Aug 2, 2012, 9:36 PM EST
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
- College Basketball Talk’s Latest Top 25 0
- Coach K earns career win No. 1,000 in No. 5 Duke’s win over St. John’s 0
- Kentucky lands commitment from international Class of 2016 big man 2
- Saturday’s Snacks: No. 18 West Virginia, Georgetown win absolute thrillers 0
- No. 11 Kansas makes a statement blowing out No. 17 Texas 1
- Bracket Update: Upcoming stretch could have major impact on Duke’s NCAA seeding 2
- Sister’s illness makes for a bittersweet homecoming for Tulsa head coach Frank Haith 0
- No. 6 Wisconsin utterly embarrassed No. 25 Iowa for more than one reason (13)
- The Top Ten Players that Coach K has had at Duke (12)
- You think college basketball is unwatchable this year? Turn on an Indiana game (7)
- College Basketball Talk’s Latest Top 25: So where do we rank Duke? (5)
- You Make The Call: Was this a charge on TaShawn Thomas? (VIDEO) (5)