For the moment, the momentum for renovations to Lexington’s Rupp Arena has stopped. The Kentucky State Senate did not move forward with the proposed plans to renovate both the home of the Kentucky Wildcats and the connected Lexington Convention Center. In today’s political climate, no elected official wants to sign off on any financial plan where the taxpayers will be left to bear the brunt of the debt, even for the Commonwealth’s beloved Wildcats.
The unspoken elephant in the discussions of and plans for the renovations to Rupp is the current financial situation of the newest basketball ball facility in the state of Kentucky, Louisville’s Yum Center. In short, the Yum Center’s complex financial plan has failed to live up to the promises that the citizens of Louisville and Kentucky were told. The special TIF District set up around the arena has not produced revenues to pay on the facility’s debt, meaning the financial burden on the taxpayers is becoming more than anyone anticipated. While that is disappointing, it’s not unusual for such construction projects to fail to live up to their initial financial projections.
Mandatory Credit: Jamie Rhodes-USA TODAY Sports
The major point of contention is the lease agreement that the University of Louisville signed with the Yum Center. The university gets to pick dates for men’s and women’s basketball and volleyball, meaning the facility has to try to schedule events around those already set dates. While that’s certainly doable, it is difficult to work around the UL events if the facility needs to be reconfigured for other events such as concerts. Add in the fact that UL gets a percentage of the revenue and it’s easy to see how the Yum Center can’t possibly meet its debt payments, leaving the Louisville Metro government on the hook for an annual $9.8 million payment that will balloon up to near $20 million in the next few years.
Obviously, the state of Kentucky will need to assist the city of Louisville with those payments because if the Arena Authority (the quasi state agency that oversees the Yum Center) defaults on its debt, the state’s credit rating would take a big hit. With that in mind, the state of Kentucky simply cannot afford another arena/facility that would bring about more debt that the taxpayers would have to responsible for. It simply isn’t feasible.
Part of the problem with the entirety of the Rupp Arena project is the Lexington Convention Center portion and the area around Rupp. Lexington Mayor Jim Gray, in my mind is overreaching. Obviously, the crown jewel in the plan is the refurbishing of Rupp Arena. Kentucky Basketball is the cash cow that everyone in Lexington wants to attach itself to. That, however, only works to a certain point. By packaging the Rupp renovations (which would be financially sound) together with the convention center plans (a dicey proposition at best), the Lexington political leadership doomed the entirety of the project. Improving the place where the Wildcats play is an easier sell than putting a park with a man-made stream in the middle of downtown Lexington.
Rupp Arena will be renovated at some point in the near future. As historic as it is, it’s an outdated facility and the best college basketball program in the country deserves a state of the building to call home. However, with the specter of the Yum Center hanging over the head of decision makers, the plan needs to be more streamlined to focus on Rupp itself and it must make financial sense. Anything less simply won’t do.