LOUISVILLE, Ky. (WDRB) -- The KFC Yum! Center is preparing to resume in-person events later this month, starting with University of Louisville basketball games at reduced capacity.
The arena’s plan for the U of L men’s and women’s seasons includes social distancing measures, mandatory masks and attendance capped at about 3,800 fans per game, or 15% of the building’s available seating.
Arena officials intend to limit the seating to the lower bowl and luxury suites. Even with the upper section closed, they believe they can keep groups of fans spaced out by at least 6 feet.
The Yum! Center would be the largest sports or entertainment venue in the Louisville area to hold inside events since the COVID-19 pandemic began. Jefferson County is under a “red” advisory because of a “critical” incidence rate of coronavirus cases, according to the Louisville Metro Department of Public Health and Wellness.
Speaking at a meeting of the Louisville Arena Authority on Monday, Yum! Center general manager Eric Granger said arena staff will block off seats that aren’t ticketed and ushers will work to ensure fans are sitting in the right seats.
Granger also said fans must follow social distancing and mask requirements, including in common areas such as concourses.
“We will be enforcing it, and if someone doesn’t follow the protocols we have it place they will be ejected, unfortunately,” he said.
Granger said Kentucky Gov. Andy Beshear’s office has indicated it will be willing to revisit the arena’s capacity once it has reopened.
The first non-basketball public events since the pandemic started are Hot Wheels Monster Trucks Live scheduled for March 13, followed by a Michael Buble show on March 17. Granger said no decision has been made on the attendance for those events, although he expects it could come after January.
But, he said, “in order for these two events to be economical both for us (and) the promoters who are putting on the event, we will need to grow our capacity.”
The arena relies heavily on sales taxes generated by tax increment financing, or TIF, in a two-mile area downtown to help pay off its construction debt. However, the arena authority only receives a portion of those tax revenues that exceed $17.5 million each year.
The TIF district created $13.4 million for arena debt payments during 2019, according to a new payment received by the arena authority. But arena officials believe those tax revenues in 2020 may not even reach the minimum level – resulting in no revenue at all for the arena authority.
Wall Street firm S&P Global Ratings says that scenario is possible and was a reason why it changed its view of the arena authority’s ability to repay its construction debt in a research note last week.
However, analysts noted that there is about $54 million in cash reserves that can be tapped for debt payments, in addition to a debt service account of $31.2 million. They expect, in a worse-case scenario, that arena officials could go five years before having to use the latter debt fund.
The arena authority, a public agency appointed by Kentucky’s governor and Louisville’s mayor, oversees the building at Second and Main streets and repaying the money that built it.
After refinancing its bonds in 2017, the arena board owes nearly $17 million in bond payments this year. By next year, that amount rises to $20.6 million, then to about $21 million in 2022.
Besides the TIF revenue, Louisville Metro government makes an annual guaranteed payment of $10.8 million. U of L’s $2.42 million yearly lease payment also goes toward debt service, as do naming rights and sponsorship revenues; and some revenues from arena events, such as premium seating and concession sales.
Arena officials had projected well above $30 million per year in total revenues for the bond obligations over the first half of the decade.
“We are, in my opinion, financially positioned well to withstand this,” William Summers V, the chair of the arena authority’s finance committee, said during Monday’s board meeting.
At the same time, he said there need to be a “lot of changes” downtown to produce the amount of TIF revenues that went to the arena in the past.
“As leaders of this community, we’ve got to focus on making sure that we create a downtown that was as robust as it was before this pandemic,” he said.
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