By Chris Acree —
For a sports fan, the season of Fall is a wonderful time to be alive. Football is just getting good, the World Series is being decided and basketball is just beginning. But fans and viewers should know that with most every professional sports team, there’s an eery tale of extortion.
Public funding for stadiums, particularly for professional sports teams, remain one of the biggest rackets in society today. Multibillionaire team owners constantly demand taxpayer money for increased tax breaks, extensive renovations, or a new stadium altogether. And if the city pushes back they threaten to move the team to another city and leave the public holding the bill for the old arena.
For instance, taxpayers in Minnesota are on the hook for over half a billion dollars for the new home of the Minnesota Vikings – U.S. Bank Stadium. Or take the Atlanta Braves for example, who originally resided in downtown Atlanta, decided to move to the suburban confines of Cobb County, Georgia where they managed to acquire $300 million in property taxes (usually used for luxury items like roads and other infrastructure) and silenced much public outcry through governmental gymnastics.
And while The Yum! Center doesn’t have a money-grubbing professional team owner residing in it (yet), it still has fiscal controversies of its own.
The average Louisville resident might not notice anything wrong with the city’s riverside sports arena. Cards’ basketball and volleyball games usually have a good crowd, and during the offseason, the venue almost always hosts big-name concerts and other events. But what they might not know is that The Yum! Center is losing money hand over fist.
As reported in The Cardinal and several other media outlets, the arena is in debt to the tune of $22 million – a deficit that is projected to increase to as much as $37 million by 2029. People who keep track of this sort of thing, such as bond rating agency Moody’s Investors Service, say that The Yum! Center’s financial projections still show them being able to cover the debt. Keep in mind that these are also the arena’s own estimates, so make of that what you will.
Why so much debt? Well, a committee of state legislators want to know, and they’ve requested that Kentucky state auditor Mike Harmon audit the Louisville Arena Authority. He was undoubtedly pleased to hear this, as his office isn’t even done with an ongoing audit of the U of L Foundation. A representative from the Arena Authority said an audit was unnecessary and that the group already has a plan to reduce the debt.
While The Yum! Center’s books have yet to be analyzed, a likely culprit may be the revenue sharing agreement the arena has with the university’s athletic foundation. As with many stadiums and other similar venues, The Yum! Center receives quite a bit of money in the form of tax subsidies. The arena’s lease says that the athletic foundation receives 88 percent of private suite sales – a big source of revenue for any stadium.
As many of us at the time would agree, it was an awesome deal for U of L when the school The Yum! Center was being built, but unfortunately, one way or another it was always going to screw the taxpayer. More specifically, when you factor in that the arena receives money from the city and state, one could argue that Louisville residents are giving money directly to the athletic foundation.
That’s certainly what local businessman Denis Frankenberger, who testified at the committee meeting, thinks. “Basically what you’ve got is a conduit by which taxpayer dollars are funneled through and out the other end and they go into the University of Louisville Athletic Association,” he said. “It’s a taxpayer scam.”
The Arena Authority may still owe the Kentucky State Fair Board some money as well. They made an agreement when the arena was first built to pay the Fair Board for the lost income from Freedom Hall, the basketball team’s old renown home. The Fair Board says this money totals to over $11 million.
Any financial recommendations for The Yum! Center would certainly include a restricting of the agreement between the two parties. But the school really doesn’t have reason to do that right now, and the arena has no influence over U of L, so arguably a deal may never happen. But that definitely doesn’t mean it shouldn’t happen. The Yum! Center is without a doubt one of the premier arenas in the nation. It’s the third-largest collegiate arena in the country, behind UK’s Rupp Arena and Syracuse’s Carrier Dome. And if we want to keep it that way we need to make sure it is financially viable and paying its rightful debts.
U of L has not had the best track record with money in the past. Just look at all the money our former school president allocated for himself and his buddies and all the money that our school foundation lost in bad investments and random factories they bought (seriously, look that one up).
Restructuring our deal with The Yum! Center will not only ensure that the arena can remain fully operational in the future, but it would be a great first step in showing that the school can be fiscally responsible and increase trust with the city and taxpayers by reducing their financial burden. If they can do that, maybe The Yum! Center can remain in good working order for years to come. And maybe, just maybe, it could even attract an NBA team one day.
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