For Immediate Release: Thursday, January 31, 2013
KFC Yum! Center’s finances, lack of transparency distasteful to Kentucky taxpayers
(LOUISVILLE, Ky.) – Despite the fact that $649 million of the $1 billion price tag for downtown Louisville’s new KFC Yum! Center comes from taxpayers statewide, the arena’s Authority operates behind closed doors, according to a recent report that exposes huge debt, operating losses and a lease that is “choking the financial life from the arena.”
According to “Billion Dollar Basketball,” a 38-page analysis of the arena, the facility faces more than $800 million in debt and lost more than $50,000 daily in 2011.
Few Kentuckians are aware of the arena’s tenuous financial situation because of the Arena Authority’s “continuing practice of releasing mostly positive news to the media and the public,” said author and Louisville entrepreneur Denis Frankenberger, who combed through financial statements, board meeting minutes and the center’s lease agreement with the University of Louisville Athletic Association.
Frankenberger also pointed to Director Jim King’s recently expressed concern that the governing board will seek a bailout from the City of Louisville “to prevent a debt service payment default on the Authority’s outstanding bonds.”
Despite the fact that the Arena Authority has stated that its Public Support Percentage has been around 94 percent during 2010 and 2011, the report charges that the Authority continues to operate with “an absence of transparency”
“Taxpayers statewide have been forced to contribute nearly $340 million to build this Taj Mahal, which makes the closed-door meetings absolutely inexcusable,” said Jim Waters, president of the Bluegrass Institute, Kentucky’s free market think tank. “Why should Kentuckians in mountains of eastern Kentucky be forced to fund this losing proposition on the other side of the state that many will never step foot in, and certainly won’t benefit from?”
Also, according to the report:
* Operating costs for the arena exceed $92,000 per day while “giving away millions to its primary tenant and others.” The arena has lost more than $1 million per month since opening in October 2010.
* The terms of the lease with its primary tenant – the University of Louisville Athletic Association – must be renegotiated if the arena is to avoid financial failure. The report charges that the lease arrangement unfairly benefits the university even as it threatens the arena’s economic future. According to Frankenberger, the university “makes more than $20 million a year even as the arena has lost more than $30 million since opening.”
The report also recommends several steps to bring the arena out of its financial peril, including calling on Gov. Steve Beshear and Metro Louisville Mayor Greg Fischer to “immediately recast the Arena Authority Board of Directors by appointing experienced noteworthy business people from anywhere within the United States who have no connection to the University of Louisville with preference given to those who have experience with Arena or Stadium operations.”
For interview information, please contact Jim Waters at 270-782-2140 or email@example.com.