Regions Arena Budget Holds After Fraud Loss, Project Manager Tells Mobile Council
Regions Arena is about 75% complete and projected at $281.6 million, leaving it slightly under what remains of its budget after a $14.7 million fraud loss, its project manager said.
MOBILE, Ala. — The Regions Arena budget can absorb the $14.7 million the city lost to fraud and still leave the project slightly ahead, the manager overseeing construction told Mobile City Council members Tuesday, though he cautioned that the margin depends on no major surprises in the months remaining.
Sam Matheny of Volkert Engineering said at a Nov. 3 Finance Committee meeting that construction is now about 75% complete and is projected to cost about $281.6 million. The venue remains on track to be substantially finished by March 25, 2027, he said, the same day the Red Clay Strays are scheduled to begin the arena’s opening run.
“We are still on budget, even with the recent fraud event,” Matheny said.
How the numbers work
The project’s original budget was $300 million, which included a $15 million owner’s contingency. The fraud loss consumed nearly all of that cushion and left about $285 million for finishing construction, Matheny said. His $281.6 million estimate sits about $3.4 million below that figure.
Counting the money lost to the fraud, the city’s total outlay would be about $296.3 million if none of the $14.7 million is recovered. Federal investigators are still trying to recover it.
Matheny acknowledged that unforeseen problems could still move the final number. He called the chance of exceeding $285 million “very low” at this point in the project. If it did happen, he said, the city would have to take elements out of the project or find more money.
Answering questions from District 4 Councilman Ben Reynolds, Matheny said it is unlikely the project will go past its $300 million budget.
“There should not be any big surprises,” he said.
Council members also pressed Matheny on the project’s reserves, and his answers showed the budget is less roomy than the top-line figure may suggest.
The project has two contingencies, he said. Besides the $15 million owner’s contingency now tied up by the fraud, there is a separate $15 million construction contingency. He expects that second fund to be fully used, and possibly slightly exceeded. The owner’s contingency is not available to him for construction costs, he said.
Some items first budgeted under furniture, fixtures and equipment have also moved into the construction contract, Matheny said, so a shift of that kind does not necessarily mean the project is saving money overall. He pointed to the scoreboard, which had been planned as a separate equipment purchase before it was added to the contract.
Matheny did not have the most recent payment application with him and could not give the total paid so far, but he said the contractor is current on payments. He expects about five more months of construction, followed by retention and closeout payments, for about seven more payments in all.
Where construction stands
Matheny gave councilors a status report on specific parts of the 298,000-square-foot building. Work has started on the floor of the ice rink, he said. Drywall is about 85% finished, while tile work and restroom areas are about 60% to 65% finished.
The murals that hung in the old Civic Center are expected to come out of storage and be installed in the arena sometime next week, according to Matheny.
“Back of the house” work will continue after the March date and wrap up by the end of April, he said.
The city originally hoped to open the arena in September 2026, but pushed that date back, citing rainy weather. The city said in September that the construction team’s pace would allow an early opening ahead of a mid-spring contractual completion date.
That schedule matters because the arena has already sold tickets. The Red Clay Strays, a band formed in Mobile, are booked for three nights, March 25-27, 2027, with St. Paul & The Broken Bones as special guest. What began as a single Friday concert grew to three shows within days of the September announcement.
Other dates announced so far include Def Leppard and the Goo Goo Dolls on April 20 and the Harlem Globetrotters on April 24. Comedian Matt Mathews’ sold-out shows were moved to April 3 after construction delays.
The arena is being built on the former Civic Center property. City officials have said Expo Hall, the last of the three main Civic Center buildings still standing, will be demolished before the new venue opens. Plans for that part of the site have not been settled. The new building is designed to hold up to 10,000 spectators and to host ice hockey, which the old Civic Center could not do.
Fraud questions and the debt
The update came during a session called mainly to address the fraud. A person impersonating B.L. Harbert International, the arena’s contractor, persuaded city staff to change the company’s email and banking information, and the city then wired the money in October as part of what had been a regular monthly payment.
Council members used the meeting to question administration officials about the loss. The administration said it is working with cybersecurity, accounting and law firms, as well as federal investigators. Councilwoman Gina Gregory said she believes it is wise for the council to continue a “parallel investigation” of its own.
The city attorney declined to answer detailed questions about which employees were responsible or how they were disciplined, calling those personnel matters.
The fraud does not alter what Mobile owes on the building. As previously reported, the city issued about $250 million in bonds in March 2025 to help pay for the project. It now pays roughly $11.1 million a year in interest, and those payments are scheduled to rise to about $21.1 million a year in 2031, covering principal and interest, until the debt is retired in 2045. The city also raised its hotel and short-term lodging tax from 8% to 10% in 2025 and dedicated part of that revenue to arena debt.
The money lost is therefore not a change in the debt but a loss of funds that might otherwise have remained available. Mayor Spiro Cheriogotis has said the loss will come out of the arena’s contingency, and that he cannot promise future capital projects will go untouched.
The Finance Committee is scheduled to meet again Nov. 17.
