LOUISVILLE, KY. (WDRB) -- If you follow sports in this city, you no doubt remember the past NBA flirtations. It's hard not to think of them when the NBA is mentioned now -- which is quite often, and probably more by government officials and city leadership than at any time in the past.
In the past, there have been NBA teams interested, but little official leadership willing to step forward. Now there is leadership expressing interest, but they have no team.
What the city has now is an arena, and that's the root of what we're seeing today. Louisville mayor Greg Fischer says he wants to explore the possibility of an NBA team. He wants to find out if it would be good for the city, if people want it, what all the sides of the issue are. And that's responsible.
I'm a fan of the NBA. I have no doubt, unlike some, that the NBA would be successful in Louisville.
But the subject deserves a deeper discussion than that.
First, the discussion now, unlike before, is stemming from financial need. Government leaders are more sympathetic to the cause than in the past, and NBA proponents have a wider opening, because the KFC Yum! Center downtown arena is coming in below revenue projections, and an NBA tenant is viewed as the simplest and fastest way to turn that around -- a turnaround that is needed, because the payments required on the arena are only going to get larger over the next decade.
One major benefit an NBA team offers that a college team doesn't is the ability to generate some tax revenue from the players themselves. Through 41 regular-season games and (for some) playoffs, the players on the court pay local taxes on their considerable earnings for that game, as do coaches. Because it is a professional enterprise, there are more tax benefits in other areas, though there are likely tax concessions that must be made just to get a team. They don't come into a building just to make money for the city. They come in to make money for themselves.
Which brings us to the University of Louisville, the arena's primary tenant, which is feeling, I think it's fair to say, the beginnings of some pressure to alter its arena deal or to step aside for a pro tenant.
That's the first thing that must be understood. When the calls come for U of L to "cooperate" or to "be a good citizen," the translation is that U of L needs to step aside to become a secondary tenant in the KFC Yum! Center.
From a cosmetic standpoint, if an NBA team moves into that arena, the large Cardinal logos will need to come off the building's exterior, or at least be joined by a larger logo for the NBA Franchise. The U of L Hall of Fame inside the main entrance would need to be rebranded as an NBA display, or significantly reduced to become a shared space giving the NBA top billing. The team store would become primarily an NBA team store. The practice gym would be taken over by the NBA team and refurbished for its use, and primary locker room and training space would go to the pro team.
From a more important standpoint, the financial, U of L would have to give up a significant share of its revenues from the building. And that's appropriate, many NBA proponents say, because it's a non-profit organization, essentially. It isn't returning a tax benefit to the city like a professional entity would. And that makes a certain amount of sense from a paying-the-bills standpoint.
But one aspect of this is lost in that discussion, and I think a look back is important. Without U of L, the arena would not exist. City leaders courted U of L, and more or less bent over backwards to make sure it was the primary tenant. City leaders could've procured, or tried to procure, an NBA tenant back in the bonding process of this arena, but they either couldn't or didn't. They needed U of L's involvement as an anchor tenant in order to get the place built. It was U of L's standing as a cornerstone institution in this city, and U of L's popularity as a basketball program, that helped allow the bonding to be secured.
U of L, in 2005, proposed building an arena adjacent to Freedom Hall. It fought for a Fairgrounds location, which it would have considered a campus location. When city leaders wanted an arena downtown, U of L played hardball for the site it wanted -- and got it. But it was not the university's preference to play downtown. More than once, they backed away from the notion of playing there at all, and even then said publicly they would not be a part of city efforts to bring an NBA team to Louisville.
And when it came time to negotiate a deal for that arena, U of L did so in order to protect itself from one scenario above all others -- to have the city use U of L's reputation and stability as an anchor tenant to get a downtown arena built, only to be elbowed out of the way after construction was complete to bring in an NBA team when one became available. U of L doesn't want to be the professional equivalent of the person who supports and helps someone all the way through professional school, only to see them "upgrade" once the higher status is attained.
That's why the current contract between U of L and the arena is essentially NBA-proof. And the interest in city leaders now in bringing an NBA team shows that negotiating such a deal was, in retrospect, pretty wise for U of L.
So now, in addition to an arena financing problem, and a problem of finding an interested NBA team, city leadership has a U of L problem if it wants to make these things work.
What can't be argued by that leadership is that U of L has not delivered on its side of things. City leaders point to the 40 home games a year that NBA teams play and the amount of revenue that would draw into the Tax Increment Financing District. And they are right. It would.
But in terms of bringing fans through the doors -- and downtown to the TIF district to spend money -- U of L basketball has delivered just fine. In fact, in the first year of arena operation, U of L men's basketball alone delivered 517,777 fans in 24 home dates, exhibitions included. What few counted on was women's basketball adding nearly 12,000 per game, or 165,892 fans coming downtown for 15 home dates and one exhibition.
So here's the number. Men and women combined for 683,669 fans in 39 home dates in 2010-11, the last year for which there was a full slate of 41 NBA home games.
Compare U of L's 683,669 with the Indiana Pacers attendance that season -- 555,077 for 41 home dates. In fact, the combined U of L attendance figures outdrew the 41-game regular-season totals for the Indiana Pacers, Sacramento Kings, New Jersey Nets, Memphis Grizzlies, New Orleans Hornets, Philadelphia 76ers, Minnesota Timberwolves, Milwaukee Bucks, Atlanta Hawks, Charlotte Bobcats and Detroit Pistons.
The U of L number would have ranked 18th in the 30-team league, though the league doesn't have exhibition totals. And the real upside for NBA revenue comes if your team makes the playoffs. It's a huge payday. Regardless, U of L is in the same ballpark as other small-market NBA teams, including at least four (Hornets, Rockets, Grizzlies and Kings) that the city has had discussions with before, if you're talking straight-up attendance and fans brought into the TIF district.
Now, NBA proponents will say, and rightly so, that a college basketball fan is not the tax benefit that a pro fan is. And in fact, the average price paid for a ticket by those fans is not what the average price for an NBA ticket would be (owing mainly to U of L women's basketball being inexpensive). An NBA team would lure a whole new level of corporate interest.
But that number of fans coming downtown also ought to lead to other questions, particularly over whether the city has developed the area around the arena as well as it should have, creating enough opportunities for consumers to spend money within the TIF district. The obstacles placed in front of developer Todd Blue, for instance, in developing the Iron Quarter, were a blow to the whole enterprise.
There's the issue of whether there are enough events in the arena, and whether U of L is being cooperative enough in allowing for those events. This is one area where U of L needs to tread carefully. It needs to go the extra mile to work with arena officials on scheduling, if it wants to avoid giving more fuel to the NBA fire.
Already, moves like one made last week -- a letter sent to KFC Yum! Center first-right-of-refusal seatholders that they're now going to be hit with a $7 per ticket processing fee for all events -- is the kind of nickel-and-diming that is counterproductive for the facility.
Regardless, it is coming down to this.
If the leadership in this city wants a professional team in the KFC Yum! Center, it needs to be prepared to buy U of L out of its current arena contract. And that buyout, given the contract it would be getting out of and concessions U of L would be making for an NBA team to come (and the importance of U of L's role in the arena being built) would probably be significant.
In fact, it would probably be a good start in U of L kicking off plans for a campus arena of its own.
This is where things are, and it's tricky for all parties, none more than the mayor. If he's going to talk NBA, it becomes a difficult balancing act, one that will require him to re-recruit his current primary tenant.
One thing should be clear -- when the talk turns to taxpayers "holding the bag," taxpayers were always holding the bag. All of the revenues we're talking about, whether TIF revenues or additional revenues from the NBA or adding events for the facility or Metro Government dollars through the contract city leadership agreed to, they are all tax revenues. The question is just who is paying those taxes -- fans of U of L games, NBA players and coaches and fans, people coming downtown to enjoy restaurants and hotels and other businesses within the TIF district or Metro Government -- and all city taxpayers -- through an agreement that government leaders signed.
It would seem that the best solution here is for everyone to work together. The arena has been a net gain for this city. The events there have been memorable, U of L has been a success there, and in general, if government is going to spend tax money, it's always best if there's something to show for it. The arena is a big thing to show for it.
If an NBA franchise becomes realistically and seriously interested in this city, there's no question it has to be explored. But U of L is too large and important an institution to be elbowed out of the way in this instance. For those serious about the NBA, there's no fast-break around that issue.
Wednesday, August 13 2014 4:56 PM EDT2014-08-13 20:56:42 GMT
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