If you read the kind of publications that Goldman Sachs advertises in, you may have noticed some ads from the vampire squid touting its role in helping save Louisville by selling bonds for its new basketball arena. (There’s a Goldman-created video, too.) As the San Francisco Chronicle’s David Sirota picks up the story:
As Goldman’s ad tells it, Louisville’s major problem was its need for a new arena. That’s when the bank swooped in with a “financing strategy” to build the stadium, which then supposedly led to “a vibrant downtown scene, where new businesses are opening (and) existing businesses are expanding.”
The only problem, writes Sirota: “If you do bother to click around the Internet, you’ll inevitably find that the Louisville economic picture is anything but ‘vibrant.’ Today, the city is suffering from an 11 percent unemployment rate and a $22 million budget shortfall.” He also cites the article we mentioned last fall that noted that Louisville’s TIF district wasn’t generating enough tax revenues to pay for the arena construction costs, which would leave the city having to dip into general funds to pay off those Goldman bonds.
And it gets even worse, according to Insider Louisville’s Terry Boyd:
The truth is even weirder: Goldman Sachs fell short of being able to place all the arena bonds.
It was in fact Louisville-based brokerage Hilliard Lyons that saved the day, placing the highest-risk, lowest rated piece of the arena debt.
How do I know? I wrote the story for Business First last year.
Concludes Boyd: “We’ll find out pretty soon if the arena’s revenue will match our collective debt obligation. But one thing is for sure — you can bet Goldman Sachs makes money no matter what happens to tax payers.”