By Shelby Brown–
U of L athletics has agreed to pay an additional $2.4 million yearly to lease the KFC Yum! Center. The agreement will be reviewed and possibly approved by both the university’s board of trustees and Yum! arena’s board. They meet at 1 p.m. and 1:30 p.m. respectively.
The extra payment will help cover the arena’s bond debt, according to attorney Mike Herrington. The $2.4 million payment adds to athletics’ existing $1.3 million yearly payment. That means by 2047 U of L will have paid $75 million extra to the arena.
The added costs made for an uncomfortable U of L Athletic Association meeting, but the board approved the new lease agreement.
Interim President Greg Postel said how the athletics will pay the extra sum is a matter internal discussion. The agreement cites a possible $2 to $8 surcharge on men’s basketball tickets.
“I don’t want anyone to think that I feel that the amount of money we’re putting in is by any means affordable — it’s not. It’s a stretch,” Postel said.
Athletic Director Tom Jurich supported the agreement and mentioned possibly charging spectators for events that were previously free. Per Jurich, towards the end of the meeting, Postel said there would be no further discussion on the lease agreement, stating the university paid its fair share as the Yum! Center’s tenant.
Though he said little in Thursday’s meeting, Jurich claims he had enough say in the negotiations.
While many stayed silent, some ULAA members opposed to the new lease. Former university board chair Larry Benz said if U of L was an NBA team, they would’ve left town.
“I find if extremely disheartening that we get punished for success. U of L athletics has lived up to every aspect of the good faith agreement, exceeded all of it’s conduct commitments and promises on that agreement. And what are we guilty of? Success,” Benz said. “I’m going to support this, but very, very begrudgingly.”
Benz praised Postel for rescuing the lease agreement, which he called a “failed economic initiative.”
While the floor was open for questions, Eric Berson asked for assurance U of L wouldn’t be stuck with ULAA’s extra obligation. Jurich said he hopes the university helps athletics.
“I sure hope we’re not, as an athletics department, stuck together hanging on to all of this, because that isn’t fair,” Jurich said. “I keep hearing that the university (is) one family, I hope that is true.”
The arena was originally financed in 2007 prior to the economic collapse. That economic downturn hit the arena hard, causing it to miss tax increment financing (TIF) projections.
As of August 2008, over $349 million in bonds were issued. It would cost upwards of $400 million to refinance the arena. Herrington said the major problem is seat sales are not generating enough money to cover debt payments, which start in 2019.
“Once you fall behind, it’s hard to catch up,” Herrington said.
Final payments for arena bonds are due September 2054.
“We are a part of this community, however, and it poses a challenge for us when we’re asked to step up and support a community asset perhaps somewhat beyond our comfort zone. That’s really where we are,” Postel said.
File photo / The Louisville Cardinal