The University of Louisville Cardinals may be knocking on the door of a Final Four, but their home arena isn’t faring quite as well. The Louisville Courier Journal reported Thursday: “The Kentucky State Fair Board, which manages the building for the Louisville Arena Authority, expects net income of about $500,000 from operations in 2011. That’s far less than the $1.2 million budgeted, and a fraction of the $3.7 million forecast when the project was financed in 2008.” It’s not surprising to those who pay attention to stadium scams that the arena wouldn’t be as profitable as expected. Problem is, that’s just the operating costs. There’s still the matter of the public debt on the arena — $19 million per year — which in itself is very problematic. The public paid for the arena comes using tax-increment financing (TIF), which means that new taxes from the arena and the surrounding real estate district pay the arena debt. Problem is, if taxes from the surrounding area don’t cover the costs, the city has to make up the shortfall, which looks to be the case. Explains FieldofSchemes.com’s Neil deMause: “And with that tax-increment financing district running short of projections as well, the public is looking at a $7.5 million shortfall in paying off the arena bonds this year and next — something the authority is filling by using surplus funds and raiding a maintenance account.” Ouch.
In short, Louisville’s KFC Yum! Center is a lavish new home for the UL Cardinals and brings in some major concerts, but the higher-than-expected operating costs of the arena and the lack of taxes from surrounding development spell trouble for the city and its taxpayers.