Louisville lacks the corporate support for an NBA team that would likely be needed to attract professional basketball to the city, said a study into the feasibility study commissioned by Greater Louisville Inc.
Those corporations would be called upon to lease suites at the KFC Yum! Center for NBA games—but the “lack of corporate depth” in Louisville means that those companies would each need to lease a greater share, the study said.
Louisville does has a strong potential fan base for the NBA, the study noted.
The results raise questions of how Louisville will approach financing issues with the KFC Yum! Center, where the tax district created to pay off bonds hasn’t produced the hoped for revenue.
The executive summary is posted below. It’s the only portion of the study that’s been released so far.
Mayor Greg Fischer said the report leaves the city “where we were before.”
Fischer emphasized that Louisville was never in pursuit of an NBA team—and there doesn’t appear to be an available team in the near future. The study doesn’t end the prospects for Louisville someday having an NBA team, but the next time a team becomes available more research will be needed.
“If that happens someday we need to revisit all of the data, we need to make sure the state and the city and UofL are all on the same page with this as well and then we’ll deal with it at that point in time,” Fischer said.
Fischer is interested in extended the tax increment financing district—in which a portion of the taxes from businesses near the arena are targeted to pay the arena’s bonds—10 more years to 30, he said. The Kentucky General Assembly must approve any changes.
That would be helpful obviously to put more revenue in the pot,” Fischer said.
Discussions on any such move are “in the very early stages,” he said.
The study also notes that Louisville corporations that chose to spend money an NBA team would likely, at least in the beginning, shift those funds from the sports and entertainment they’re already supporting in the city.
Fischer said the study does not put an end to the possibility of Louisville attracting an NBA franchise.
PricewaterhouseCoopers did the study. It conducted, in part, by interviewing a sample of Louisville companies. Fischer suggested that those companies’ support may become more favorable if a specific team were available—where the companies could better assess their potential success in the city.
“It means it needs to be investigated specifically for what’s the team, who are the players, what’s the coach. And if it’s real, then people will take it more seriously,” he said.
The lacking tax increment financing revenue means that the city is likely to contribute the maximum contribution to the arena’s construction bond debt.
Fischer has raised interest in the NBA in large part because of this. The tax increment financing hasn’t produced the expected revenue.
A franchise doesn’t appear available any time in the near future.
The embattled Sacramento franchise appeared destine to move to Seattle earlier this year after an offer to buy from a group led by businessman Chris Hansen and Microsoft’s Steve Ballmer.
But not now. The NBA’s relocation committee voted 7-0 to keep the Kings in Sacramento, and a new ownership group there has offered to forego revenue-sharing among NBA owners—a policy meant to bolster struggling franchises.
A final decision on the Kings is expected May 15.
Stern has said expansion isn’t likely anytime soon.
“Between the state, the city and UofL, the Yum! Center will be fine,” Fischer said.
UofL has a lease that NBA advocates have criticized as too favorable to the university. Fischer said there have been no discussions on renegotiating that lease.
They’ve been good responsible corporate citizens,” he said. “There are no discussions going on with them, with their lease. If and when we ever got to that point, I’m sure they’d have something to add to the conversation.”
Update: Here’s reaction from Home Court Advantage, which released its own study last year warning of negative effects of the NBA in Louisville, has issued a statement through Boxcar PR. It says, in part:
“Our community’s size and economic status does not support an NBA team. Our community overwhelmingly embraces the collegiate atmosphere that University of Louisville Athletics brings to our city.”
Meanwhile, attorney J. Bruce Miller, a longtime NBA advocate, criticized the study for not looking at a broader section of Louisville’s region. He said companies outside of Louisville would be interested in supporting an NBA team in the city.
“The market area is not Jefferson County,” he said. “The market area is the Insight-exlcusive cable franchise area, which includes Lexington, Frankfort, Covington, Bowling Green, Owensboro and southern Indiana. That’s the market area for a major league professional athletic team. They seem to want to believe that it’s just Jefferson County, and that’s just not the case.”
Miller also said he’s spoken with prospective NBA team owners interested in bringing a team to Louisville, at least some of which are from outside the U.S.
We’ll have more reaction to the study on Wednesday.