Louisvillian says Yum! Center losing $1 million a month and needs a new lease to survive
01/31/2013 11:20 AM
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.
Below the Fold
GOP Senator backs Democratic auditor's re-election bid; Edelen launches video featuring praise from other prominent Republicans
Number of untested sexual assault kits in Kentucky, recommendations on crime lab backlog to be released soon
Subscribe and get the latest political intelligence delivered to your inbox.