Legal action has begun to challenge a council's decision to spend £32m of public money on a new hotel at Hampshire's Rose Bowl cricket ground.
A consortium of local hoteliers has applied for a judicial review.
They are questioning the legality of Eastleigh Borough Council's investment - which they claim was the result of a "rushed decision making process".
The council said it was assessing the challenge and taking legal advice before deciding what to do.
It has said the project will create 200 jobs and the cost will have no impact on taxpayers.
But the consortium, made up of Meridian, Shire and Macdonald Hotels which all operate locally, disputed that claim.
Moez Mohamed says the decision poses an immense risk to the taxpayer
The plans for a new 175-bedroom hotel is part of a £48m revamp of the Rose Bowl which would make it the second largest Test ground in the country.
Other improvements include new stands and enhanced access. Work is already under way.
The hoteliers said: "The development threatens to create unfair competition at the expense of the taxpayer, together with the impact this will undoubtedly have on existing jobs.
"It appears however that the council has not had proper regard to the financial risks and the current economic realities, and instead appears to be proceeding on the basis that there is no risk whatsoever to the local tax payers."
Eastleigh Borough Council said: "The council received notice of the intention to serve a judicial review on Friday 20 November and is currently assessing its implications.
"We are taking extensive professional legal and financial advice so that we can be confident that we acting properly within the law and that this exciting project can go ahead with our full support."
The revamp of the Rose Bowl will increase the ground's capacity to 25,000, making it the largest Test ground in the country after Lords.
The whole project is due to be completed by the summer of 2011 in time for the ground's first England Test match, against Sri Lanka.
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