It highlighted major concerns about costs, mismanagement and overstated economic benefits but the state's two major parties still back the project, with the opposition insisting it wants to see it delivered on-time and on-budget.
Tasmania's proposed AFL stadium should be scrapped or the deal renegotiated, a report has found. (HANDOUT/TASMANIAN GOVERNMENT)
The report found the cost of the Macquarie Point stadium would increase by $321 million and had been "significantly understated", while the cost-benefit ratio had been "significantly overstated" at 44 cents in every dollar invested.
"Tasmania deserves an AFL team and must have it at the right cost but not at any cost," Mr Gruen said in the report.
"Tasmania is not a wealthy state and it must meet substantial social and economic challenges."
He said substantial costs could be avoided by scrapping the stadium or renegotiating the terms of an agreement with the AFL over a local team, but community engagement was needed.
Mr Gruen found the project was already displaying the "hallmarks of mismanagement", saying a state government pledge to deliver it without borrowing more than $375 million "cannot be met".
The construction of the 23,000-seat waterfront stadium is a condition of Tasmania's entry into the AFL, with the Tasmanian Devils due to join the competition in 2028.
Some 200,000 people have paid $10 each to join the club as founding members.
Construction of the 23,000-seat waterfront stadium is a condition of Tasmania's entry into the AFL. (Loic Le Guilly/AAP PHOTOS)
But the report found the stadium was likely located in the wrong spot in a "flawed" decision effectively made by the Tasmanian government and the AFL.
Mr Gruen took aim at the deal struck between the government and the league, claiming it was "over-specified and imposes needless costs" with an unrealistic timeline.
"It is not too late to achieve an AFL-ready stadium at lower cost with lower technical risk and with less community division," he said.
Recommendations include having up to seven AFL seasons played at an existing stadium and delaying its opening by at least four years.
Opposition finance spokesman Luke Edmund said the report raised serious questions but Labor still supported a stadium in Hobart as it "delivers the AFL dream" and jobs.
"Tasmanians want this team to be delivered. Tasmanians want to see the Devils running out," he told reporters on Friday.
"But when is that actually going to happen and how much is it going to cost?"Â
Minister Eric Abetz says the project will unlock "decades of investment, jobs and opportunity". (Chris Kidd/AAP PHOTOS)
Tasmanian minister Eric Abetz said the state government would proceed with the project.
"The transformation of Macquarie Point will shape Tasmania for generations and unlock decades of investment, jobs and opportunity," he said.
Independents Miriam Beswick and Rebekah Pentland, formerly members of the Jacqui Lambie Network, said the return on investment did not stack up and Tasmania could not afford the bill.
"It's not too late for the premier to take a deep breath and assess whether the stadium is truly in the state's best interests," Ms Beswick said.
Jacqui Lambie Network MP Andrew Jenner urged the government to tweak the project to rein in spending, while the Tasmanian Greens accused the government of being "deceitful" about costs.
"It's time for the Liberal and Labor politicians to abandon their obsession ... and actually invest in the things that matter for Tasmanians," Greens deputy leader Vica Bayley said.
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