Aug 2, 2012, 9:36 PM EDT
A budding controversy surrounding the leasing terms between the Louisville Arena Authority and the University of Louisville over the KFC Yum! Center seems to have reached a boiling point.
There have been rumblings that the university has been getting the best of a bad deal for some time, but this week InsiderLouisville.com got to the root of the problem.
Essentially, it goes like this: the lease says that the U of L has the right to buy the arena in the event of a default, which creates quite a conflict of interest when you consider that a) the university is the tenant and b) the “University of Louisville Athletic Association both controls booking dates, limiting the potential for outside income, while taking the majority of revenue under the lease in an arrangement that’s looking more and more financially untenable.”
In essence, the clause sets up scenarios – most of which are highly unlikely – in which U of L officials could refuse to alter the agreement to ensure money is available to service the $348 million in municipal debt issued to build the arena, then buy the arena for a much lower price.
How can this be?
Because Section 47, the “Right of Tenant” clause in the lease, states that U of L essentially has the right to buy the KFC Yum! Center it leases in the event the owner – Arena Authority – defaults.
This doesn’t right.
The tenant of a publicly-funded building can not only control incoming revenue streams — in part by blocking an NBA team from coming to Louisville through their scheduling agreements — but can then buy the arena on the cheap if the current owners default on it?
That’s like saying I’m able to prevent my landlord from leasing out another apartment in my building and then calling ‘dibs’ on buying the building from them when they can’t pay their mortgage.
Anyway, I’d strongly urge you to go read Boyd’s work. Thorough investigative stuff heavy on the financials I don’t quite understand.
Photo credit: Louisville.com
- Oklahoma State lands commitment from elite point guard in 2015 0
- John Calipari hiring an analytics director is smart, necessary, strictly for his players 0
- Marcus Smart’s mom reportedly hospitalized the day he shoved Texas Tech fan 0
- Four-star point guard verbally commits to Clemson 0
- Top 2015 and 2016 prospects comment on high school-to-pro move in new report 0
- Four-star 2015 shooting guard commits to Illinois 0
- Florida State gets commitment from 7-foot-4 2015 center 2
- Wichita State gets commitment from three-star 2015 point guard (2)
- Three-star point guard down to Maryland, Providence, UNLV and Virginia Tech (1)
- Former SMU commit picks Michigan State (1)
- Alex Poythress dunks over 7-foot Dakari Johnson (VIDEO) (1)
- Sean Miller gives update on Arizona forward Brandon Ashley (1)