A £3.15m loan handed to Wakefield Trinity to buy Belle Vue is nearly double the estimated value of the ground, secret council papers have revealed.
But Belle Vue was only worth around £1.7m when it was valued in January 2018, a document shown to the Local Democracy Reporting Service (LDRS) says.
Although Trinity wants to redevelop the ground to meet new regulations, the council's loan was solely for the club to buy Belle Vue from previous owners, the 88m Group.
The decision notice, which has not been made public by the council, also says there is "no business plan in place" for the running of the stadium once any redevelopment has been completed.
And it reveals that the council must be willing to evict Trinity if it fails to repay the loan, which is being charged at an interest rate of 2.5 per cent over 15 years. Alternatively the site may be sold for housebuilding.
The notice, which was signed by council leader Peter Box on March 13, says: "A Red Book valuation was undertaken in January 2018, which estimated a value of £1.7m for the stadium and land based on current use.
"The estimated value with enhanced planning permission (after redevelopment) for both sites would be in the region of £3.5m to £4m.
"These valuations therefore indicate the purchase price of £3m is significantly above the value of the asset in its current use."
The papers go on to say that there is a "risk" that if Trinity can't repay the loan, any sale of the ground afterwards wouldn't be big enough to cover the taxpayer's losses.
In the event of the club being unable to repay, it says, "The council would need to be willing to a) evict the borrower b) secure enhanced planning permission and c) market and sell the land for residential development."
In a statement about the sale, Wakefield Trinity's chief executive, Michael Carter said: "A significant amount of negotiation went into this, but at the end of the day the asking price from 88m Group was £3m and they wouldn’t accept any lower.
"This then incurs stamp duty of around £150,000. This deal has not just secured the freehold on the entire site, but has put this club firmly back in charge of its own future."
In response to Mr Carter's comments, 88m Group chairman Manni Hussain said: "We had been in negotiations with the council and club for over two years.
"We had various independent valuations undertaken not only on the stadium but also on the former Superbowl site which was also sold as part of this acquisition by the club.
"Considering the development potential of the two sites, this is a great purchase and will kickstart the redevelopment of the stadium and surrounding areas into a fantastic stadium, and also secure their home for the foreseeable future."
The deal for Trinity to remain at Belle Vue has all but ended long-held hopes that the club may relocate to a new community stadium on Newmarket Lane in Stanley. That move was given planning permission in 2012 but the ground was never built.
Supporters have called for Yorkcourt, who had been expected to build the stadium, to now pay for Belle Vue's renovations with Section 106 money, which is put into a community by developers when they build.
The council papers say that a "reasonable planning case" can be made for that to happen, but adds that it "cannot be guaranteed".
Tom Stannard, the council's corporate director for regeneration and economic growth, said: "We cannot comment on the confidential terms of the loan agreement between the council and Wakefield Trinity, however we can assure residents that the necessary and prudent financial controls have been put in place to make sure public money is secured, whilst still supporting the club."
Local Democracy Reporting Service