A group managing a downtown arena's finances missed annual payment deadlines under a lease agreement with its key tenant, according to Kentucky's auditor, who called for a team effort to help shore up the facility's finances.
The payments on the KFC Yum Center were missed because the Louisville Arena Authority and University of Louisville athletics officials, who hold events there, failed to share information in a timely manner, State Auditor Mike Harmon said.
The arena is home to the University of Louisville's men's and women's basketball teams, and also stages concerts and other events.
Harmon reiterated concerns that the arena's current revenues won't be sufficient to make bond payments as soon as 2020. He said since the Yum Center opened in 2010, the arena authority has "faltered badly," while the UofL Athletics Association's financial position has "dramatically improved."
"It's time for all parties involved to make the commitment necessary to put the arena on a sustainable path," he said.
State lawmakers passed legislation this year that extended the time that a tax rebate program can be used to help pay off arena debt.
UofL's interim president, Greg Postel, said work is underway on a "creative solution" to deal with the arena's financial challenges. He said he hopes the plan is finalized soon.
Arena authority Chairman Scott Cox was upbeat about the discussions with UofL.
"I think we'll have an agreement with them very soon," he said. "And they will do more than their fair share to make the finances better for the Yum arena."
The lease agreement between the arena authority and UofL Athletics Association says the annual payment is to be calculated by April 20 and made by April 30. Auditors found the calculation and payment were completed after those deadlines in 2016 and this year, Harmon said.
Cox said the auditor offered "good, constructive criticism."
"We appreciate the report and his findings and we take them to heart," Cox said. "And we're going to make some changes that we've suggested to him."
Cox said he accepts full responsibility for the missed payment deadlines.
UofL said it was disappointed the audit didn't specify reasons for the delayed payments.
"The arena supplies UofL with the final revenue figures from all parties that are to be deducted from the university's payment," said UofL Senior Associate Athletic Director Kenny Klein. "Once that figure is provided, the university provides a check soon thereafter. On most occasions, the arena does not have all of those other sources available by April 20."
In a letter to Cox, Harmon also noted a lack of sufficient deposits into a fund meant to support future renovations and replacements at the arena.