Sometime in the not-too-distant future, the University of Louisville may have its own downtown basketball arena. The alarmists are out again, with the scare messages about the KFC Yum! Center.
They want to change the composition of the Arena Authority to include business people without any connection to UofL, giving preference to those with experience in arena and stadium operations. They also want to remove the right of the university to have authority to approve leasing of the arena, an arrangement that enables UofL to block University of Kentucky “home” games at the arena.
"This is the very thing the university wanted to avoid by building an on-campus arena," said William A. Stone, a member of the UofL Board of Overseers. "The group has trivialized their own efforts with the silliness of their demands.
Equally curious, they want to use the force of the Kentucky Legislature to pressure a renegotiation of the lease “to a level of fairness allowing the arena sufficient revenues to, at least, pay its expenses and annual debt service by June 30, 2013.”
Denis Frankenberger, a former local business owner, held a press conference Thursday to announce what everybody already knows — that the arena is faced with the threat of defaulting on the construction bonds. He warns that Louisville and Kentucky taxpayers will be settled with the debt.
Frankenberger says that the Arena Authority loses $33,235 per UofL men’s basketball game and $87,624 for each women’s game in the facility. He concludes that the project will never pay for itself while the the University of Louisville continues to make millions of dollars annually.
The university, it should be remembered, originally wanted an on-campus facility before caving into political pressure. The arena would never have been constructed without UofL’s involvement. Negotiations led to some of the following advantages for UofL (there are many more):
- 88% of revenues from the lease of 71 private suites.
- Exclusive use and control of private suites at all times.
- Two free suites for the President and Athletic Director.
- Arena responsible for maintenance and janitorial services.
- All proceeds from programs and program advertisements.
- 50% of all payments from third party concessions, including the gift shop, and catering sales.
- All revenues from side court VIP seating ($10,000 per season).
- 10% of all permanent signage inside and outside the arena.
- 100% of all license fees from TV, radio, motion picture or other recordings.
- Share equally with arena all net revenues from NCAA events.
- Scheduling priority and priority use of the arena.
- Discounted prices for faculty, staff, students and Letterman’s Club.
Generous to be sure. More than likely, however, UofL would have enjoyed even more amenities and financial benefits with its own on-campus arena. The city accepted UofL’s terms because city officials were desperate for a downtown arena. Now with a different administration, it’s a different tune, at least from the group headed by Frankenberger.
Expecting any kind of consensus from the community leadership, the Kentucky General Assembly, and a successful renegotiation of leasing terms is wildly optimistic and unlikely to occur. Attorneys would still be filing legal briefs a couple of years from now.
“This is the very thing the university wanted to avoid by building an on-campus arena,” said William A. Stone, a member of the UofL Board of Overseers. “The group has trivialized their own efforts with the silliness of their demands.
“It is the responsibility of the city and state to meet their financial obligations by spending money on something that is concrete and productive, as opposed to all the feel-good projects in which they get involved, ” he added, noting such examples as Light Up Louisville and Operation Brightside.
Part of the lease agreement is that, in the case of a foreclosure, UofL as the primary tenant would have 90 days to give notice to the mortgage holder that it will purchase the property on the terms and price set forth in the offer.
“That would be a fascinating possibility to consider,” he concluded.
Filed Under: Downtown Arena