced to €3.3 million with KSC's presence in the 1. Bundesliga and the rent having increased to €2.2 million for lower-level appearances.

The simple maths here is unrelenting - with such rent levels, there is no way the club can fulfill its obligation to the city in 33 years. According to the latest calculations, it will take at least 50 years to fully repay the debt. It is worth mentioning that the costs of renovations or the risk of a short lifespan of the stadium have not been added to the calculation.

© Stephan Hoogerwaard

Politicians were aware of the risks

In an interview with SWR Aktuell, the leader of the CDU deputies on the Karlsruhe city council Detlef Hofman did not hide his lack of surprise from the erroneous forecasts from 2016. The risk of being left with debts for longer was clear from the very beginning. But this is a project that we carried out within a rational framework, in contrast to the city council and combinatorial practices, he added.

Aljoscha Löffler of the Grüne Fraktion Karlsruhe parliamentary group was more critical of the whole affair, drawing attention to the problem of excessive costs. His faction demanded clarification on the current repayment scenarios. It has been clear for a long time that it will take much longer than previously assumed for the club to meet its financial obligations. There is a great danger that the people of Karlsruhe will be stuck with a significant portion of costs, Löffler said.

In case Karlsruher SC declares insolvency to the city, the authorities might have to consider writing off a part of the debt. This, in turn, could soon lead towards disaster in the context of the dire state of the city's finances and the lack of an approved budget for the next two years.

© Stephan Hoogerwaard