Anyone heard of this yet? Louisville is planning to build a $450m downtown arena, whose primary purpose is to host U of L basketball games. And I thought the University of Maryland's Comcast Center, at $125m, was a bit rich.
Raymond Keating states that Louisville's Metro Council approved its $200m share of the financing on a 23-1 vote. The state of Kentucky is putting up $75m, which leaves $175m to come from ..... the University?
The governor of Kentucky has created a new entity, the Louisville Arena Authority, to develop the project. The pictures of the arena at their web page look fabulous, and for the price, they certainly should. There is also an economic impact study (power point! animated!) available there. It claims that (in effect) moving U of L basketball games from Freedom Hall to the downtown arena will generate $154m in annual economic impact, net of spending transferred by local residents.
Let's do the math. Freedom Hall seats about 19,000. The new arena is designed for 22,000. Suppose both sell out for 30 games. Let the new arena's seats be a significant improvement, so that they sell for $50 each, a $15 premium over tickets at Freedom Hall. The additional seats would thus yield $4.5m of new revenue. The seats "moved" from Freedom Hall would bring in, under these assumptions, an additional $8.55m. So the bread and butter fare at the new arena nets $13.05m in additional ticket sales ($33m if you assume that Freedom Hall is no longer usable). How one gets from there to $154m in annual economic impact takes a mighty big imagination.