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LOUISVILLE, Ky. (WDRB) -- The University of Louisville has agreed to cap its share of annual sponsorship revenue at the KFC Yum! Center, a move that is expected to produce more than $1 million for arena officials to help pay off the building's debt.
The Louisville Arena Authority, which is in charge of retiring $349 million in arena construction bonds, voted to amend the U of L agreement at its monthly meeting Monday.
Arena authority chairman Larry Hayes said the change also clarifies the original agreements governing sponsorship revenue at the building, where U of L's men's and women's basketball teams play.
Overall, the arena generates about $5.5 million in sponsorship revenues a year, according to AEG, the building's operator. U of L stood to receive $1 million in sponsorship money this year but agreed to receive $750,000, with next year's share capped at $850,000 and $950,000 the following year, said Justin Jokovich, AEG's finance director.
The move will free up an estimated $1.5 million for arena debt payments over three years.
"Our commitment to the university is we're going to continue to do a really good job in marketing, so hopefully all of us will make more money in the future," Hayes said.
Metro Council President Jim King, who serves as a nonvoting arena authority member, said U of L was "extremely receptive" to the negotiations that led to the changes.
"I think that what we've done is probably set up a pattern that's going to last not just over the next few years but probably indefinitely," said King, who authority members credited for helping bring about the new deal.
The arena authority has struggled to make its debt payments, in part because revenues from a tax-increment financing, or TIF, district, have failed to produce at the levels projected when bonds were sold in 2008. As a result, the arena authority has borrowed money from a maintenance fund, Metro government has increased its annual payment to the Yum! Center and arena officials have moved to streamline the TIF district in an effort to produce more money.
Critics also have called on changes to the authority's lease agreement with U of L – a move they claim would generate more revenue from the lucrative men's college basketball program. For example, the university keeps 88 percent of the revenue from suite rentals at the building. The remaining 12 percent is available to the authority for debt payments.
King and Hayes said there are no plans to renegotiate any other agreements with U of L.
Wednesday, February 19 2014 8:10 AM EST2014-02-19 13:10:54 GMT
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