New Orleans golf rivals race to open as Convention Center backs Topgolf loan and Five O Fore rises

But lawsuits from nearby residents and businesses have challenged the project’s lease terms and how it was approved, throwing a wrench into the financing it needs for construction. Meanwhile, Topgolf’s broader expansion plans are being dialed back as its sales have slumped, and on Tuesday the company announced a split from its parent, Topgolf Calloway Brands Corp.

Along Tchoupitoulas Street, where a three-level paddock with 102 driving bays, bars and 175-foot-tall netting was set to soon rise, little work is visible. Fencing decked with the Topgolf logo surrounds the 10-acre field long used for cruise ship parking.

Work on the project is also behind that of the rival Five O Fore Golf complex that’s rising less than three miles away. Owners of the Five O Fore project, who said last year they hoped to open that venue by next month, now say they expect to open before the end of the year. 

An important first project

Convention Center leaders view Topgolf as a key first project that will attract other investors to the River District, the proposed neighborhood of entertainment venues, office blocks, residential towers, a hotel and retail outlets that’s expected to rise on more than 50 acres of private and publicly owned land on the Convention Center’s upriver end.

Last month, during a meeting of the New Orleans Exhibition Hall Authority board, the Convention Center’s lawyer, David Phelps, said that the River District development consortium — known as River District Neighborhood Investors, or RDNI — needed the state-run entity to guarantee a $6.8 million loan so it could meet its obligation to secure initial construction financing for Topgolf.

Red River Bank wouldn’t lend without the state entity’s guarantee, which would mean the Topgolf project would remain on hold, according to Phelps.

“RDNI has represented to us that if we’re unwilling to sign this agreement, then they’re not going to be able to get a loan which means Topgolf would not be able to move forward,” he said.

The Convention Center’s board unanimously approved the loan guarantee, which obligates it to assume the loan if a lawsuit brought by David Baird, the owner of Le Citron Bistro on Religious Street, is successful in nullifying the lease. Baird sued the Convention Center in December, alleging that Topgolf’s lease was a “sweetheart deal” that violated the Louisiana state constitution because it was a “gratuitous donation” by a state entity.

The Convention Center’s attorneys have called the lawsuit “frivolous” and an Orleans Parish Civil District Court judge dismissed the lawsuit earlier this year on grounds that the suit had been filed too late. On Tuesday, the 4th Circuit Appeals Court affirmed that decision.

Baird said after the appeals court decision that he plans to petition the Louisiana Supreme Court to hear the case.

There are other lawsuits still pending related to the project. They include two brought by Daniel Matthew Ryan, an officer representing the Lower Garden District residents association, which challenge whether Topgolf’s deal with the city to move part of Melpomene Street, as well as the process granting its building permit, were legal. The former is due to be heard in Orleans Parish Civil District Court on Sept. 13.

Five O Fore and the River District development consortium have their own legal dispute over claims of unfair trade practices working through the state court system.

Phelps, Convention Center CEO Michael Sawaya and an outside real estate advisor, Mike Siegel of Corporate Realty, told the 13-member board at the monthly meeting that the loan guarantee was a good business move that would not leave the Convention Center exposed.

They said the guarantee would only be triggered if the original lease were nullified, and in that case the center would step in to be the direct landlord and receive all of the rent rather than sharing it with the River District consortium.

It wasn’t clear if the Convention Center might have exposure on the loan if Topgolf pulled out at a later date, or how the other lawsuits might impact the agreement.

Topgolf did not respond to requests for comment.

Philip Franco, a lawyer at Adams and Reese who represents the Five O Fore owners, questioned the decision by the board to approve the agreement, arguing that they “seem to be entering into a contract without a public bid process.”

“I would be surprised if it isn’t challenged,” he said.

In the rough

Since Topgolf was acquired by California-based Calloway Golf Company in spring 2021, Topgolf Calloway’s share price has declined by more than 70%, with much of the problem attributed by company executives to slowing sales at Topgolf venues and a high debt burden associated with its rapid expansion.

In its latest quarterly report at the end of June, the company reported that earnings halved.

This week, Topgolf Calloway said it plans to separate the two companies three years after the merger, and that Topgolf will reduce the number of new venues it had planned to open. Officials didn’t say which venues.