Lexington, KY – New figures have been distributed to the Kentucky General Assembly on how a renovation of Rupp Arena and a relocated and expanded convention center can be funded, as legislators meet with less than 12 hours left in the 2014 regular session.
(See the full document at the end of this article.)
When the legislature passed a 2015-16 budget, a $65 million bond for the Rupp project was omitted, as key legislators told reporters they had not seen a solid plan for how the entire $300-plus million project was going to be funded. A document given to legislators Monday from Lexington-based Commonwealth Economics increases the money requested from the state from $65 million to $80 million, as a proposed increase in Lexington’s hotel tax would no longer be part of the plan.
It also includes approximately $2 million annually from “Non-UK Naming Rights.”
While not specified in the report, those naming rights would appear to be for the arena. Last year an RFP was sent out for naming rights on the convention center. Two groups responded, one of which was Nicholasville bio-tech company Alltech; the other has not been released. Those naming rights were not to include the arena, and estimates for what naming rights to the convention center could bring wouldn’t be expected to reach much more than $2 million over the course of the contract.
According to a Sept. 2011 edition of Sports Business Daily, a $2 million annual sponsorship for naming an arena home to a non-professional sports team would rank high atop the list of the largest naming rights deals. The largest overall contract as of 2011 was for Omaha’s CenturyLink Center, which includes an arena and convention center. That building is under a 15-year, $14 million contract. The most annually, as of 2011, was Louisville’s KFC Yum! Center, fetching $1.35 million annually for a decade. Nearby in Cincinnati, Great American Ballpark gets $2.5 million annually over 30-years from Great American Insurance.
Mayor Jim Gray’s communications director Susan Straub stated she couldn’t comment as to whether the naming rights for Rupp would be for sale. Previously Gray and Lexington Center Board Chairman Brent Rice said naming rights would only be sold if costs required it and the buyer would have to couple their name with Rupp Arena, similar in fashion to a compromise reached in Denver with the opening of the Broncos’ current stadium, now called Sports Authority Field at Mile High.
In addition, Lexington would offer an annual debt service increase from $1.8 million to $2.4 million for 30-years. The cost of the project would be lowered by $8 million through engineering changes on the convention center portion of the project.
The document also shows the Lexington Center Corporation would seek bonds of $192 million rather than $227 million, due to a decrease in annual facility revenues.
The document states the Lexington Center Corporation anticipates $10.7 million per year from a 30-year lease with the University of Kentucky. No new lease has been signed, and the current lease on Rupp runs through the 2017-18 season.
The plan also appears to peg $35 million on the hopes that residents and fans of the arena would become members of the arena, much in the same way fans of the NFL’s Green Bay Packers can buy non-voting stock in the football team.
The city would issue a $192 million revenue bond and a $40 million general obligation bond. The general obligation bond would be repaid from Lexington’s general fund while the $192 million would come from the arena's revenues. Both bonds would be paid over 30 years. Tax increment financing (TIF) generated funds would not be relied up for this plan.
Before bonding could take place, the Lexington Center Corporation would need to settle on actual construction costs, have the state money allocated, have the “Team Rupp” membership sale perform as anticipated and have a naming rights partner signed on, according to the document.
See the whole document: Rupp Costs.