It turns out it’s not just Louisville’s arena tax district that is running short of money; so is the arena itself:
By all accounts, the KFC Yum! Center has been a spectacular success since it opened in fall 2010, meeting every expectation except one — profitability.
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.
The problem, apparently, is that despite a packed event calendar, operating costs are higher than expected — $9.2 million a year instead of $5 million — which has quickly eaten up the revenue from all those Katy Perry concerts.
Still, turning a $500,000 annual profit isn’t so bad, right? Except that that’s just a $500,000 profit on operations — factor in the $19 million a year in debt payments the public took on to build the KFC Yum! Center, and you have a mammoth loss for taxpayers. 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. They haven’t had to sell any hospitals yet like up the river in Cincinnati, but the century’s still young.
Why I remember seeing ads from Goldman Sacs in my Economist way last year bragging about their involvement in the arena’s financing…
If they had better accountants, they could show more profit. I’ll bet they could come up with at least $4 million of EBITDAAABOOS (Earnings before interest, taxes, depreciation, amortization, and a bunch of other stuff).
What do KC and Louisville have in common with each other? Goldman-Sachs and AEG.
Are you paying attention, Sacramento?
Of course not.
Hmmmmm, what DOES Goldman Sachs have to say about this?
That ad was so horrible. Goldman thought it was such a success for Louisville that some servers would be hired near the arena. So those are the jobs of the future? LOL.
Any one have a link to a copy of that ad?
I’d love to see it.
Andrew,
If you Google “Goldman Sachs Louisville Arena” you will get to see the waitress featured in the magazine ads. The is also a film about the “progress” the arena has led to.
I believe the ad ran in the Economist and other publications for a few months beginning in late 2010.