Louisvillian says Yum! Center losing $1 million a month and needs a new lease to survive

01/31/2013 12:20 PM

The KFC Yum! Center’s debt and “unprecedented” lease with the University of Louisville are causing the arena to lose about $1 million per month and putting it at risk of default, according to a 38-page report written by Louisville resident Denis Frankenberger.

Frankenberger, in conjunction with the Bluegrass Institute for Public Policy Solutions, told reporters in Louisville Thursday that the arena’s lease with the University of Louisville is the “primary problem.” He said it gives it too much power to the university. Plus, he said UofL, the Louisville Arena Authority and several private companies are costing the arena $825,000 by getting free use of suites.

Frankenberger, a Louisville-based developer, said he began looking into the finances of the Yum! Center on his own after reading that Moody’s Investor Services downgraded the bond rating for the arena to junk status last year.

University of Louisville President James Ramsey told Pure Politics earlier this month that the university was obligated to negotiate the best deal possible with the arena and feels no pressure to renegotiate it. The university has the right of first refusal to take over the arena if it does default on its construction bond payments.

The report, which Frankenberger published on his site billiondollarbasketball.com, also outlines how the Louisville Arena Authority is only managing to cover the interest on the construction bonds much like a homeowner who is only paying the interest on his mortgage.

In addition, Frankenberger said the arena more than doubled its expected operational costs in 2011. They had budgeted for $5.875 million and spent $12.124 million, he said. However, the arena switched management companies earlier this year, which Ramsey said has helped keep costs down.

About Ryan Alessi

Ryan Alessi joined cn|2 in May 2010 as senior managing editor and host of Pure Politics. He has covered politics for more than 10 years, including 7 years as a reporter for the Lexington Herald-Leader. Follow Ryan on Twitter @cn2Alessi. Ryan can be reached at 502-792-1135 or ryan.alessi@twcnews.com.

Comments

  • viewer wrote on January 31, 2013 03:54 PM :

    I cant put my finger on it , but something has been wrong with the Yums Center from the start. It has had whispers of trouble with money issues from the bonds to how it pays its staff. Where there is smoke usally there is fire somewhere. A lot of big names involved in holding the Yums Center bonds. Is that the reason we cant look closer ??? Time will tell. Who talks first…..

  • OH WELL wrote on May 14, 2013 08:57 AM :

    OH WELL WHO WOULD HAVE THOUGH IT WITH THE WISDOM AND VISION IN D,VILLE

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